Should you ignore low priced stocks ? | stockbee

8/07/2013

Should you ignore low priced stocks ?

Low priced stocks show higher momentum than high priced stocks. If you see the top 100 stocks ranked by one year momentum, you will see the list is dominated by stocks priced below 15. This you will see across time periods. The smaller stocks can move big. High priced stocks seldom can match the big priced stock moves.

But then there are many traders who shun low priced stocks or scan for above certain price threshold . There are many who claim only stocks above certain magical price point of 15 or 20 or 40 can make big moves.

Really ?

Is stocks future gains a function of its starting price?

Utter nonsense.

There are more practical reason for focusing on higher priced stocks for certain account sizes. A large multi million dollar account may not be able to take a big position in small stock. But that does not mean the smaller stocks are not momentum leaders.

The 15 dollar price cut off advocated by IBD is one example of this kind of approach. But there is very little logic to it based on actual momentum returns. Many growth stocks will in fact make bulk of their moves below the price of 15 and top out.

For small account traders lower priced stock offer excellent trading opportunities. They can make explosive moves of 10 to 40% in matter of  days. A small catalyst on small cap can lead to big moves.

When scanning for swing opportunities you need to take different approach based on price of stock. If looking for breakout you can scan using a Dollar scan for the higher priced stock.

Most important thing to remember is the future move of stock is not a function of its starting price. 

Top 50 momentum stocks

Only stocks with 100000 plus volume considered.

Ranked using one year anchored  momentum


RVLT
ACAD
QKLS
MTG
STXS
VIPS
CSIQ
IDRA
ZHNE
AEGR
USU
JKS
SR
SPWR
INO
RSOL
ECTY
YRCW
EVC
BCRX
RDN
TSLA
ADUS
SNTS
SUNE
KERX
SRPT
NXST
ACRX
NFLX
STP
HIMX
CLDX
GTN
OWW
PLUG
GST
QIHU
SVU
PPC
HSOL
TROV
LIN
GPRE
AUDC
INSM
TEAR
AMRI
MNKD
BEAT

You can access all the Top ranked momentum stocks for free by visiting this link. 

The list is updated daily.

No comments: