(0:45) - An Influx of New Young Investors
(8:00) - Stocks Under 5 Dollars: Rising Earnings Estimates
(11:00) - Tracey’s Top Stock Picks
(17:10) - Episode Roundup: AFI, BB, CLMT, CRK, XEL
Welcome to Episode #229 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, she’s going solo again to welcome the new traders and investors who have decided to buy stocks in 2020.
Robinhood, the popular mobile investing app, reported that it had added over 3 million new accounts during the coronavirus shutdown. Other big brokerages such as Schwab and Fidelity have also seen millions of new accounts.
Suddenly, stock trading was hot again.
But this also made older investors nervous. There’s been a lot of angst about all the speculation that Robinhood traders, in particular, are taking on by buying companies that have already filed for bankruptcy.
Are new traders in for a rude awakening when stocks sell-off again? Will it all end badly?
Every Generation Has to Learn the Lessons
In 1998 and 1999, it was Generation X that was new to investing. Online stock trading had just launched. Suddenly, you could trade, for a low amount, right from your living room instead of calling your broker to make the trade.
There was a lot of handwringing in 1999 from seasoned investors too as Generation X traders bought Pets.com and Webvan.
But Generation X learned its lessons. Millennials and Generation Z will too.
All investors and traders are “newbies” in the beginning.
Screening for Stocks Under $5
But if you’re going to trade the cheap stocks, those under $5, why not find some that might have rising earnings estimates?
At least something positive may be going on with that company as many analysts are cutting earnings estimates right now, not raising them.
Screening for Zacks Rank #1 (Strong Buy) and Rank #2 (Buy) stocks along with a price under $5 produced 182 companies.
On that list, are a lot of biotechs and drug companies.
Staying away from those stocks as many are in drug or vaccine development, these 5 companies are under $5 and have the Rank.
5 Stocks Under $5 with Zacks Rank of Strong Buy and Buy
1. Armstrong Flooring AFI saw sales jump 10% in January and February before the COVID shutdowns hit. It’s expected to lose $2.44 this year but just $1.54 next year. As of Mar 31, it had $31.9 million in cash.
2. BlackBerry Limited BB is expected to have positive earnings this year with the Zacks Consensus at $0.05. That’s a forward P/E of 99.8, but the shares are trading right around $5.
3. Calumet Specialty Products CLMT operates 3 refineries. It is expected to see a loss of $1.23 this year but just $0.30 next year. As of Mar 31, it had $103.7 million in cash.
4. Comstock Resources CRK is a natural gas E&P company. It’s expected to make $0.44 this year. The estimates are rising as analysts expect the natural gas market to improve by the second half of his year.
5. Xcel Brands XELB, a media and consumer products company which owns Halston, Judith Ripka, Isaac Mizrahi brands, is the cheapest company on this list as it trades around $1. It has a market cap of just $21 million. But it’s expected to make $0.27 a share this year which gives it a forward P/E of just 3.8.
What else should you know about screening for stocks under $5?
Tune into this podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Comstock Resources, Inc. (CRK) : Free Stock Analysis Report
Calumet Specialty Products Partners, L.P. (CLMT) : Free Stock Analysis Report
Xcel Brands, Inc (XELB) : Free Stock Analysis Report
Armstrong Flooring, Inc. (AFI) : Free Stock Analysis Report
BlackBerry Limited (BB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research