The 52 week low list is often a scary list to troll. Some illiquid stocks may receive a price pop over a week to one month as these small cap companies show up on screening websites and scanning filters that target small retail investors. (This finding was reported in this highly debated 52 Week Low article)
But the more liquidity a company has, the more difficult this small retail effect becomes. The focus of this article is not to put our hopes and trust in the little investor for a tiny short-lived pop, but to see which of these lowly shares are possibly being picked up by instuitional investors. These large funds and powerhouses are typically viewed as informed investors by the rest of the market.
Make no mistake, this will be a contrarian list of investments not suitable for all trading types. But if you like to run your nets on the bottom of the oceans in the hopes of finding a discarded stock that might move up in the future, this article is dedicated to you. (Also look at 8 Highly Unusual Growth Stocks)
Support on the 52 Week Low List
How do we find stocks that might be finding support near their lows? There are a few ways to analyze. The first and most obvious would be to find reported transactions of institutional buying. However, these reports have a lag time between transaction and when the average person finds out. We will try to analyze stocks with some liquidity so that the retail trader effect is muted. Also, we keep an eye out for support levels, and if the share price bounced on good support, this is desirable. We will attempt to find stocks that are exhibiting some positive momentum or trading right near support levels where bigger fish may bite at.
- CYCC – Cyclacel Pharmaceuticals is currently bouncing off $1.40 support levels and has been doing so for roughly 8 months now. The prices have not seen a lift since institutional buying was reported on Dec.31st. Did the smart money see something promising in their cancer therapies yet to be reflected in share price or are they covering their bets just in case?
- CCSC – Share prices have bounced off $22 support levels. Total ownership change for this stock is positive with a net 2.6 million shares being bought up.
- CTRN – A definite trading range has been established between $20 - $25. The stock popped briefly on high volume earlier in February on the $20 support before slumping back down on low volume.
- UNIS – Unilife Corporation is over 72% below its 52 week high and less than 10% above its 52 week low. Recently bouncing off a $4.75 bottom, prices have risen and then slumped over the past week. The one analyst covering this (Yahoo reported) gives this a $15 price target and expects next years EPS to be at 0.54 per share as opposed to negative 0.12 this year. Maybe he is overly bullish or hasn’t updated his target lately. Institutions have increased their positions on this stock.
- MR – Mindray Medical International Limited, is less than 5% off its 52 week low and has 16 million share short with a float of only 48 million (Yahoo data). Prices have bounced off the $26 bottoms, retreated since then, and eyeing up the support levels once more. The PEG ratio is 1, long-term growth is expected at 20% per year, and the PE is 20 which is slightly above industry standards.
- FRO – Frontline Ltd. is also bouncing off a support level around the $25 range. Volume has increased in January and February which is useful in tracking tops and bottoms.
- SWHC – Smith & Wesson has popped off the $3.60 lows all February long.
- SYNM – Syntroleum Corp. is also popping off lows of around $1.50.
After looking over this list of underperforming stocks, only a couple have positive ownership changes. In general, the fund managers decrease their positions of losing stocks unless they have a valid reason to expect a trend reversal. A small support bounce can provide quick trade for a small buck, but for longer term traders they should look into increasing analyst forecasts, or sustained upward trending before buying. (You might also be interested how to lower risk and raise reward with 'under the radar' method)
Are there any stocks listed here (or other 52 week lows, or near lows) that you are buying into with the hopes of an upside move in 2011? What are your reasons for doing so?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.