Investing

9 Analyst Stock Picks Under $10 With Massive Upside Calls

Bazaarvoice Inc. (NASDAQ: BV) was raised to Buy from Neutral at B. Riley on Friday, with what seems like a big $8.50 price target. This user-generated content solutions provider for brands and businesses had closed at $5.78 before the call, and it closed out the week at $6.09. What stands out is that the consensus price target is almost $10.00. The upgrade was also just a week ahead of earnings, and Bazaarvoice had been started as Buy at Needham just a week earlier.

Coeur Mining Inc. (NYSE: CDE) was started as Buy and with a $6.50 price target (versus a $5.47 close) at Roth Capital. The late-week call is right in line with other analyst calls, as the consensus analyst price target is $6.51.

CTI BioPharma Corp. (NASDAQ: CTIC) was reiterated as Buy with a fair value estimate of $3.50 at Janney Capital Markets after the American Society of Clinical Oncology (ASCO) presentation. The prior closing price was $1.94, but shares traded as high as $2.40 before closing out the week at $2.05. Janney is very positive here and expects more good news for an approvable path for pacritinib trial in myelofibrosis.

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Vical Inc. (NASDAQ: VICL) was given what is a very controversial call because it implied exponential upside. Maybe that is because this is an all-or-none call in a company that has been a massive disappointment. Roth Capital started Vical as Buy on Tuesday, and its massive upside price target was all the way up at $4.65. This was against a prior $0.88 close, and shares closed out the week at $0.98. Calling for 300% upside must come with at least some significant risks.

So, back to those risk disclosures about small-cap and low-priced stocks. This is very important, and not considering risks can come with some very serious disappointments and potential losses.

If analyst calls in Dow or S&P 500 stocks generally come with upside projections of 10% to 20%, what does it tell you when you see other calls for upside of up to 100%, or even more? It means there is a lot more risk.

Investors often expect or give too much weight to what analysts on Wall Street have to say. Analyst calls often fail to live up to expectations, and in many cases the analysts covering a stock have the same or hardly any more intimate knowledge about a company and its industry than investors.

Some analyst reports feel like they are all-or-none calls, the proverbial Hail Mary pass. Some stocks with small market caps and low share prices languish for a decade. Some of them get delisted, and some even implode. While there are young companies that eventually will grow up into multibillion giants, the reality is that most companies that are listed on the Nasdaq or New York Stock Exchange have limited total addressable markets, and some of them just may never make it above a certain size.

Lastly, small-cap and low-priced stocks are generally only suitable for the least risk-averse investors. Conservative investors, retirees and the so-called widows-and-orphans investors better stick to larger capitalization stocks, with dividends, years of operating history and a businesses that are deemed very stable.

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