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The following is a list of stocks trading below $5. All of these stocks also have conservative accounting practices, according to the ratings developed by forensic accounting firm Audit Integrity.

Audit Integrity was founded in 2002 to develop risk management tools based on a statistical analysis of corporate integrity. The Accounting and Governance Risk (AGR) rating is a forensic measure of the transparency and reliability of a corporation's financial reporting and governance practices. The closer the score is to 100, the more conservative the company's accounting practices, according to Audit Integrity.

All the companies in this list have high AGR scores above 86, i.e. more conservative and transparent accounting practices than most other firms.

Short float values sourced from Finviz, AGR ratings sourced from Audit Integrity.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


The list has been sorted

1. Great Basin Gold Ltd. (GBG): Gold Industry. Market cap of $1.11B. Price at $2.68.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 99. Short float at 3.16%, which implies a short ratio of 4.9 days. The stock has gained 65.03% over the last year.

Other Highlights:

- The company's capital spending accelerated by 304.2% over the last five years, much faster than the industry average of 26.88%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.

2. Level 3 Communications Inc. (LVLT): Diversified Communication Services Industry. Market cap of $2.09B. Price at $1.26.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 100. Short float at 7.1%, which implies a short ratio of 5.04 days. The stock has lost -1.57% over the last year.

Other Highlights:

- The company has demonstrated rapid cash flow growth over the last five years, which may lower their risk going forward. Five year average cash flow growth at 53.3%, much higher than the industry average at 7.55%.

3. Northgate Minerals Corp. (NXG): Gold Industry. Market cap of $840.56M. Price at $2.83.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 96. Short float at 3.96%, which implies a short ratio of 2.8 days. The stock has gained 7.06% over the last year.

Other Highlights:


- The company appears to be undervalued relative to book value. Price/Book ratio at 1.52, much lower than the industry average of 4.14.

- Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 14.2M shares during the most recent quarter, vs. 10.4M net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 8.5M shares during the most recent quarter, vs. 2.8M net shares purchased in the previous quarter.

4. Vonage Holdings Corporation (VG): Diversified Communication Services Industry. Market cap of $797.55M. Price at $3.69.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 86. Short float at 2.48%, which implies a short ratio of 1.44 days. The stock has gained 156.85% over the last year.

Other Highlights:


- The company's capital spending accelerated by 16.9% over the last five years, much faster than the industry average of 10.95%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.

- Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 10.2M shares during the most recent quarter, vs. 24.5M net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 1.5M shares during the most recent quarter, vs. 6.9M net shares purchased in the previous quarter.

5. VisionChina Media Inc. (VISN): Advertising Agencies Industry. Market cap of $341.22M. Price at $4.70.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 88. Short float at 1.4%, which implies a short ratio of 2.01 days. The stock has lost -43.35% over the last year.

Other Highlights:

- The company appears to be undervalued relative to book value. Price/Book ratio at 1.25, much lower than the industry average of 4.47.

- Itís also worth pointing out that the company has a track record of outperforming its competitors. Over the last five years, EPS grew by 105.89%, higher than the industry average at 7.73%, while revenues grew by 233.85%, outperforming the industry average at 6.94%.

6. Vantage Drilling Company (VTG):
Oil & Gas Drilling & Exploration Industry. Market cap of $552.22M. Price at $1.91.

According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 95. Short float at 2.75%, which implies a short ratio of 1.86 days. The stock has gained 33.57% over the last year.

Other Highlights:

- Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 1,155,103 shares per year (over last 2 years).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 6 Stocks Under $5 With Conservative Accounting Practices