U.S. markets bounced back this week, gaining back some of the ground lost over the first three weeks of January. It was a week marked by Fed watching, a rebound in oil and, rather unexpectedly, a decision by Japan to go negative on interest rates.
The sub-$5 stocks had a great week, with about two dozen of them producing gains over 20%. It was not a great week for small biotech stocks, but a few still managed to do well.
Instead, small energy plays stole the show this week as oil prices firmed.
Here are the best of the small stocks for this week:
Best Stocks Under $5: Amedica Corporation (AMDA)
1/29/16 Closing Price: $2.79 (+72% for the week)
Amedica Corporation (NASDAQ:AMDA) is a Salt Lake City, UT-based company that makes medical implants. This week AMDA released a new product called the Valeo II C interbody fusion device system.
Now, that’s quite a mouthful, but what exactly is it and what does it do?
The company says it’s a new type of implant which restores cervical alignment for patients who have spinal fusion and various types of replacement surgery. The new material is a silicon nitride ceramic material that resists body rejection and gives doctors an improved method to see how the body is healing post-surgery.
In addition, Amedica also announced they will be presenting their work at the annual meeting of the Orthopaedic Research Society, March 5 to March 8 in Orlando, FL.
AMDA stock pushed up above its 50-day moving average this week on strong volume, but is still below its 200-day moving average.
Best Stocks Under $5: Transenterix Inc (TRXC)
1/29/16 Closing Price: $2.76 (+57% for the week)
Transenterix Inc (NYSE:TRXC) is another medical device company that is focused on developing robotic surgical devices. This week Transenterix stock took off on rumors that it is being considered for acquisition by Johnson & Johnson (NYSE:JNJ).
The problem is that the rumors began after CEO and chairman Alex Gorsky of JNJ did not specifically name TRXC during a conference call where he discussed the possibility of JNJ acquiring a medical device company. TRXC is one of several possibilities, but investors rushed to buy up shares of TRXC stock in hopes that Gorsky was targeting the Morrisville, NC company. JNJ is already partnered with Alphabet Inc (NASDAQ:GOOGL) to manufacture robotic surgical devices.
TRXC also announced this week that they will be presenting on Feb. 11 at the LEERINK Partners Fifth Annual Global Healthcare Conference in New York City. The company will undoubtedly be discussing their SurgiBot System and their ALF-X multiport robotic system that is not yet available in the United States.
Investors are cautioned not to buy stocks simply because of takeover rumors, but rather to research the company’s fundamentals and technicals before making investment decisions.
Best Stocks Under $5: JP Energy Partners LP (JPEP)
1/29/16 Closing Price: $5.08 (+44% for the week)
JP Energy Partners LP (NYSE:JPEP) led a handful of small energy companies higher this week. The catalyst for JPEP’s big move was their announcement that they would keep their fourth-quarter 2015 distribution of $0.3250 per unit ($1.30 annually) intact.
Many have feared that the energy LP companies would be slashing or eliminating dividends due to declining oil prices, but some, such as JPEP, have opted to continuing making payouts. JPEP’s distribution is to be paid on Feb. 12 to investors of record as of Feb. 5.
At the current price, the distribution works out to about 26% annual. However, JPEP stock is a bit risky in that its EPS at 6 cents is far too low to sustain $1.30-per-unit distribution long term.
JPEP finished strongly today to push just over the $5 level.
Best Stocks Under $5: SunCoke Energy Inc (SXC)
1/29/16 Closing Price: $3.78 (+63% for the week)
SunCoke Energy Inc (NASDAQ:SXC) may sound like a new product put out by The Coca-Cola Co (NYSE:KO), but it’s really a producer of coal and other raw materials for use in steelmaking.
The Lisle, IL company reported fourth-quarter earnings this week of 30 cents a share, or 16 cents of adjusted earnings. This blasted the analysts’ estimates for only 5 cents a share. In addition, SXC said it had $19 million in net income, whereas a year ago it showed a loss.
Interestingly, the company is now outperforming their results from a year ago, when the stock price traded for about five times its current price. Better times may well be ahead for SXC.
Best Stocks Under $5: Peabody Energy Corporation (BTU)
1/29/16 Closing Price: $4.45 (+28% for the week)
Peabody Energy Corporation (NYSE:BTU) unlike many of the sub-$5 stocks, is a well-known name on Wall Street. BTU, along with several other coal companies, has fallen on hard times since mid 2014, when it traded for well over $200 a share.
There was a bit of hope this week, as Peabody announced that it’s pursuing ongoing negotiations with several lenders to exchange 2018 notes for other secured notes by a subsidiary. The subsidiary could include several mines owned by Peabody. Unfortunately, the new notes would not contain a guarantee for the existing debt that Peabody carries, so it could be a tough sell.
Despite its sharp gain this week, BTU looks like a purely speculative play at this point.
As of this writing, Ethan Roberts did not hold a position in any of the aforementioned securities.
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