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5 Low Priced Breakout Stocks with Superlative Returns

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Betting on breakout stocks is one of the most popular methods used by active investors. In order to determine such stocks, it is necessary to identify stocks whose price movement is bound within a narrow channel. Investors must identify stocks which have moved or will move above this band, since they represent lucrative investment opportunities.

However, opponents of this strategy warn that if one incorrectly times one’s purchase, it could lead to huge loss. But when implemented correctly, buying breaking stocks could result in substantial gains, which is why this method remains popular.

Zeroing in on Breakout Levels

The key to this strategy is calculating the support and resistance levels of a stock. The floor of the stock’s trading channel is its support level and it should be sold as soon as it threatens to fall lower. On the other hand, the resistance is its breakout level and it is poised to gain substantially if it supersedes that.

When a stock is close to its support level, demand is literally hitting the floor. On the contrary, demand rises when it is breaching its resistance level, signaling that this is the right time to make a lucrative addition to your portfolio. The idea is to pick stocks which have just broken above their resistance barriers or are very closing to doing so.

Screening Parameters

• Percentage price change over four weeks between 10% and 20% (Stocks which are showing considerable price increases, but whose gains are not excessive.)

• Current Price /52-Week High greater than or equal to 0.9 (Stocks which are trading 90% close to their 52-week highs.)

• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy rated stocks can get through.)

• Beta for 60 months less than or equal to 2 (Stocks which move by a greater degree than the broader market but within a reasonable limit.)

• Current price less than or equal to $15 (Stocks which are reasonably priced.)

These criteria narrowed down the universe of over 7,700 stocks to only 18.

Here are the top 5 stocks that met these criteria:

Enzo Biochem Inc. (ENZ - Free Report) develops, manufactures and markets health care products based on molecular biology and genetic engineering techniques, and also provides diagnostic services to the medical community. It has a Zacks Rank #1 (Strong Buy) and its average EPS surprise over the last four quarters is 4.2%.

Yamana Gold, Inc. is a producer and developer of gold, silver and copper in Canada and several South American countries. It has a Zacks Rank #1 and its average EPS surprise over the last four quarters is more than 100%.

U.S. Auto Parts Network, Inc.  (PRTS - Free Report) is a leading online provider of automotive aftermarket parts, including body parts, engine parts, performance parts and accessories. It has a Zacks Rank #2 (Strong Buy) and its average EPS surprise over the last four quarters is 62.5%.

ARI Network Services Inc. (ARIS - Free Report) is a provider of business-to-business Internet e-commerce solutions for manufacturers with shared distribution and service networks. It has a Zacks Rank #2 and its average EPS surprise over the last four quarters is 4.2%.

Ceragon Networks Ltd. (CRNT - Free Report) is a leading provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators, enterprises and government organizations.  It has a Zacks Rank #2 and its average EPS surprise over the last four quarters is 55.6%.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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