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Three Low-Priced Stocks for Your Portfolio


Array Biopharma, Global Cash Access Holdings, and MFA Financial aren't finished rallying yet.

Three strong names uncovered in this week's search for low-priced trade candidates are Array Biopharma Inc (NASDADQ:ARRY), Global Cash Access Holdings, Inc. (NYSE:GCA), and MFA Financial, Inc. (NYSE:MFA). A screen from targeted names priced south of $10, up solidly for 2012, but not yet approaching "overbought" territory, as defined by the Relative Strength Index (or RSI) indicator. The 24 stocks below met these qualifications:

Biotech firm Array is up nearly 150% this year and has outperformed the S&P 500 Index (INDEXSP:.INX) -- on a relative-strength basis -- by almost 24 percentage points during the last three months. Despite this technical prowess, the stock's RSI is still hovering solidly below 50, dashing any concerns that this rally could be overbought.

Call activity has been ramping up on the security, as its 10-day call/put volume ratio tracking buy-to-open activity on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at a whopping 54.25, up from the 50-day ratio reading of just 3.16. On an absolute basis, however, option speculation is relatively limited. In the front three-month series, for example, there are just 2,698 calls in overall open interest versus 12,860 open puts. (For what it's worth, 12,114 of these open puts are contained to the December 2.50 strike).

Array is the first of these three names expected to enter the earnings confessional, sometime during the last week of October. Cash Access Holdings and MFA Financial are expected to report in early-to-mid-November.

Global Cash Access Holdings provides financial services (namely ATMs and cash advances) to the gaming industry. Business must have been good this year, as the shares have gained more than 72% so far in 2012.

Short-term option traders are showing an unusual preference for puts, as indicated by the stock's Schaeffer's put/call open interest ratio (SOIR). While the ratio of 0.37 still suggests calls outweigh puts 100 to 37 among options with less than three months until expiration, this ratio is actually higher than 94% of all Schaeffer's put/call open interest ratio (SOIR) readings taken during the past year.

Global Cash Access Holdings has been largely overlooked by Wall Street. Just five analysts follow the stock, offering three "strong buy" ratings and two "holds."

Lastly, real-estate investment name MFA has gained nearly 24% in 2012 and has slightly outperformed the SPX during the past three months. The stock recently pulled back to test support at its 80-day moving average, making now an intriguing entry point.

Although eight of 13 covering analysts rate MFA a "buy" or better, the consensus 12-month price target does not reflect this optimism. In fact, at $8.21, this target is actually a discount to the equity's current price. Future adjustments to the upside could inspire a fresh round of buying demand.

On the options front, the stock's SOIR of 3.27 ranks higher than four-fifths of the past year's readings, indicating that short-term option speculators are focused on the put side. Again, capitulation toward the bullish front could result in further gains for the security.

This article by Beth Gaston was originally published on Schaeffer's Investment Research.

Below, find some more great content from Schaeffer's Investment Research:

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Twitter: @schaeffers
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