“If there is such a thing as conventional wisdom in investing, which may be doubtful, one often touted rule is to avoid low-priced stocks. The most common reason given for this advice is often that they are low-priced for a reason. Fair enough, but it is important for investors to remember that at one time smartphone and tablet giant Apple Inc. (NASDAQ: AAPL) was a single-digit priced stock. Investors who bought Apple at the bottom made a tremendous amount of money.
Another reason cited by some trading pundits is that low-priced stocks, especially those under $5, are not marginable. Again, a true statement. Investors looking to get leverage on stocks have a built-in advantage with low-priced names. They already are priced low, so more shares can be bought and require less capital than high-priced stocks. In addition, many low-priced shares have options traded on the underlying shares. Investors can always seek leverage via the option markets.
We looked through our research database for solid names that not only had good stories, but had Wall St. coverage. Typically the last thing large bulge bracket firms, or any firm for that matter, wants to do is pitch a low-priced name that gets crushed. Here are the names we found that investors may want to consider….”
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