The stock market has again challenged new all-time highs and the Nasdaq is over that elusive tech-bubble peak above 5,000 again. So what if it took 15 years to get back? The current bull market is also over six years old.
With many Wall Street analysts and market strategists calling for even more upside from stocks ahead, investors are on the hunt for value stocks and companies that are either undiscovered or overlooked by the rest of the market.
24/7 Wall St. reviews dozens of analyst reports each morning. The goal is quite simply to find new trading and investing ideas for our readers. While some analyst calls cover stocks to buy and some cover stocks to sell, the weekend reviews of all analyst calls leaves many stocks that are trading under $10 in which analysts see enormous upside potential. The caveat here is that low-priced or small-cap stocks often come with more risk than Dow or S&P 500 stocks.
Analyst calls in Dow Jones Industrial Average stocks may be for upside of 10% or 20%. In the low-priced or small-cap universe, analysts often issue upside calls of 30%, 50% or even 100%. That also confirms that the stocks are much riskier by nature — the higher the risk, the higher the potential reward.
24/7 Wall St. would remind its readers that analyst calls frequently do not live up to expectations. Some of the riskier stock calls even feel like they are all-or-none gambles. To prove the point, some of these less than $10 stocks remain as small-cap stocks for years. Many of them even implode, or end up getting delisted.
Investors sometimes believe that small-cap and low-priced stocks eventually grow into huge companies. If history has proven one point, it is that only a few companies make it big while many languish or fail.
These are the eight analyst stock picks under $10, and they have been broken out into two groups to highlight the riskier picks from the far more risky picks.
With Callaway Golf Co. (NYSE: ELY), it was unclear whether it would make the under $10 club, but a $9.89 closing price on Friday let it slide under the radar. Of course it took a slight sell-off after earnings to get there, as well as a downgrade to Market Perform from Strong Buy at Raymond James. Still, there was one call that was meant for long-term value and special situation investors. Jefferies gave Callaway a huge price target of $16 earlier in the week, but it was no earnings analysis — it was about the rekindled interest in golf from youngsters, and its stake in TopGolf.
Grupo Aval Acciones y Valores
Goldman Sachs raised Grupo Aval Acciones y Valores S.A. (NYSE: AVAL) to Buy from Neutral on Wednesday. This was at $9.19 prior to the upgrade, and the American depositary shares (ADSs) rose 3.2% to $9.49 on the day of the upgrade. It also closed even higher at $9.69 on Friday, and it has a 52-week range of $8.45 to $13.92. As this was an ADS call, there is no official U.S.-listed price target seen for this bank and financial services provider based in Colombia.
On Tuesday, Groupon Inc. (NASDAQ: GRPN) was reiterated as Buy with a $12 price target at Sterne Agee. This call was on the heels of the company’s Ticket Monster stake sale and its $300 million stock buyback announcement. After closing at $7.11 on Friday, this leaves implied upside of close to 68%, if the firm’s target lives up to plan. Just keep in mind that this is far more aggressive than the $8.89 consensus price target, and it is well above the 52-week range of $5.18 to $8.43. In fact, readers might want to consider that $12 is also the highest analyst price target of all 19 analysts that Thomson Reuters identifies with formal price targets.