I am not sure about the psychology behind it, but lots of investors are attracted to stocks under $10. Maybe it is the idea of finding a "bargain" early in the game, where we can buy a big position in terms of the number of shares. I am sure there are other explanations.
I am no exception. In the 1990s, I found an offshore oil drilling company that I bought aggressively between $2 and $3. The stock ran up to near $30 and the proceeds sent my three sons to the colleges of their choice with money left over.
My current list of 10 stocks under $10 may not do as well (remember that four-letter word -- risk -- and use a sellstop), but here they are in alphabetical order:
In this daily chart of Agenus (AGEN) , above, we can see the basing pattern that has been developing since October. The On-Balance-Volume (OBV) line turned to the upside in March, signaling more-aggressive buying, with the volume of trading in AGEN heavier on days when it closed higher. AGEN is above the 50-day and the 200-day moving averages, which are currently flat. The Moving Average Convergence Divergence (MACD) oscillator is bullish, with its position over the zero line. A close above $5.50 for AGEN will be a strong bullish signal for new and existing longs.
In this daily chart of Archrock (AROC) , above, we can see that a low was established in February. The OBV line turned up in early March to support the advance. There was a gap to the downside, but AROC came back with renewed gains. Prices are above the 50-day and 200-day averages. The MACD oscillator is bullish. I would look to buy weakness towards $8 should it develop.
Career Education (CECO) is the third name on our list. CECO has quickly tripled from its early March nadir. The gains ahead may not be as quick, but the chart is still bullish after a rapid triple since early March. Prices are above the rising, 50-day and 200-day simple moving averages. There is a bullish golden cross of those two averages in April. The OBV line has been telling us that buyers have been more aggressive since March. The MACD oscillator is bullish, too. Consider buying a very shallow dip.
In this chart, above, of Gramercy Property Trust (GPT) , we can see that this security could soon be off our list of "under $10s." GPT broke out late February from the base it formed last year. The OBV line has been rising over the past 12 months, suggesting that accumulation has been underway for months. The MACD oscillator turned up again above the zero line. Prices are above both popular moving averages, which are rising.
In this daily chart of Iridium Communications (IRDM) , above, we see a low around $6 in October and a retest in January and February. The OBV line has been improving since October and prices have encountered resistance around $9, until recently. The MACD oscillator is above zero -- telling us we should trade IRDM from the long side. Still under $10, so it made my list.
The turnaround in Keryx Biopharmaceuticals (KERX) is shaping up nicely on the chart, above. Prices made a low in October and then the retest in January and February. KERX broke out over $6, pulled back to $6 and has now resumed the advance. The OBV line turned up in October to confirm the price action. Prices are above the rising, 50-day average, and the 200-day, too. We can see a bullish golden cross of the averages in May. I would buy KERX at current levels, and add on strength.
This chart of Neuberger Berman (NML) is a little different than the previous six charts. NML saw heavy volume in January and February, as some holders probably "threw in the towel" as others bought. The OBV has risen strongly since the price lows. Prices are testing the 200-day average, but are above the 50-day.
In this chart of Pioneer Energy Services (PES) ,we can see a base from August until May. In late May, prices started to pick up steam on the upside after a golden cross of the 50-day and 200-day averages earlier in the month. PES looks like a buy in the $4 to $5 area.
You see their commercials all the time, now here is the daily chart of TrueCar (TRUE) , above. TRUE has been basing out, and now is above its 50-day and 200-day averages, with the OBV line improving. The MACD oscillator is above zero. I would try to buy TRUE closer to $8 and enter a sellstop at the same time below $6.
At the bottom of our list, and the bottom of the alphabet, is Zynga (ZNGA) , chart above. ZNGA just broke out over $2.75, with a rising OBV line, and is already above the 50-day and 200-day moving averages. Here I would only buy a new high for the move up.
This list was driven by the charts, but do your homework and fundamental research before you jump in.