With the bull market now six years old and with a Federal Reserve expected to finally begin raising interest rates in the months ahead, investors get jittery any time there is a week when stocks sell off. Still, one trend that has held true for almost four years now is that investors buy stocks on every pullback. 24/7 Wall St. reviews dozens of analyst upgrades and downgrades each day of the week to find hidden values and to find new trading and investing ideas for its readers. Some calls cover stocks to buy and some cover stocks to sell.
Most price targets from analysts in Dow and S&P 500 stocks call for upside of 10% to 20%, but in small-cap and low-priced stocks you often see calls for upside of 30%, 50% or even 100%.
The first thing that investors need to consider here is that small-cap stocks come with much more risk than traditional Dow and S&P 500 stocks. We have given much more detailed exposure on the risks of small-cap and low-priced stocks with big analyst calls on the second page of this article, and investors should not overlook that — with several runner-up analyst calls in stocks under $10 mentioned as well.
Ambev S.A. (NYSE: ABEV) is a big player in distribution of beer, soft drinks, food and other consumables throughout Latin America. At the start of last week we saw that JPMorgan raised its rating to Overweight from Neutral. The firm also gave Ambev a $6.50 price target. Shares were at $5.75 before the call, and they closed out the week at $5.92. What stands out here is that the consensus price target is up closer to $7.00, so JPMorgan is far from stepping out on a limb here, despite calling Ambev Overweight.
Frontier Communications Inc. (NASDAQ: FTR) remains a highly controversial name and a battleground stock due to its telecom dividend yield of close to 8%. 24/7 Wall St. showed a post-merger analysis that was partly from Wells Fargo showing the dividend is going to be safe after the merger and after the stock and convertible offerings. Wells Fargo’s valuation range is $8.50 to $9.00, well above the consensus target of $6.73. There were two other identified brokerage calls this past week as well. Frontier was raised to Outperform from Market Perform with a price target of $6.00 at Raymond James, while the firm D.A. Davidson raised shares to Buy from Neutral with a $6.50 price target.
Gold Fields Ltd. (NYSE: GFI) was raised to Outperform from Sector Perform at RBC Capital Markets on Tuesday. There were also two analyst upgrades from the prior week in Gold Fields. Deutsche Bank raised it to Hold from Sell, and HSBC raised its rating to Buy from Hold. Price targets here are often elusive due to the company being South African, but at $3.19, the stock has a 52-week trading range of $3.09 to $6.01. Thomson Reuters has a consensus price target of $4.25. Gold Fields also has a market cap of almost $2.5 billion.
Groupon Inc. (NASDAQ: GRPN) may still have many issues, but some substantial upside could remain. The daily deals and discounting site was started with a Buy rating and price target of $8.50 at Deutsche Bank late in the week. This was versus a $6.00 prior close and a consensus price target of almost $8.50. This implies over 40% upside in Groupon. However, we also saw that the firm B. Riley downgraded Groupon to Neutral from Buy Thursday.
PMC-Sierra Inc. (NASDAQ: PMCS) was initiated with a Buy rating at Craig-Hallum this week. What stood out here was the $13.50 price target, versus the $10.75 consensus target. This is actually now the highest analyst target, and while shares closed at $9.23 on Friday, versus the $8.96 pre-call close, it still implies an upside of 46%. PMC-Sierra has a 52-week range of $6.52 to $9.86 and a market cap of almost $1.9 billion.
Additional calls and risk disclosures and warnings are seen as follows: