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5 Stocks Under $5 to Play the Market Recovery

These low-dollar bargains look poised to deliver big returns

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mechel185Mechel (NYSE:MTL) is a Russian steel company that has been taking fire from all sides. Demand has been weak thanks to recent economic uncertainty, so prices have been soft and margins razor-thin. And despite being one of the BRIC nations with Brazil, India and China, Russia has had a rather disappointing growth rate in recent years — including a recent downward revision to 2013 GDP outlook from the IMF.

It’s hard to argue that the negativity has not been priced in after a gut-wrenching 90% drop since 2008 and a 50% drop in the last year alone.

Of course, it just tanked 10% this week on ugly earnings as MTL swung to a loss … so further declines can still happen.

Still, the top line at MTL remains very strong and the steel company is firmly in the black even if operations aren’t running at high margins. Mechel does have $9.1 billion in debt hanging over its head, but a cyclical recovery in the steel business both in Russia and globally could lift the dark clouds and prompt a big move higher.

One of the risks, of course, is that this stock doesn’t have an analyst following and that major industries in Russia can be as inscrutable as state-owned enterprises in China.

But if you’re an aggressive trader who’s willing to speculate on a recovery, Mechel may be for you. Just be ready with a bottle of antacid, because this could be a wild ride. The risks are real but a rebound could be impressive in Mechel.

Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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