Investing

5 Low-Priced Fallen Angel Blue Chips With Massive Upside Potential

Lee Jackson

Published: February 6, 2019 7:00 pm

Last Updated: January 11, 2020 11:31 am

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 $15 level that could provide investors with some solid upside potential. This week we screened for companies that were once considered among the blue chip leaders in their respective sectors but have fallen on some tough times. For those that are skeptical, just remember once Apple had fallen to $1, and as late as 2005 was still under $10.

BlackBerry

This was the first smartphone-type company that was buried when Apple released the iPhone. Blackberry Ltd. (NYSE: BB) continues transitioning from a mobile hardware provider to a mobile-focused security software and services company. Its portfolio of products includes BlackBerry Secure Unified Endpoint Management, crisis communication, corporate asset tracking, cybersecurity services and other secure collaboration software and communication technologies.

The company also licenses its brand/IP for mobile devices and its QNX business provides leading embedded software systems. BlackBerry recently named Bryan Palma as president and chief operating officer. Palma was most recently Cisco’s senior vice president and general manager of customer experience for the Americas. Before joining Cisco, he was the vice president of cyber and security solutions at Boeing.

Macquarie has a Buy rating and a huge $12.50 price objective. That compares with the Wall Street consensus target of $10.31. The shares traded on Friday’s close at $8.11 apiece.

Caesars Entertainment

Shares of this well-known old-school gaming company offer solid upside. Caesars Entertainment Corp. (NASDAQ: CZR) provides casino-entertainment and hospitality services. Its segments include Caesars Entertainment Resort Properties, Caesars Growth Partners, and Other. The company’s resorts operate primarily under the Harrah’s, Caesars and Horseshoe brand names.

Caesars facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. Caesars Entertainment is one of the largest gaming companies in the world and currently owns or operates 49 casino properties in 13 U.S. states and in four other countries.

Activist investor Carl Icahn is said to be building a massive position in the company, which could be very positive for investors.

Oppenheimer has a Buy rating, and its price target for the shares is $15. The consensus target was last seen at $11.67, and the stock traded at $9.26 per share on Friday’s close.

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Ford

This is a solid value play now, and demand could jump with a trade deal with China paving the way. Ford Motor Co. (NYSE: F) is one of the world’s largest vehicle producers, with over 6 million units manufactured and sold globally. The company has made significant progress executing on its One Ford plan and delivering best-in-class vehicles.

The company also remains committed to positioning itself well within the evolving auto industry through balanced investments across electrification, autonomy and mobility services.

Ford reported fourth-quarter adjusted earnings per share in line with revised estimates, although core operating results were a bit weaker than some expected. Ford continues to struggle amid a volatile global market, exacerbated by some perceived critical missteps that may partially abate later this year.

Shareholders are paid an outstanding 6.82% dividend, though that could be lowered this year. The $11 Jefferies price target on the shares compares with the $9.32 consensus target. The shares closed on Friday at $8.72.

General Electric

If any stock has taken a beating over the past two years, it has been this former industrial powerhouse. General Electric Co. (NYSE: GE) businesses are organized broadly under seven segments: Power, Renewable Energy, Energy Connections, Oil & Gas, Aviation, Healthcare, Transportation and GE Capital. The company’s products and services include power generation equipment, aircraft engines, locomotives, medical equipment, compressors and others. Over half of the business is tied to service and aftermarket support.

Last year the venerable American industrial giant got the ultimate humiliation of being removed from the Dow Jones industrial average after a stay of over 100 years.

The massive restructuring and debt reduction plans that have been announced over the past year come after years of acquisitions and changes in the core business at General Electric, and in some cases what many on Wall Street thought were ill-advised moves by the former CEO Jeff Immelt. The company’s once dependable dividend has been chopped to $0.04 a share and may be eliminated altogether at some point.

Investors in GE are paid a small 0.40% dividend. Williams Blair’s Buy rating comes with a $12 price target. The posted consensus target is $11.61, and the shares were last seen trading at $10.19.

Nokia

This telecommunications company once ruled the cell phone arena, until the advent of the smartphone in 2007. Nokia Corp. (NYSE: NOK) owns two main businesses: 1) Nokia Networks, a network infrastructure equipment supplier to global wireless and wireline operators, and 2) Technologies, its patent/IPR licensing activities.

The company reported solid fourth-quarter results with revenue and EBIT figures that came in above Wall Street estimates, while earnings per shares were in line with expectations. The 2019 guidance was lower than expected due to the uncertain timing of 5G deployments.

Many top Wall Street analysts feel that the positive sentiment for 5G and share shifts are likely to support the stock, and rival Ericsson also looks to benefit as well. We covered both of the companies this past week.

Merrill Lynch rates the shares a Buy, with a $7.50 target price, and has them on the firms US 1 list. The consensus estimate was last seen at $7.09, and the stock ended the week at $6.13 a share.

These are five top companies that most seasoned investors are well aware of and perhaps have owned shares of over the years. While they still may be fighting through some issues now, and in the coming months and years, they all appear to have avoided the dubious distinction of ending up in the Wall Street graveyard.