24/7 Wall St.

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.

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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.

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Additional calls and risk disclosures and warnings are seen as follows:

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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