Investing
5 Stocks Priced Under $10 With Massive Implied Upside Potential
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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.
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 exciting additions to portfolios looking for solid alpha potential. Plus, after the huge fall sell-off, these five look even better now.
Internap
This off-the-radar small cap has been hammered this fall and looks like a potential winner. Internap Corp. (NASDAQ: INAP) engages in the provision of information technology infrastructure services. The company operates through two segments.
The INAP COLO segment consists of colocation, managed services and hosting, and network services. The INAP CLOUD segment offers compute and storage services via an integrated platform that includes servers, storage and network.
Recently, Blade, which is the creator of Shadow, the high-performance gaming computer, accessible from multiple devices, selected the company for its mission-critical data center needs on space and power. Blade selected Internap’s Dallas Data Center for strategic location, data security and low latency, enabled by the company’s route-optimized Performance IPTM technology.
Jefferies rates the shares a Buy and has a $7.50 price target. That compares with a Wall Street consensus price objective last seen $13.11. The stock was last seen trading at $4.42 per share.
Kosmos Energy
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 sector 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.
RBC has an Outperform rating and a $10.50 target price for the shares, while the posted consensus target is $10.41. The shares closed trading on Friday at $4.28.
Scorpio Tankers
Jefferies analysts have remained positive on this maritime shipping stock. Scorpio Tankers Inc. (NYSE: STNG) provides seaborne transport of refined petroleum products worldwide, such as gasoline, heating oil and fuel oil. Product tankers move refined products from global refineries to points near consuming markets. Its fleet consists of 109 owned product tankers and 17 chartered-in product tankers. It largely operates in the spot shipping markets.
The company recently hosted a very positive investor day in which Emanuele Lauro, the board chair and chief executive officer, said this:
We have seen a significant improvement in the spot market for product tankers during the latter half of the fourth quarter of 2018. While this positive development is beginning to materialize in our fourth quarter figures, we expect to realize the full benefit of these fixtures throughout the remainder of December and into the first quarter of 2019.
The Jefferies team has a Buy rating and a $4 price target. The consensus target is $3.19, and the shares were trading on Friday’s close at $1.89 apiece.
Viking Therapeutics
This small cap biotech could have monster upside potential. Viking Therapeutics Inc. (NASDAQ: VKTX) focuses on the development of therapies for metabolic and endocrine disorders. Its clinical program, VK5211, is an orally available drug candidate, which is in Phase 2 clinical trial for acute rehabilitation following non-elective hip fracture surgery. VK5211 is a non-steroidal selective androgen receptor modulator.
The company’s second program is focused on the development of orally available small molecule thyroid hormone receptor beta agonists. Its two molecules are VK2809 and VK0214. The former is an orally available, tissue and receptor-subtype selective agonist of the thyroid beta receptor that is entering Phase 2 development for the treatment of patients with hypercholesterolemia and fatty liver disease.
B. Riley FBR started coverage of the company this week with a Buy rating and a $16 price target. That compares with the sky-high consensus target of $32.93. The stock closed trading at $8.99 on Friday.
24/7 Wall St.Zynga
This is a very aggressive tech play that could have upside above the Jefferies target. 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.
A $5.25 price target accompanies the Jefferies Buy rating, while the consensus target is $4.74. The stock ended the week at $3.71 per share.
These are 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, they are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage on them.
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