Stocks hit a new all-time this last week on the heels of a strong unemployment and jobs number. Now investors have to decide whether the next year or more will simply be a sustained bull market or if it will be a stock picker’s market. 24/7 Wall St. reviews dozens of analyst research reports each day of the week for new ideas and hidden gems for our readers. We generally see many upside and downside stocks in these reports, but stocks trading under $10 often have massive upside potential in these analyst calls.
24/7 Wall St. of course wants to remind readers not to ignore the risks here. Stocks under $10 are often among the riskiest in the stock market. Only four of the stocks in the S&P 500 Index have share prices under $10, and only one is under $9.
Many investors are attracted to lower-priced high-volume stocks. Whether this is true remains a constant debate, but many of the investors believe that there is larger room for upside.
You almost never see an analyst say that a Dow Jones Industrial Average (DJIA) stock has 50% upside or more. You frequently hear the analysts covering speculative stocks showing upside of 50%, 100% or even more.
Very few of these sub-$10 stocks would pass a “widows and orphans” suitability test. This is what brokers and financial advisors have to consider when it comes to ethics and suitability for clients.
All caveat emptor (buyer beware) warnings aside, you can see the major analyst calls in stocks under $10 from this past week. Just to come up with a list of this sort, it requires filtering through hundreds of analyst report summaries.
These are the ten analyst stocks (plus three runners up) we tracked this past week that were trading under $10 and have huge implied upside, if the analysts are correct in their calls.
Amicus Therapeutics Inc. (NASDAQ: FOLD) provided a final analysis plan for its Phase 3 Fabry monotherapy study with top-line data coming in the third quarter. Deutsche Bank liked the news earlier in the week and raised the rating to Overweight, sending the stock up more than 20% to $3.68 on Monday. Then came more upgrades: to Buy from Neutral at Janney with a $5.00 price target (from $2.50) and to Outperform from Market Perform at Leerink Swann. Amicus shares were up more than 5% to $4.20 late in the week. Maybe that eats up the upside potential, but the consensus price target is still up at $6.00, implying close to 50% upside.
Alcatel-Lucent S.A. (NYSE: ALU) was raised to Overweight from Neutral at J.P. Morgan on Wednesday. The French communications equipment turnaround saw shares pop about 4% to $3.67 on Wednesday, and the stock closed the week at $3.70. This turnaround remains ongoing, but there is still almost $1.00 more before its 52-week high even comes into play. Imagine if the turnaround really starts to eventually work.
Enphase Energy Inc. (NASDAQ: ENPH) was started with a Buy rating and given an $11 price target at Canaccord Genuity on Wednesday. The stock had a great week, and the share price was up another 3% to $9.36 at the end of the week. Keep in mind that Enphase was also named as one of our alternative energy stocks with massive upside potential, and $11 might be very conservative if the company lives up to our solar expectations.