6 Analyst Stocks Under $10 With Strong Upside Potential

July 26, 2014 by Jon C. Ogg

Stocks ended this last week on a very rough note, but we also saw yet another new high in stocks earlier in the week as well. This bull market feels as though it is migrating to a stock picker’s market, where investors look for upside in individual companies rather than broad rallies. This brings up the stocks under $10 where investors think they can have well above average gains.

24/7 Wall St. reviews dozens of analyst research reports each day of the week for new ideas for our readers. We often see big upside or downside in many analyst calls, but in stocks trading under $10 is where we often see calls for stocks to rise 50%, 100% or even exponentially. In order to come up with the weekly list of stocks under $10, it usually requires going back through 200 to 300 analyst calls to filter out the microcap companies or oddball calls.

Readers must know that low-priced and small-cap stocks generally have more implied risk than most established stocks. For instance, investors almost never get to see upside targets issued on Dow Jones Industrial Average and S&P 500 stocks with this sort of magnitude. Another consideration with small cap or low-priced stocks under $10 stocks is that these would almost never pass a “widows and orphans” suitability test for investors.

These are the five analyst stocks under $10 that made the grade this week, with a runner-up included due to it only recently rising above $10.

Amphastar Pharmaceuticals Inc. (NASDAQ: AMPH) is still a new public company, and its quiet period ended this past Monday. BMO Capital Markets issued an Outperform rating and $17 price target. Needham issued an Outperform rating and $17 price target. Piper Jaffray started it as Overweight with a $16 price target. Jefferies issued a Buy rating, but with a less bullish $14 price target. Amphastar closed at $9.55 prior to the new analyst calls, and shares were down at $9.30 later in Monday trading, ultimately sliding to $8.98 by Friday’s close.

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FormFactor Inc. (NASDAQ: FORM) was reiterated as Buy at Stifel Nicolaus on Friday, but the real move was that the price target was raised to $10.00 from the prior target of $9.00 in the call. With a weak market sending shares down 4.4% to $6.94, this leaves an implied upside of 44% for this front-end semiconductor company. This call was also ahead of earnings due next Wednesday. We would remind readers that we have seen some very mixed reports from chip-related companies.

Gol Linhas Aéreas Inteligentes S.A. (NYSE: GOL) was raised to Buy from Neutral at Bank of America Merrill Lynch on Monday. It was given an $8 price target, versus a $5.80 close, implying around 38% upside. Merrill Lynch downgraded two other Latin American carriers in the same call. Note though that GOL Linhas closed at $6.40 on Friday.

Huntington Bancshares Inc. (NASDAQ: HBAN) barely made the under $10 category because its stock closed at $9.98 on Friday. The stock was raised to Outperform with an $11.50 price target (versus a $9.74 close) at Keefe Bruyette & Woods on Tuesday. The consensus price target is only $10.59 here.

VimpelCom Ltd. (NYSE: VIP) is a telecom and mobile communications provider with extensive exposure to Russia, Ukraine and the Commonwealth of Independent States. So Russia exposure is bad, right? Maybe not. On Thursday came a report from Merrill Lynch raising the rating to Buy from Neutral and giving it a $10.50 price target, implying 30% total return from when the call was made. The firm said all roads lead to Rome, with Russia bottoming and a merger in Italy. The team feels the stock is unfairly cheap.

ALSO READ: Analyst Sees Huge Upside in Petrobras Ahead of Elections

As a runner-up call, RF Micro Devices Inc. (NASDAQ: RFMD) has only just risen over $10 in recent weeks. It was previously on the under $10 analyst calls for the stocks with big upside and now the stock trades at $10.89. Many analysts raised their targets on Friday after it beat earnings and raised guidance. Needham raised its target to $12 from $10, Raymond James to $13 from $10.50, Canaccord Genuity to $12.50 from $9.50 and a firm named Northland Securities raised its target to $15 from $11.

In case you missed Friday’s top analyst upgrades and downgrades, these included Amazon.com, Brightcove, Exxon Mobil, GM, Mylan, Petrobras, Twitter and many more. Last week’s analyst stock picks under $10 actually included a dozen stocks, including Aerohive, B2Gold, Glu Mobile, Kinross Gold, Wendy’s and more.