By David Sterman / seekingalpha.com,One of the most fertile areas for investment research can always be found among stocks that trade for less than the price of a deluxe cheeseburger.
When a stock is below $5 or $6, many mutual funds are prevented from owning them. Yet if these stocks can make some headway and move up toward the $10 mark, then the stocks will begin to pop up on fund managers' radars. And when they begin to pour money into these stocks, their buying efforts can quickly move shares up into the low teens.
With that in mind, I wanted to take a fresh look at my favorite names that are trading below $6. That's not to say that these stocks are micro-caps or nano-caps -- I tend to like companies that are worth at least $250 million, as they have to be at least that large to ever get noticed by those stock-moving fund managers. Here's a quick synopsis of my current favorite stocks under $6.
JetBlue (JBLU)
This low-cost airline is gradually morphing from industry upstart status into maturity. Gone are the days of white-hot growth, but JetBlue is quietly becoming a profit machine. Per share profits are likely to double this year, and as long as the economy stays aloft, per-share profits should rise another +50% in 2011 to around $0.60.
That profit surge comes even as revenue growth is expected to slow to around +10% next year. I always like to see profits growing faster than sales, as it means that a company is able to squeeze more profits out of each incremental dollar of sales. For JetBlue, the operating leverage comes from continually optimizing its route structure to re-direct empty planes to cities where demand is more robust. (more)
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