Every quarter we like to review the research at the top firms we cover and look for any new stocks to buy that are priced either slightly above or under $5 per share. In the past, many firms were reluctant to cover low-priced stocks. Some felt that the low price meant they were simply too risky. Other firms lamented the fact that many stocks trading under $5 were not marginable. Most of those concerns have declined over the years.
One of the attributes of finding quality low-priced stocks is that investors can own a far larger position than with many mega-cap blue chip names. While building an entire portfolio of low-priced names is probably not the best strategy, carving out some capital to put into some of the top stocks to buy may make good sense.
Here are some of the top names to buy trading just above and below the $5 level from our Wall Street research database.
Alcatel Lucent S.A. (NYSE: ALU) remains a top low-priced stock to buy at Merrill Lynch. It may be among many companies that will benefit from higher capital expenditure budgets at the major carriers and cable companies this year. The Merrill Lynch price target for the stock is $6.58. The Thomson/First Call estimate is posted at $4.90. Shares closed Wednesday at $4.03.
Ceragon Networks Ltd. (NASDAQ: CRNT) is rated at Strong Buy at Needham. The company is the top high-capacity wireless hauling specialist. It provides innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers. The Needham price target is $8. The consensus price target for the stock is $4.69. The stock closed Tuesday at $3.08.
Galena Biopharma Inc. (NASDAQ: GALE) may be the home run that biotech investors are looking for. The stock is Buy rated at Maxim Group, which recently raised its price target. With an FDA-approved pain medication, a partnership with generic giant Teva Pharmaceuticals and a superior pipeline, the stock may be an acquisition target. After a huge rise, the stock took a hit when CNBC’s Jim Cramer urged viewers to take profits. The lowered price may offer new money a solid entry point. The Maxim price target is posted at $11, and the consensus target is $7.33. Galena closed Wednesday at $5.28.
Glu Mobile Inc. (NASDAQ: GLUU) is a top mobile gaming stock to buy at Cowen and Company. The company releases its video games internationally via multiple platforms, including iOS, Android, Amazon, Windows Phone and Google Chrome. Embodying the “freemium” model, games created by Glu are typically free to play. Glu generates revenue through in-game micro-transactions consisting of $1.99 or less. The Cowen price target for the stock is $5 and is the highest on Wall Street. The consensus target is $4.15. Glu Mobile closed Tuesday at $3.71.
Hercules Offshore Inc. (NASDAQ: HERO) is a top small cap name to buy for 2014 at Wunderlich. The company provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry worldwide. Hercules Offshore operates through five segments: Domestic Offshore, International Offshore, Inland, Domestic Liftboats and International Liftboats. While the recent fleet status report was a little unsettling to some Wall Street firms, the lower price entry point may be attractive. The Wunderlich Price target is posted at $10, and the consensus number is $8.48. Hercules Offshore closed Wednesday at $5.00.
RF Micro Devices Inc. (NASDAQ: RFMD) is a top low-price name to buy at Oppenheimer that may have big upside. The company also got a nice push recently at Canaccord when the firm reiterated its Buy rating. RF Micro reported net profit of $36.4 million, or $0.13 a share, which met analysts’ EPS expectations. It also marked an increase from net profit of $21.3 million and earnings of $0.08 a share in the same period one year earlier. RF Micro Devices reported revenue of $289 million, up from $271 million in the same quarter a year earlier. Analysts had expected revenue of $320 million. The Oppenheimer price target for the stock is $8, and the consensus is at $6.67. The stock closed Wednesday at $5.35.
Sharps Compliance Corp. (NASDAQ: SMED) provides management solutions for medical waste, used health care materials and unused dispensed medications in the United States. The company offers its recovery system for the containment, transportation, treatment and tracking of medical waste and used health care materials generated outside the hospital and health care facility settings, as well as SharpsTracer, a solution to provide customers with an electronic record of receipt and treatment of their waste to meet regulatory requirements. Wunderlich has a Buy rating on the stock and just raised its price target from $6 to $7. The consensus is set at $5.00. The stock closed Wednesday at $5.01.
Sonus Networks Inc. (NASDAQ: SONS) is a top stock to buy at FBR Capital. The firm sees the company transitioning into the session border controller and diameter signaling market, two of the most robustly growing markets in the communications equipment space, while it manages the decline of its media controller platform and slowly transitions its product to a more software-focused, and potentially less hardware-focused, platform. The FBR price target for the stock is $4, and the consensus is higher at $4.30. Sonus Networks closed Wednesday at $3.04.
Synta Pharmaceuticals Corp. (NASDAQ: SNTA) is a leading oncology name to buy at Jefferies. The company primarily focuses on developing its lead cancer drug ganetespib as a treatment for non-small-cell lung cancer, breast cancer and colorectal cancer. If approved, the drug is expected to hit annual peak sales of $425 million to $600 million. The Jefferies price target for the stock is a huge $19, and the consensus target is $15.85. Shares closed Thursday at $5.24.
Zogenix Inc. (NASDAQ: ZGNX) is a top name to buy at Oppenheimer and Leerink Swann for 2014. The FDA approved its top new drug Zohydro. The drug is a timed-release form of hydrocodone, which is one of the most highly prescribed pain medications in the world. The Zogenix drug contains no acetaminophen, which has been proven to cause liver damage. This is a boon to patients suffering from oncology-related pain, as often radiation therapy weakens or damages the liver. The Oppenheimer price target for the stock is $500, and the consensus price target is $5.23. Zogenix closed Thursday at $4.35.
We have added some new names to our list of stocks to buy and provided updates on others. Many of these names may not be suitable for more conservative accounts. However, with research coverage from some of the top firms on Wall Street, many of these names could be poised for big upside in the rest of 2014.