2 Speculative Stocks Under $5

Includes: BTN, CAMT
by: Bret Jensen

The market seems to be embracing risk so far in 2012. Europe has also managed to kick the Greece can down the road, yet again. Although cautious longer term, you have to dance while the music is still playing. Here are two small caps under $5 that have little analyst coverage, very low valuations and increasing technical strength.

Camtek Ltd. (NASDAQ:CAMT) - "Camtek Ltd., together with its subsidiaries, designs, develops, manufactures, and markets automatic optical inspection (NYSE:AOI) systems and related products in the Asia Pacific, North America, and Europe. Its AOI systems are computerized systems that optically inspect various electronic product components for defects caused during the manufacturing process". (Business Description from Yahoo Finance)

We list four reasons CAMT is solid value at $2.50 a share:

  • The company is rapidly increasing earnings. It made $0.18 a share in FY2010, looks to earn $0.33 in FY2011, and analysts project it to make 40 cents in FY2012.
  • The stock looks like it has bottomed and is poised to cross its 200-day moving average.

Click to enlarge

  • The company has grown earnings at a better-than-25% annual clip over the past five years, and now sells near the bottom of its five-year valuation range based on P/E and P/S.
  • The stock is cheap at just over 6 times forward earnings, and has a very low five-year projected PEG (0.50).

Ballantyne Strong (NYSEMKT:BTN) - "Ballantyne Strong, Inc. designs, develops, manufactures, services, and distributes theatre and lighting systems. The company operates in two segments, Theatre and Lighting. The Theatre segment offers digital equipment, such as cinema projectors; and motion picture projection equipment comprising motion picture projectors, xenon lamphouses and power supplies, a console system combining a lamphouse and power supply into a single cabinet, and soundhead reproducers, as well as related products, such as sound systems under the Strong and Simplex trademarks". (Business Description from Yahoo Finance)

We take a look at four reasons BTN is a buy at $4.75 a share:

  • Ballantyne has a rock solid balance sheet with over $1.50 in net cash per share on the books (About 30% of market capitalization).
  • The stock has increasing technical strength and just crossed its 200-day moving average.

Click to enlarge

  • The stock has a forward P/E of under 6 and has a five-year projected PEG of just 0.44.
  • The one analyst that follows the stock has a $8.25 price target on BTN. The company is also selling near the bottom of its historical valuation range based on P/E, P/B, P/S and P/CF.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CAMT over the next 72 hours.