Stocks ended this past week on a very rough note, with the Dow having seen its first one-day drop of more than 300 points this year. The Dow has also dipped into negative territory for the year now. Investors do not seem panicked by the drop. In fact, many investors have decided to effectively put together a shopping list of stocks that they missed out on and they will buy if the shares fall back to bargain levels. It turns out that investors are mindful of the notion that the worst month for stocks is August.
24/7 Wall St. reviews hundreds of Wall Street research reports each week. We see many calls for strong gains in analyst reports, but the small-cap stocks and stocks trading under $10 often come with massive potential compared to the analyst price targets. We sometimes even see calls for these stocks to rise 50%, 100% or even exponentially.
Some caveats and common sense reminders should be brought up here. Keep in mind that low-priced and small-cap stocks generally have more implied risk than most established Dow and S&P 500 stocks. You almost never hear of an analyst report calling for Dow stocks to rise 50% or 100%. Another consideration with small-cap stocks or those under $10 is that they would almost never pass a “widows and orphans” suitability test for investors.
These are this past week’s analyst stock picks trading under $10 with massive upside potential.
Groupon Inc. (NASDAQ: GRPN) was reiterated as Buy with a $12 price target on Friday by Sterne Agee. What is interesting is that this compared to a $6.47 prior close and a $6.46 close on Friday. The call is also immediately ahead of earnings on August 5, and the firm expects 23% revenue growth, but that is driven by international growth rates, which are almost 200% higher than that of domestic growth.
Glu Mobile Inc. (NASDAQ: GLUU) was shown as having a strong second quarter and strong guidance at Canaccord Genuity on Thursday. The firm raised its price target to $8.00 from $5.50, but the stock slid on weak margin concerns and on some obvious profit taking. Maybe people realized that the Kardashian game is a waste of time. Glu Mobile closed down at $5.72 on Friday.
Huntington Bancshares Inc. (NASDAQ: HBAN) was raised to Outperform from Sector Perform and it was given a $12 price target at RBC Capital Markets on Thursday. The prior close was $9.91, but the stock slid with the sell-off and closed at $9.70 on Friday. That still leaves close to 25% upside, higher than you see in most banks.
SLM Corp. (NYSE: SLM) was raised to Buy from Neutral with a $10 price target, versus a prior $8.82 close, at Janney Capital Markets on Thursday. Shortly before the close of trading on Friday, the stock was up to $8.94. This is only an implied upside of 12%, but note that the consensus analyst price target here is $10.63.
The rest of the analyst stock picks under $10 are listed below.