Stocks remain close to all-time highs, but investors are getting used to being told that the bull market has become a stock picker’s market. 24/7 Wall St. reviews dozens of analyst research reports each weekday, looking for new ideas and hidden gems for our readers. We generally see many upside and downside stocks in these reports, but sometimes the stocks trading under $10 have incredible upside price targets from analysts.
24/7 Wall St. would caution readers to not ignore the fact that stocks trading under $10 are often among the riskiest stocks in the market. To prove a point, only four of the members in the S&P 500 Index have share prices under $10 — and only one of them trades under $9! Still, many investors are attracted to lower-priced stocks as they feel like there is larger room for upside.
Unlike the Dow Jones Industrial Average stocks, many analyst calls in these lower-priced and small-cap stocks often come with upside projections of 50% upside, or 100% — or even exponential upside. You just do not see that sort of call too often in DJIA components.
Another consideration on risk in most of the stocks under $10 is that almost all of these selected from this past week would fail the “widows and orphans” suitability test. This is what brokers and financial advisors have to consider when it comes to ethics and suitability for clients.
So, now you have your caveat emptor warnings and you can see the major calls in stocks under $10 from this past week. To generate these nine stocks under $10, we reviewed more than a couple hundred analyst report summaries.
These are the nine analyst stocks we tracked this past week that were trading under $10 and have huge implied upside, if the analysts are correct in their calls.
Ampio Pharmaceuticals Inc. (NYSEMKT: AMPE) saw a gain of more than 4% on Friday to $8.31, after Jefferies started coverage with a Buy rating and assigned a $14 price target. The driver is enrollment in its eye study trial has ended. While this biotech player has an implied upside of 68% to the Jefferies target price, the 52-week range is $5.06 to $10.86, and a call from Citigroup in May gave Ampio a whopping $21 price target.
Atlantic Power Corp. (NYSE: AT) is back again in the analyst calls under $10, with Imperial Capital starting coverage as Buy and with a $7 price target this last Thursday. The $473 million small cap power generation player has a 52-week range of $2.11 to $5.36. This $7 target is the highest among analysts by far, and shares rose 4% on the upgrade and another gain of almost 6% on Friday to close out at $3.92. Imperial’s upside was nearly 100% when it made the call, and the new street-high target is still close to 80%.