The stock market has gotten off to a rough start in 2015. The Dow Jones Industrial Average was down about 3% for January late Friday trading. However, investors should recall that 2014 was another positive year even though the Dow started off down 5.2% during the first month of that year.
What investors have done all through the second half of this six-year old bull market is that they have bought solid stocks on dips. 24/7 Wall St. reviews dozens of brokerage and independent analyst research reports each morning to find new trading and investing ideas for our readers. Some of the analyst calls cover stocks to buy, and others cover stocks to sell.
There is another side of Wall Street research outside of Dow stocks and large cap stocks, and that is the small cap stocks and stocks with share prices under $10. When possible, 24/7 Wall St. accumulates and publishes summaries of those analyst stock picks trading under $10 — and this week we tracked eight analyst calls in stocks that were under $10.
Investors may get excited because these are low-priced stocks or because they have low market caps. After all, someone has to eventually grow up to be the next behemoth with exponential possible returns. Still, 24/7 Wall St. wants to again make the firm reminder that these stocks, with small market caps and with prices under $10, are generally far more risky than your Dow stocks and well-established companies.
Investors need to know that the risk profile is far worse in small caps and low-priced stocks than in normal companies with large established values. Almost none of these would pass a “widows and orphans” suitability test. And to emphasize risk even further, some stocks of this sort might not even survive as viable entities through time.
Of the eight stocks under $10 with key analyst calls this past week, we have one gold stock, two were solar, two were financials, and three were technology. We show the current price and the prior price to the close, the analyst target price named, the consensus analyst price target, and even a 52-week range. Some color was added on each as well.
First Niagara Financial Group Inc. (NASDAQ: FNFG) was raised to Buy from Hold at Jefferies at the start of the week, after beating earnings expectations the prior week. The price target was also put at $9.50, which now is a street-high price target. Shares of the regional bank closed at $8.25 after the upgrade, and they were back down to $8.11 in mid-Friday trading. This bank’s market cap is still small, at just under $3 billion. Its 52-week range is $7.00 to $9.61, but note that First Niagara’s consensus price target was $8.12 on Friday’s close.
Genworth Financial Inc. (NYSE: GNW) was started as Buy at Jefferies on Friday. What stands out here is that the $10 price target, versus a $6.94 prior close and a Friday close $6.98, implies upside that is above 45%. Genworth has been a truly troubled stock over time, and the turnaround that was taking a hold blew apart on it early last November. Genworth’s 52-week trading range is $6.75 to $18.74, and the consensus analyst price target is almost $12.