There's a certain thrill that comes with trading penny stocks. But to avoid the inherent dangers, many investors interested in winning nominally small but high percentage returns turn to larger companies that are still offered at lower prices.
Here, we screen a universe of stocks that are trading between $1-$5 with market caps above $300 million. Then, to find names showing upside momentum, we screened for stocks on "winning streaks."
For our purposes, a winning streak is measured by a persistence of days in which the stock outperformed the S&P 500 and little persistence of days in underperforming the index. We measured this by the ratio of the longest winning streak (in days) divided by the longest losing streak over the last month.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
We were left with two stocks are trading between $4-$5. Both are currently on a winning streaks. Do you think these stocks will continue to win? Use this list as a starting point for your own analysis.
1. Builders FirstSource, Inc. (NASDAQ:BLDR): Engages in the manufacture and supply of structural and related building products for residential new construction primarily in the southern and eastern United States. Market cap at $432.92M, most recent closing price at $4.47. The stock's average daily alpha vs. the S&P500 index stands at 0.99% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e. the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 2.5).
2. Hovnanian Enterprises Inc. (NYSE:HOV): Engages in homebuilding and financial services businesses in the United States. Market cap at $519.92M, most recent closing price at $4.42. The stock's average daily alpha vs. the S&P500 index stands at 1.92% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e. the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 3.).
Data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.