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Meltdown pushes 359 stocks under a buck

Matt Krantz
USA TODAY
This illustration picture taken on February 28, 2008 in Paris shows Euro coins and one US dollar bill.

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

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