If you have been regularly looking at the list of largest percentage gainers on a daily basis, you have definitely seen how some beaten down names with really low share prices have been surging lately. In fact, more than a few have seen triple-digit percentage gains in just a matter of days. Throughout the last few weeks, we have been highlighting the fact that the current rally off the February 11th lows has been led by low quality, beaten down stocks, but no chart sums this up better than looking at performance based on share price.
To illustrate this, check out the average performance of stocks since the closing low on 2/11 based on share price. Since 2/11, the average stock in the S&P 1500 is up an impressive 16.3%, but the performance of low priced stocks has trounced that. For example, on 2/11, there were 52 stocks in the S&P 1500 trading for less than $5 per share. Since then, the average return of those stocks is a gain of 58.9% with a median gain of 45%! Further, of the 106 stocks in the S&P 1500 that closed at a level of between $5 and $10 per share on 2/11, the average gain has been 30.6%. Stocks trading between $10 and $20 per share on 2/11 are also outperforming the overall market with an average gain of 18.1%. Conversely, with an average gain of 14.4%, stocks that closed above $20 but less than $50 per share on 2/11 are underperforming the overall market, and as you go higher and higher in terms of share price, the average return declines. No wonder people are always looking for quick hits in low priced stocks. While they don’t always outperform, when they rip, they rip!