Investing

Jefferies Has 5 Stocks Trading Under $10 With Huge Upside Potential

Lee Jackson

Published: October 13, 2018 7:10 am

Last Updated: January 11, 2020 4:28 pm

While most of Wall Street focuses on large and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. In fact, 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 on to a winner, as you can always sell half and keep half.

We screened our 24/7 Wall St. research database and found five new stocks that are rated Buy by the analysts at Jefferies, are trading under the $10 level, and which could provide investors with some solid upside potential. While they are much better suited for aggressive accounts, these stocks could prove exciting additions to portfolios looking for solid alpha potential.

Dean Foods

This top consumer food stock makes sense for more conservative investors. Dean Foods Co. (NYSE: DF) processes and distributes fluid milk, and other dairy and dairy case products in the United States. It is engaged in manufacturing, marketing, selling and distributing a range of branded and private label products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States.

Dean Foods sells its products under approximately 50 national, regional and local proprietary or licensed brands and private labels, including DairyPure, TruMoo, Alta Dena, Berkeley Farms, Country Fresh, Dean’s, Friendly’s, Garelick Farms, LAND O LAKES, Lehigh Valley Dairy Farms, Mayfield, McArthur, Meadow Gold, Oak Farms, PET, T.G. Lee, Tuscan and others.

Shareholders of Dean Foods are paid a 1.9% dividend. The Jefferies price target for the shares is $13, and the Wall Street consensus target was last seen at $8.54. The stock traded on Friday at $7.05 a share.

Insys Therapeutics

This company has been the target of short sellers, but it could be ready for a big bounce. Insys Therapeutics Inc. (NASDAQ: INSY) is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve the quality of life of patients. Using proprietary sublingual spray technology and capabilities to develop pharmaceutical cannabinoids, Insys addresses the clinical shortcomings of existing commercial products.

The company markets Subsys, a sublingual fentanyl spray for breakthrough cancer pain in opioid-tolerant adult patients, and Syndros, an orally administered liquid formulation of dronabinol for the treatment of chemotherapy-induced nausea and vomiting, as well as anorexia, associated with weight loss in patients with AIDS. It is also developing Cannabidiol Oral Solution, which has completed a pediatric study for the treatment of pediatric epilepsy; has completed Phase 2 study to treat West syndrome; and is in Phase 2 study for the treatment of childhood absence epilepsy, as well as Buprenorphine Sublingual Spray that has completed Phase 3 study to treat acute pain.

Jefferies has a $10 price target on the stock, which compares with a consensus target posted at $9.60. The shares were trading on Friday at $8.85 apiece.

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SeaSpan

This stock is widely followed on Wall Street and offers a safer aggressive play. SeaSpan Corp. (NYSE: SSW) operates as an independent charter owner and manager of containerships in Hong Kong. The company charters its container-ships under long-term, fixed-rate time charters to various container liner companies. As of February 15, 2018, it operated a fleet of 91 container ships.

Company management recently discussed the focus on capital allocation and shareholder return at the recent analyst day, noting the team’s investor-oriented background. The company recently issued $150 million in preferred stock at an 8% yield. SeaSpan also closed on $150 million unsecured two-year revolver loan, the first of its kind for a container-ship lessor.

SeaSpan investors are paid a solid 6.88% dividend. The $10 Jefferies price target compares with the $8.44 consensus figure. The shares were changing hands Friday at $8.15 apiece.

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.

WisdomTree shareholders are paid a 1.48% dividend. Jefferies has set its price target at $11. The posted consensus target is $10.36, and the stock traded at $7.10 per share.

Zynga

This is a very aggressive tech play that could have upside above the current price targets. Zynga Inc. (NASDAQ: ZNGA) is a leading developer of mobile and social games. In the company’s relatively short history, it has developed a broad portfolio of games that includes several games on Facebook and several top-grossing mobile apps. Key franchises include FarmVille, Zynga Poker, Hit It Rich Slots and Words With Friends.

With live events growing the company’s revenues, cost-cutting should drive margin expansion, which is very positive. The company also pops up in takeover chatter, and the low price makes it even more attractive. Once again, this week rumors started to flow that a bigger player may be looking to buy the company.

The Jefferies price target is $5.25. The consensus target was last seen at $4.85, and the stock was trading at $4.20 on Friday.

These five stocks are trading under the $10 level and have big upside to the analyst’s price targets. Again, while they are not suitable for conservative accounts, aggressive investors can get some solid share leverage buying 5,000, 10,000 or more shares and can make money on a much smaller share price move.