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. 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.
Goldman Sachs is the premier investment bank in the world, so we screened the firm’s outstanding research database and found five stocks trading under the $10 level that could provide investors with some solid upside potential. While much better suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
This top security company is a well-known protector of homes and businesses. ADT Inc. (NYSE: ADT) is the largest residential and second-largest commercial security monitoring company in North America. The company serves over 7 million customers, installing over a million systems per year. Roughly 94% of revenue is generated in the United States, with the remainder from Canada.
ADT reported good third-quarter results that slightly beat on revenue and adjusted EBITDA, and it moved 2018 guidance higher. Third-quarter revenue rose 6% and adjusted EBITDA 3% year over year, with both 1% ahead of estimates. So far this year, free cash flow rose a strong 26% year over year. While competitive fears still linger, undemanding valuation and strong free cash flow growth make the stock very attractive here.
The Goldman Sachs price target on the shares is a whopping $15, which compares with a Wall Street consensus target of $12.94. The stock traded on Friday at $8.25 per share.
This is a solid energy exploration and production play. Kosmos Energy Ltd. (NYSE: KOS) is a conventional oil and gas exploration and production company focused on the Atlantic margin. The company’s focus is on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.
Although many companies in the industry have scaled back exploration, Kosmos believes this is the best route to generating value, seeking to replicate its discovery and development of the Jubilee field in Ghana.
Goldman Sachs has a $9 price objective for the shares, while the posted consensus target price was last seen at $10.21. The shares were changing hands on Friday at $5.75 apiece.