Stocks are looking for their footing after having hit new all-time highs in the prior week. Volatility has returned, but investors are looking at individual stock picks rather than just trying to ride a tired bull market. 24/7 Wall St. reviews dozens of analyst research reports each day of the week for new ideas for our readers.
We generally see many upside and downside stocks in these reports, but it seems that the low-priced stock trading under $10 often comes with massive upside potential in some of these analyst calls.
24/7 Wall St. would remind readers that low-priced and small cap stocks generally have more implied risk than most established stocks. Still, many investors are attracted to lower-priced high-volume stocks because they often think there can be more room for upside ahead. In fact, you often see upside price targets signaling implied upside of 50%, 100% or even more — something you almost never see in Dow Jones Industrial Average stocks.
In the consideration of risk and suitability, very few of these sub-$10 stocks would generally 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.
These are the 12 analyst stocks we tracked this past week that were trading under $10 and have huge implied upside in their research reports.
Apollo Investment Corp. (NASDAQ: AINV) was raised to Buy from Neutral with a $10 price target (versus an $8.56 close, and versus an $8.83 consensus target at the time) at SunTrust Robinson Humphrey on Wednesday. Keep in mind that this is one of the controversial business development companies that yields more than 9%. Now the consensus price target is up at $9.05, and the $8.72 close implies upside of almost 15% — plus the 9.2% yield.
DHT Holdings Inc. (NYSE: DHT) was started as Buy with a $10 price target (versus a $6.64 prior close) at Canaccord Genuity on Wednesday. The firm noted that the company has double the hull and double the ton, and fortunately the stock was up only a penny higher to $6.65 by the time Friday’s close rolled around. This implies upside of 50%.
Groupon Inc. (NASDAQ: GRPN) has had a hard time finding many fans, but B. Riley has jumped on board of the daily deals site. Groupon was raised to Buy from Neutral on Tuesday with a $9.50 price target. This was compared to a prior $6.45 close, and shares were up another 1% to $6.58 on Friday, which still implies potential upside of 44% if the firm is right. That $9.50 price target is almost $1 higher than the Groupon consensus price target.