8 Analyst Stocks Under $10 With Major Upside Calls

October 4, 2014 by Jon C. Ogg

ten dollarsVolatility is back, with two weeks in a row of big sell-offs followed by big gains. What this means is that investors and traders remain more than eager to find stocks that are getting oversold or have been overlooked or stocks that are viewed as undervalued. 24/7 Wall St. reviews dozens of analyst reports each morning, and this turns into reviewing hundreds of analyst reports each week. Some reports cover stocks to buy, while others cover stocks to sell.

Many investors think that stocks trading under $10 offer more value than stocks with high prices. Similarly, many investors think they can find better value and upside potential in small-cap stocks rather than in Dow Jones Industrial Average stocks. This is of course not universally true, but what is different in low-priced and small-cap stocks is that the analysts who cover them often have price targets that predict 50%, 100% or much more upside. You just don’t see analyst calls like that in Dow and S&P 500 stocks.

We would like impress on readers that these stocks are much riskier than normal. Almost none of these low-priced or small-cap stocks would pass the traditional “widows and orphans” suitability test. Another serious risk is that many speculative analyst stocks simply fail to live up to expectations. Some even crash and burn.

ALSO READ: Analyst Still Sees Zogenix Potentially Doubling

Here 24/7 Wall St. has covered eight such stocks under $10 with major analyst calls. At the end are two runners up that almost but were not under the $10 mark at the end of the week. We have included a research summary of each analyst call, as well as a note tied to the price, value or trading range, and some color has been added on each.

AK Steel Holding Corp. (NYSE: AKS) was raised to Buy from Hold by Deutsche Bank on Thursday. The firm assigned it with a $10 price target when shares had been trading at only $7.25 as of the prior close. The stock swung around with a volatile market, but AK Steel shares were up almost 4% at $7.53 shortly after the call, and the stock was up at $7.74 late on Friday, against a 52-week range of $3.81 to $11.37. For both sides of the coin — KeyBanc muted the gains with a lower earnings target signaled on the same day, and Citigroup assigned a new Sell rating just the week before.

Nxt-ID Inc. (NASDAQ: NXTD) has been hyper-volatile after being tied to the Apple Pay news and on the Wocket hopes. The last day of September brought a 7% rally in the stock to $2.56 after a firm called Northland Securities issued a new Outperform rating and $6 price target. Its 52-week range is $1.36 to $7.25, and it has warrants trading under NXTDW after a recent capital raise. This would have represented 134% upside if the firm’s target was realized, but shares were up massively on Friday around $3.75 in late-day trading. Note that Northland was in the underwriting syndicate with Benchmark and Newport Coast Securities for a small financing on September 10. As we have asked before: What is a fair price for this stock?

Hecla Mining Co. (NYSE: HL) was raised to Buy from Hold with a $3.50 price target at BB&T Capital Markets on Wednesday. The prior close was $2.48, and that is where the stock was late on Friday as well — implying 40% upside. Just keep in mind that the cratering gold and silver prices allowed the stock to hit a 52-week low as well.

ALSO READ: 8 Stocks Analysts Predicted to Double or More

There are five other analyst calls in stocks under $10 worth noting as well, followed by the two runner-up stocks that went slightly above the $10 mark by late Friday.

Angie’s List Inc. (NASDAQ: ANGI) has reportedly put itself up for sale or is seeking strategic alternatives. The reviews website was raised to Market Perform from Underperform at Northland Securities. Shares were under $6.50 before the reports were made, and the stock was just over $8 in Friday afternoon trading. This upgrade might not sound like a Buy on the surface, but it removes one more “sell” rating. Think about this: maybe the company will have a name change to Someone Else’s List.

Eldorado Gold Corp. (NYSE: EGO) was raised to Sector Perform from Underperform by RBC Capital Markets on Friday. The gold company was given a $9 price target, versus a $7.08 prior closing price. The pressure on gold at the end of the week was too much for one analyst call to matter — the stock was down more than 2% at $6.92 late on Friday.

Orbitz Worldwide Inc. (NYSE: OWW) was raised to Outperform from Perform with a $9.50 price target by Oppenheimer on Wednesday, as it is one of the lower-cost producers. The travel site’s prior close was $7.87, and the stock was up at $8.02 late on Friday. The consensus price target was $9.58 here as well.

Silver Spring Network Inc. (NYSE: SSNI) was started with an Outperform rating at Raymond James on Friday. The small cap grid enhancement player was also assigned a price target of $13, versus a prior $9.48 close. Shares were up over 2.5% at one point on Friday. Interestingly enough, the consensus price target is actually up above $14 in this stock.

Zogenix Inc. (NASDAQ: ZGNX) submitted its supplemental new drug application to the FDA for Zohydro this past week, and Oppenheimer issued a favorable report with an Outperform rating and a $2.50 price target. This was also with the stock trading very close to a 52-week low and would be a call for Zogenix to more than double. What is odd is that Oppenheimer has the lowest price target of the group of analysts covering it. Shares were under $1.20 after the call, but the shares rallied on Friday and the stock was up 9% to $1.37 Friday afternoon.

ALSO READ: This Week’s Apple Analyst Downgrade Lacked Teeth

As with all analyst calls, the formal ratings and price targets can change rapidly. We do have two runner-up calls from this week as well. We did not include them in the formal eight stocks because of share price issues that took place in the aftermath of the calls.

Carbonite Inc. (NASDAQ: CARB) was given a new Buy rating and a whopping $16 price target at a firm called Lake Street Capital. The online storage stock traded under $10 on both Wednesday and on Thursday during the volatility, but Carbonite did not close under $10 on either day. A 2% gain also had shares up at $10.51 late on Friday. That is technically no longer under the $10 mark, but at least it still leaves about 50% implied upside. Just be advised that the consensus price target here is only $10.50.

Repros Therapeutics Inc. (NASDAQ: RPRX) was featured by a firm we generally do not see calls for stocks to double — Merrill Lynch issued a report on September 29 calling it a double after maintaining its Buy rating and a whopping $24 price target. With September’s close-out price of $9.90, this implies upside of about 140%, if the firm is correct. Amazingly, Repros has a consensus price target even higher, above $28, and its 52-week range is $8.46 to $27.52. Unfortunately, this stock was around $10.53 late on Friday, so that “under $10” category was opportunistic in time.

Last week’s analyst stocks under $10 with massive upside calls included Alcatel-Lucent, DSP Group, IGI Labs, Immunomedics, MagicJack, Maxwell Tech and others. Also, Friday’s key analyst upgrades and downgrades included Apple, Cliffs Natural Resources, Cree, Salesforce.com, SunPower and a dozen or so more.

ALSO READ: Analyst Sees Cliffs Natural Going off the Cliff

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