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.
24/7 Wall St.Ferroglobe
This stock was absolutely hammered back in the spring and could be offering investors an outstanding entry point. Ferroglobe PLC (NASDAQ: GSM) produces silicon metal and silicon- and manganese-based alloy, which serves customers in the chemical, aluminum, solar, steel and ductile iron foundry industries.
The company operates through two segments. Its Electrometallurgy segment includes its coal- and quartz-mining operations and its silicon metal and ferroalloy production. The Energy segment consists of its hydroelectric power operations, which currently operate approximately 20 production smelting facilities in the field of electrometallurgy.
Stifel’s Buy rating comes with a massive $13 price objective. The posted consensus price target is $15.40, and the shares were last trading at $7.98.
Sirius XM
This stock has been on a roll this year and looks poised to go higher. Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world’s largest radio company, measured by revenue, and has approximately 33.1 million subscribers.
Sirius creates and offers commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and a wide range of Latin music, sports and talk programming. Sirius is available in vehicles from every major car company and on smartphones and other connected devices as well as online.
Sirius is also a leading provider of connected vehicles services, giving customers access to a suite of safety, security, and convenience services, including automatic crash notification, stolen vehicle recovery assistance, enhanced roadside assistance and turn-by-turn navigation.
Merrill Lynch has a Buy rating, and its $8 price target soon may be going higher. The consensus price target is just $6.89, but the shares ended the week at $7.11.
WisdomTree Investments
This asset manager remains an up-and-comer in the exchange traded fund business, with many specialized ETF offerings. Wisdom Tree Investment Inc. (NASDAQ: WETF) currently has over $30 billion in assets under management and continues to benefit from the movement toward ETFs. This is especially true with the specialized currency hedged products, with the potential for significant uptake in interest rate hedged products.
The company has developed proprietary indexes rather than tracking third-party indexes. Its product offering of specialized ETFs, many of which are active or rules-based, generates higher fees than most ETFs. More than two-thirds of the company’s assets under management have international investing objectives.
Shareholders are paid a 1.31% dividend. Jefferies has a $13 price target on the Buy-rated stock, and the consensus target was last seen at $10.36. The stock ended Friday at $9.09 per share.
Five stocks for aggressive accounts that look to get share count leverage on companies that have sizable upside potential. While not suited for all investors, these are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage.
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