10 stocks under $10: Bruker BioSciences (BRKR)

Posted Nov 29th 2007 8:43AM by Beth Gaston Moon
Filed under: Personal Finance, Bargain Stocks, Stocks to Buy

To keep below the $10 threshold on our first pick, investors may need to get in while the getting is good. Bruker BioSciences (NASDAQ: BRKR) is growing ever-closer to double-digit territory, and now may be the opportune time to open a position. The company develops and manufactures equipment and tools for use in the pharmaceutical and biotechnology fields.

During the past year, sales have grown by nearly 47%. At the company's last earnings report on October 29, the firm said net income jumped to $8.66 million, or 8 cents per share, from $2.98 million (3 cents per share) in the year-ago period. Excluding items, BRKR banked 6 cents per share, or a penny better than Wall Street's consensus estimate.

The stock has been chugging slowly higher during the past three months, even while the broader market has been losing steam. Since mid-August -- when they bottomed around the $7 level -- BRKR shares have gained close to 35%. The stock is in the process of digesting recent gains and is visiting support from its 10-week (or 50-day) moving average. This trendline could provide a springboard needed to boost the equity higher and into double-digits.

Daily chart of BRKR since August 2007 with 50-day moving average

Short interest could also be a factor in the stock's near-term future. Presently, there are 3.8 million BRKR shares sold short. When compared to the stock's average daily volume, this corresponds to about 7.5 days of constant trading required to eradicate all of these bearish bets. If the stock rebounds higher and short sellers make a mad dash toward the exit signs, a short squeeze could transpire, funneling additional buying pressure into the equity.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

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