5 Stocks Trading Under $10 With Huge Upside Potential

Most firms on Wall Street focus on large- and mega-cap stocks, as they provide a degree of safety and liquidity. Unfortunately, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low to mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.

Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are onto a winner, as you can always sell half and keep half.

We screened our 24/7 Wall St. research database and found five stocks trading under the $10 level that could provide investors with some solid upside potential. While more suited for aggressive accounts, they could prove to be exciting additions to portfolios looking for solid alpha potential.

Arcos Dorados

This company may be way under the radar, but it has one of the best products imaginable in terms of name recognition. Arcos Dorados Holdings Inc. (NYSE: ARCO) is the world’s largest McDonald’s franchisee and Latin America’s leading quick-service restaurant operator. The company has exclusive rights to operate or subfranchise restaurants in over 20 countries in Latin America and the Caribbean. Brazil represents about half of revenues and nearly 60% of EBITDA.

Arcos Dorados was created in 2007 via the acquisition of McDonald’s assets in the region. The company completed a $1.4 billion initial public offering in April 2011. The company has posted solid results this year, with Mexico leading the way for momentum.

Merrill Lynch rates the shares at Buy and has a huge $12 price target. The Wall Street consensus target is $11.32, and the shares traded at $7.15 on Friday’s close.

Avadel Pharmaceuticals

While not very well known, this is another company with huge upside potential. Avadel Pharmaceuticals PLC (NASDAQ: AVDL) offers various drug delivery platforms, including Micropump, LiquiTime, Trigger Lock and Medusa. The company offers its products in various categories, including hospital (including Bloxiverz, Vazculep and Akovaz) and pediatrics (including Karbinal ER, Cefaclor for Oral Suspension, AcipHex Sprinkle and Flexichamber).

Bloxiverz is a drug used intravenously in the operating room for the reversal of the effects of non-depolarizing neuromuscular blocking agents after surgery. Vazculep is used to treat clinically hypotension resulting primarily from vasodilation in the setting of anesthesia. Akovaz is indicated to treat clinically hypotension in the setting of anesthesia. Cefaclor is indicated for the treatment of otitis media, lower respiratory infections, pharyngitis and tonsillitis, urinary tract infections, and skin and skin structure infections, caused by susceptible organisms.

SunTrust has a Buy rating and a huge $13 price target. But that compares with a consensus target set even higher at $16.95. The shares closed on Friday at $6.82 apiece.

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