The week of July 15 amazingly brought new highs for the S&P 500 and the Dow Jones Industrial Average. Many investors have supposedly gotten out of many stocks, and there have been many unusual hurdles for the current bull market. The reality is that investors are still looking for ways to find value and make money.
24/7 Wall St. reviews dozens of analyst research reports each morning, which ends up being hundreds of them each week. The goal is to find new investing and trading ideas for our readers. Some analyst reports cover stocks to buy, while others feature stocks to sell or to avoid.
When it comes to the stocks that analysts want you to buy, the projected upside in Dow and S&P 500 stocks is generally in the range of 8% to 15% at this stage of the bull market. But there are very speculative companies that often come with far higher upside projections of 25%, 50% or even over 100%. These are often in stocks with micro-cap or small cap valuations, or in stocks under $10 per share.
Before investors get too excited to hear about upside calls of this magnitude, there are some real life issues that can get in the way. Sometimes analysts just get their views entirely wrong. Sometimes outside forces or unexpected events scuttle the upside story. Sometimes management just blows it. And then there is the notion that what was hoped to be just could not be or was not accomplished due to the limitations of today.
It is important to remember that there is no free lunch on Wall Street. There are even instances when analysts and investors make huge upside predictions that actually come true but the market just won’t value the underlying story at what was once hoped. It happens, and sometimes these companies go into zombie mode or even implode and disappear.
Here are nine stocks under $10 in which analysts gave massive upside calls during the week of July 15. In an effort to keep readers from only considering the bullish case here, 24/7 Wall St. has tried to provide offsetting remarks or another side of the story in some cases. After all, we wouldn’t want you thinking that we believe all these grandiose upside scenarios will magically happen, as if they were preordained.
Nokia Corp. (NYSE: NOK) won several mid-week comments from analysts on its ability to win from the latest licensing pact extension with Samsung. Merrill Lynch, JPMorgan and BMO Capital Markets all chimed in with very positive analyst calls. Nokia could be a winner in advanced communications, and the Alcatel-Lucent merger left Nokia with a clean balance sheet. Shares closed at $5.92 on Friday, in a 52-week range of $5.01 to $7.63 and with a market cap of almost $34 billion. Nokia’s consensus analyst price target for its American depositary shares is $7.09. The flip side of Nokia of course is that its great upside stories have always seemed to run into hiccups in a very competitive field, and ditto for the Alcatel-Lucent operations. Also, mergers of this sort can be extremely difficult to make work due to corporate and international cultural integration risks.
Oasis Petroleum Inc. (NYSE: OAS) was raised to Buy from Neutral with a $12 price target at Ladenburg Thalmann. This July 13 call compared with a $9.33 prior close, but Friday’s closing price was down at $8.64. Oasis has a $11.60 price target, but analyst targets go as high as $20.00 for this speculative oil stock. Its 52-week range is $3.40 to $14.15. On the more cautious side, investors should keep in mind that Oasis is expected to lose money in 2016 and 2017, and it may even lose money in 2018, based on current consensus estimates.