Investors often hear about analyst upgrades and new “Buy” ratings. What they do not hear from most Wall Street analysts is the prediction that a stock price could double or come close to doubling. Most analysts do not want to get that bold by predicting “the next Apple” because a call like that can wreck a career. These all come with high risk, but some investors might be inclined to consider these as being extreme value stocks based on the projected upside.
Most stocks simply do not double over the course of a year, and identifying the next double, or ten-bagger, generally has a lot of risk that companies like 3M and GE just do not have. Such calls generally come from boutique research firms, but that is not always the case.
Ocean Power Technologies, Inc. (NASDAQ: OPTT) and XOMA Corporation (NASDAQ: XOMA) were highlighted as stocks which could more than double by analyst calls On Thursday. Deckers Outdoor Corporation (NASDAQ: DECK) is a runner-up as the call was close enough to a double that it caught our attention from the same day, and a call from Monday on Pure Cycle Corp. (NASDAQ: PCYO) will catch the eyes of small-cap and speculative investors with the risk appetite for such a small stock.
Ocean Power Technologies, Inc. (NASDAQ: OPTT) has been long forgotten by most of the green energy and renewable energy investing crowd. The company makes systems that harness the energy of ocean waves for its power. A firm called Ascendiant Capital called it a new Strong Buy and issued a $5.00 price target. What is interesting here is that shares are up over 35% at $2.00, but the stock closed at $1.48 on Wednesday. That was a prediction of more than 200% upside, and the market cap even after the run higher is still only $21.6 million or so. Ascendiant said it was under its real value and said that its technology could be worth $50 million or more just for its intellectual property and operating knowledge. Ascendiant also warned that it may need to raise capital as well.
XOMA Corporation (NASDAQ: XOMA) is surging after Canaccord Genuity raised its rating to Buy and gave an $8 price target. This stock closed at $3.13 on Wednesday and the stock is up 27% at $3.98 so far on Thursday. Thursday’s upgrade was on the heels of earnings showing that it expects positive drug study results very soon.
Deckers Outdoor Corporation (NASDAQ: DECK) is one of the companies which was nearly called a double. Jefferies gave a very positive review of specialty retail stocks and this was the top call from the firm. Jefferies has a street-high target price of $100 versus only about $62 from the consensus analyst estimates. This represents implied upside of 80% if Jefferies is right. The call has been largely ignored because the stock is down 1.3% at $54.80.
Pure Cycle Corp. (NASDAQ: PCYO) was given a Strong Buy rating from Feltl & Co. along with a $12.00 price target last Friday. This implied right at 100% upside to the $6.09 closing bell price from last Friday as the pre-call closing price. This small water and wastewater systems operator in Colorado was worth a mere $158 million in market cap, even after the strong call brought on close to a 10% rally in the shares. Our only caution here is that this was the only research call we have seen in shares of Pure Cycle.
As a reminder, these are outside calls from analysts. It is very unlikely that most investors have even heard of all four of these stocks before.