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Top 5 Stocks Under $10 Poised to Explode

#3 MGIC Investment Corp. (NYSE:MTG)

 – Number of Hedge Fund Holders (as of September 30): 47
– Total Value of Hedge Fund Holdings (as of September 30): $1.34 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 42.50%

MGIC Investment Corp. (NYSE:MTG) benefits if the housing market and U.S economy remain strong. Given that the company’s claim payments decline as more people find quality jobs, MGIC Investment Corp’s earnings have been healthy in the past few years. Given next year’s election, if the U.S government decides to pull back the FHA’s role and leaves the mortgage insurance industry to private hands, look for MGIC to do very well. Among the 47 smart money funds long the stock at the end of the third quarter was Doug Silverman and Alexander Klabin‘s Senator Investment Group.

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#2 Staples, Inc. (NASDAQ:SPLS)

 – Number of Hedge Fund Holders (as of September 30): 54
– Total Value of Hedge Fund Holdings (as of September 30): $1.34 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 17.70%

Like Office Depot, Staples, Inc. (NASDAQ:SPLS)’s stock has fallen substantially on the news that the FTC will block the merger between the two companies, owing to competition concerns. With its top line sluggish and impending new competition from internet startups and giants alike, Staples could really have used the $750 million in annual run-rate synergies that the merger would have unlocked. It’s not all bad news however. Staples is a value play, with a forward P/E of 10.36 and a dividend yield of 5.05%.

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#1 Sunedison Inc (NYSE:SUNE)

 – Number of Hedge Fund Holders (as of September 30): 73
– Total Value of Hedge Fund Holdings (as of September 30): $1.06 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 46.80%

Despite Sunedison Inc (NYSE:SUNE) shares having been beaten-up and torn-apart over the past two quarters, the smart money is still bullish on the stock. 73 elite funds such as David Einhorn‘s Greenlight Capital and Larry Robbins’ Glenview Capital were long the stock at the end of the third quarter, as SunEdison has plenty of attractive assets that it can sell to placate the market’s liquidity concerns. If SunEdison can get past the market’s risk-off phase and restore confidence in its outlook and management team, it can access growth capital and rebound nicely. Given the 37% of the float that is short, a few short squeezes might also occur.

Disclosure: None

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