Low-Priced Watch List

 | Oct 14, 2011 | 2:30 PM EDT
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In a fledgling market rally, it's fairly typical to see small, thinly traded companies score big price gains. In recent days, large-caps have also been good movers, but I've been tracking some lesser-known names that have notched unusual percentage gains.

Low-priced, thinly traded stocks can be riskier than large-caps, because they are more prone to volatility. With sparse institutional ownership, just one seller can send a stock down sharply.

One lower-priced name that's sported strong advances is Akorn (AKRX), which, as of Friday morning, was up more than 17% for the week.

Akorn makes pharmaceuticals for ophthalmological and other markets. Its market cap is $840 million, and despite being low-priced, trading between $8 and $9, the stock moves more than 1 million shares per day.

Trading volume has picked up in the past six months, as the stock has generally trended higher.

The company is acquiring manufacturing plants and other assets from India's Kilitch Drugs for $52 million in cash.

Akorn, while a somewhat speculative name, is enjoying good support from institutional buyers and is reapproaching its 11-year high of $9.50 on Sept. 20. I'll continue to track the stock's volume over the next days and weeks, to see if it can clear $9.50 in heavier-than-normal trade.

The company is due to report its third-quarter results on Nov. 1, so earnings, guidance or other information from that report could affect the price.

Another fairly low-priced stock that's emerging from a consolidation is HealthStream (HSTM), a Nashville-based company that offers training for the health care industry.

The stock trades between $13 and $14. The company's market cap is small, at $305 million. HealthStream is a thinly traded stock, with just 101,000 shares changing hands per day. Use caution with that level of trade.

At the moment, the price action in the stock has been bullish, although volume trends could be better. It's currently about 8% below its July all-time high of $14.85.

The company reports third-quarter results on Oct. 24. As with Akorn, this could be an event that moves the stock. HealthStream has beaten earnings views in each of the past three quarters.

Another somewhat speculative name that's jumped onto my screens is Vascular Solutions (VASC), a Minneapolis maker of devices used in cardiology and radiology. It's a tiny company, with a market cap of $210 million. It trades a paltry 58,000 shares per day, meaning it's another fraught with risk.

The stock is about 10% off a six-year August high of $13.75. It's up 8% so far in October, though recent volume has been lower than average.

Because it's so thinly traded, Vascular Solutions is prone to some fairly wide intraday price swings. I don't daytrade, so I'm viewing the stock as a candidate with medium-term investment potential, meaning I'll be eyeing a buy point as the stock nears that previous high.

Similar to the other stocks named here, Vascular Solutions has its third-quarter earnings report coming up. It reports on Oct. 25, so there could be some significant action in the stock on the news.

Estimates call for earnings of $0.20 per share in the quarter, on revenue of $25.07 million. The company beat EPS views by a penny in the prior quarter.

As noted above, low-priced or thinly traded stocks have more risk than more liquid names. Vascular Solutions doesn't have the same character of trading than a name such as an Apple (AAPL) or ExxonMobil (XOM), which boast huge institutional ownership.

For investors who are prepared to act quickly to maintain gains or minimize losses, however, many of these stocks can be viable investment candidates if the current market rally maintains its momentum.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider HSTM and VASC to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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