Meltdown pushes 359 stocks under a buck
Want to see just how much pressure the stock market is under? Got a buck? There are now 359 stocks trading for under $1 a share - the highest in more than 20 years.
The number of stocks currently trading on a major U.S. exchange for less $1 a share has jumped 38% this year and is up 420% from five years ago, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Seeing such a rapid jump in the number of penny stocks shows just how pummeled the market has become. This analysis is limited to stocks currently trading on a major U.S. exchange - thus omits stocks that have been delisted or bought over the years.
Still, the rapid rise in "penny stocks" is a tangible result of the market's vicious beat-down this year. The horrible start to the year, which pushed the Standard & Poor's 500 down 5.6% since the end of December and down 9.4% from the peak, is starting to take a major toll on markets. It's not just marginal companies that are feeling the strain. Even if you limit the analysis to just stocks in the broad Russell 3000 index - there are 42 members trading for $1 a share or less. That's up from just two stocks trading that cheaply in 2014 and the average of just 17 since 2000.
Perhaps not surprisingly, a vast majority of the stock falling under $1 hail from the energy sector - due to the imploding price of oil. Of the 42 penny stocks on the Russell 3000 - energy stocks account for more than a third of them or 16 companies. Healthcare is in second place with 10 of the 42 penny stocks or about a quarter.
Even more disturbing is the order of magnitude of the declines by these stocks now trading under a dollar. On average, the 42 penny stocks on the Russell have seen their stocks drop by an average of 42% this year. This isn't a case of companies that were trading for $1.01 a share - slipping just a few pennies. Wall Street isn't exactly expecting a bounceback, either. Wall Street analysts rate more than half the Russell 3000 stocks with an "underperform" or "hold" rating. On Wall Street, a hold rating is really a sell.
Most of the stocks under a buck have understandably seen their market values crunched. On average, the 42 stocks have a tiny average market value of $93 million.
But the rise in the number of penny stocks issues a big warning for investors - wondering just how bad this market is.
MOST VALUABLE RUSSELL 3000 STOCKS NOW TRADING UNDER $1
Company, symbol, 2/24/2016 price, Market value ($ millions)
Denbury Resources, DNR, $0.95, $342.9
Golden Ocean, GOGL, $0.55, $340.8
EXCO Resources, XCO, $0.96, $243.8
Unilife Resources, UNS, $0.21, $221.9
CTI BioPharma, CTIC, $0.67, $190.8
Source: S&P Global Market Intelligence, USA TODAY