Unlike any of my other screens, this stock screen focuses on stocks trading under $10/share, and have a market cap of around $1 billion or less. As for the variables that I used in the screen, I focused on fundamentals, particularly companies that have a healthy balance sheet with little debt to speak of, with a strong prospect for rapid sales and growth in earnings, as well.
Now be aware, that these kinds of stocks carry huge risks to them. A simple downgrade, news event, or missed earnings target, can derail these small-cap stocks in a heart beat. But if you have some capital that you want to roll the dice with, these stocks will give you a good start in your research.
When I last ran this screen, I told you that Power-One (PWER) was sporting a nice triple bottom, and should move higher. Well since then the market took a nasty turn, but PWER managed to hold its own by actually moving higher by 3%.
This time around, I’d like to throw two more stocks at you. The first being Brocade Communications (BRCD) which saw a huge gap down earlier this month, but since has put together a double-bottom, and the prospect for a potential 20-25% move to fill the yet-to-be-filled gap above. The second one is American Superconductor (AMSC) which is making a higher high, reversing course, and if it can break the 50-day moving average, a move in the $8’s is likely. But you may want to wait for a mild pullback, as it is fairly overextended off of recent lows.
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