6 Analyst Stock Picks Called to Rise 50% to 100%
24/7 Wall St. wanted to delve deeper into the risks and disclosures that investors genuinely need to consider in very aggressive analyst calls. It turns out the when analysts have very aggressive price targets calling for 50% or 100% upside, there is often a big chance for disappointments and the losses can be far greater than seen in most Dow and S&P 500 stocks during a market pullback.
Investors also need to understand that Wall Street analysts are often given more credit or clout than they deserve. Many of these analyst calls often fail to live up to individual analyst’s expectations. It is quite common for these analysts to have only the same or hardly any more intimate knowledge about a company and the sector than sophisticated institutional investors or than individual investors who become experts in companies in sectors.
Another consideration is that some speculative analyst reports even feel like they are all-or-none calls, or a proverbial Hail Mary pass. Some stocks with small market caps and low share prices can flounder for a decade or more. And worse, some of those stocks end up getting delisted or just implode.
While there are many younger emerging companies that eventually grow up into multi-billion-dollar giants, the reality is that most companies have limited total addressable markets. Also, some of the companies are just niche companies that simply may never make it above a certain size.
A last warning about highly speculative analyst calls is that these are generally only suitable for the most aggressive investors and traders. Conservative investors, retirees and the so-called widow-and-orphan investors need to stick to larger well-known stocks, with dividends and years of operating history in businesses that are deemed very stable.