Volatility is back, with two weeks in a row of big sell-offs followed by big gains. What this means is that investors and traders remain more than eager to find stocks that are getting oversold or have been overlooked or stocks that are viewed as undervalued. 24/7 Wall St. reviews dozens of analyst reports each morning, and this turns into reviewing hundreds of analyst reports each week. Some reports cover stocks to buy, while others cover stocks to sell.
Many investors think that stocks trading under $10 offer more value than stocks with high prices. Similarly, many investors think they can find better value and upside potential in small-cap stocks rather than in Dow Jones Industrial Average stocks. This is of course not universally true, but what is different in low-priced and small-cap stocks is that the analysts who cover them often have price targets that predict 50%, 100% or much more upside. You just don’t see analyst calls like that in Dow and S&P 500 stocks.
We would like impress on readers that these stocks are much riskier than normal. Almost none of these low-priced or small-cap stocks would pass the traditional “widows and orphans” suitability test. Another serious risk is that many speculative analyst stocks simply fail to live up to expectations. Some even crash and burn.
Here 24/7 Wall St. has covered eight such stocks under $10 with major analyst calls. At the end are two runners up that almost but were not under the $10 mark at the end of the week. We have included a research summary of each analyst call, as well as a note tied to the price, value or trading range, and some color has been added on each.
AK Steel Holding Corp. (NYSE: AKS) was raised to Buy from Hold by Deutsche Bank on Thursday. The firm assigned it with a $10 price target when shares had been trading at only $7.25 as of the prior close. The stock swung around with a volatile market, but AK Steel shares were up almost 4% at $7.53 shortly after the call, and the stock was up at $7.74 late on Friday, against a 52-week range of $3.81 to $11.37. For both sides of the coin — KeyBanc muted the gains with a lower earnings target signaled on the same day, and Citigroup assigned a new Sell rating just the week before.
Nxt-ID Inc. (NASDAQ: NXTD) has been hyper-volatile after being tied to the Apple Pay news and on the Wocket hopes. The last day of September brought a 7% rally in the stock to $2.56 after a firm called Northland Securities issued a new Outperform rating and $6 price target. Its 52-week range is $1.36 to $7.25, and it has warrants trading under NXTDW after a recent capital raise. This would have represented 134% upside if the firm’s target was realized, but shares were up massively on Friday around $3.75 in late-day trading. Note that Northland was in the underwriting syndicate with Benchmark and Newport Coast Securities for a small financing on September 10. As we have asked before: What is a fair price for this stock?
Hecla Mining Co. (NYSE: HL) was raised to Buy from Hold with a $3.50 price target at BB&T Capital Markets on Wednesday. The prior close was $2.48, and that is where the stock was late on Friday as well — implying 40% upside. Just keep in mind that the cratering gold and silver prices allowed the stock to hit a 52-week low as well.
There are five other analyst calls in stocks under $10 worth noting as well, followed by the two runner-up stocks that went slightly above the $10 mark by late Friday.