While Google (GOOG) and Apple (AAPL) make their seemingly inevitable trek towards $1000 a share it is easy to forget about the little guys but often they are far more likely to double, triple or even quadruple in price. Stocks under $5 are an entirely different animal than the Googles and Apples of the financial world. They have to approached and analyzed differently. Institutional ownership tends to be lower on stocks priced at $5 or less and that can mean more volatility due to lower volume and the larger impact of significant buy or sell orders. The benefit of lower institutional ownership tends to be a lower likelihood of sharp downturns due simply to momentum.
In these turbulent times in the economy some of these small wonders are familiar names that were priced at over $35 a share in the not so distant past; others have been the victims of indiscriminant selling in their sector. While I am not suggesting that any of these stocks should be purchased immediately after reading this article, they definitely have earned a second glance and some time on your watch list.
Chimera Investment Corporation (CIM) – Chimera is a specialty finance company that invests in residential mortgage backed securities. It is currently trading at $2.87 a share and is down nearly 30% over the last 12 months. Its P/E is less than 5 and it boasts a monster 18% dividend yield. This isn’t a stock you buy into for potential growth or stock appreciation. It is a 100% dividend play. To continue reading, click here