9 Cheap Stocks Under $10 Making New Price Highs

by: Kurtis Hemmerling

The market is doing its best to make a comeback over the last six or so trading days. The popping short-term technicals are nice, but it would also be great to see how prices react as the 1340 level on the S&P 500 is encountered.

In the meantime, it’s great to see some smaller stocks breaking above their former resistance levels. Even should the S&P 500 be unable to clear new highs for now, some of these cheap breakout stocks will have a new support underneath to rest on until it does.

Sub-$10 Breakout Stock List



Market Cap (mil)







Majesco Entertainment Co.




Cytori Therapeutics, Inc.




Global Industries Ltd.




Heckmann Corporation




LSI Corporation




Provident Energy Trust




Powerwave Technologies Inc.




US Gold Corporation



Why Are These Stocks Breaking Out?

CBR – This IT firm has modestly raised revenue on average over the past years, but net income continued to slide from 0.45 EPS in 2008 to negative $1.11 in 2010. I guess investors are expecting a turnaround play, as management experienced an overhaul last year. This led to some changes in such areas as bonus structure and business integration, with further improvements expected to reduce debt and improve profitability. Analysts must believe in the potential, as the average consensus of 2013 is 0.46 per share; for 2013, that number jumps to 0.79 EPS. This stock's momentum is largely based on the prowess of new management.

COOL – With the exception of 2008, this company has not been profitable over the past seven years. That is, however, expected to change starting this year. When a company turns profitable, it usually leads to a nice high-momentum pop. As it adds another big franchise name to its title list and works its way into Facebook, investors are betting on big possibilities.

CYTX – Sometimes, as is the case with this biotech stock, it's all about the future pipeline of treatments, potential FDA approvals, and breaking into new markets. While it is not profitable yet, revenue growth is strong, and if it can make a strong entry into the Indian markets, it could be in the green sooner rather than later.

GLBL – Another company that has a tempestuous relationship with profitability, Global Industries provides construction and subsea services for the offshore oil and gas industry. Although this stock is making annual highs and is over double the 52-week lows of $4, it is still a far cry from the 2007 highs of over $28. As oil keeps jumping over $100 per barrel, investors are surely thinking back to former price highs of GLBL and making early bets. (Here are seven more stocks to benefit from rising oil prices.)

HEK – Sometimes stocks receive analyst upgrades that make the stock pop over a few days initially, but hopefully the upgrade was based on increased guidance or some forward-looking aspect that will create a price drift over time. HEK has received favorable new coverage plus a recent upgrade, which is helping share prices make new highs.

LSI – Other times companies need to make big directional decisions. LSI recently focused its business as a semi-conductor only after selling off its external storage systems. This could mean improving margins going forward, a tighter-run business, focused growth within its niche, and cash to buy back shares.

PVX- With only one analyst covering this stock, a lack of transparency can sometimes scare investors. But a recent upgrade to buy, and some good PR coming from Cramer, can often provide the coverage to generate flowing investment dollars that are lacking in smaller stocks.

PWAV – Wireless is big business, but you need a great product and the proper marketing channels to get your foothold. Powerwave may have just that as it debuts some new products in North America that will work with existing 3G or help upgrade seamlessly to 4G coverage. As earnings are forecast to go up from negative 4 cents in 2010 to somewhere between 20 and 30 cents EPS in 2011, no wonder this stock is popping.

UXG – As gold jumped up to nearly $1450, this stock rose sharply with it. However, as gold pulled back intra-day, so did the prices of UXG. Having a stock tied in closely with the commodity price is good if you are a gold bull; if you are unsure about future gold prices, I’d recommend passing on this one.

Should You Buy One of These Popping Stocks?

Often, stocks that rise strongly over a few days make minor pullbacks on short-term support levels. So if you like the changes being made in management and the increase in growth prospects, you trust the analyst upgrade, and you want to stay invested for a good many months, you probably are not as concerned about waiting and timing to get a one or two percent discount. As a short-term trader buying on momentum, it is often good to wait for a small pullback if you like the swing-trades that 52-week highs can often deliver. (Read this article on 52-week highs and lows as to the reasons behind this short-term momentum trading strategy.)

However, do your due diligence to see if you are comfortable with the reasons the stock is jumping to new highs. Is it a turnaround pick, speculation tied to commodity prices, or new markets opening up?

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