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 on to a winner, as you can always sell half and keep half.
Every week we screen our 24/7 Wall St. research database looking for stocks covered by top Wall Street analysts that are trading under the $10 level and could provide investors with solid upside potential. This week we found five covered by the Jefferies analysts that look tempting. While more suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
This company hits screens as a potential takeout target. BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX) designs, optimizes and develops novel small molecule drugs that block key enzymes involved in rare diseases. The company currently has one approved product: Rapivab (flu) and two pipeline products.
BCX7353 is an oral treatment for hereditary angioedema. BCX9930 is an oral Factor D inhibitor for the treatment of complement-mediated diseases. Galidesivir is a potential treatment for Marburg virus disease and yellow fever, and there is a preclinical program to develop oral ALK-2 inhibitors for the treatment of fibrodysplasia ossificans progressiva.
The $13 Jefferies price objective is in line with the $13.29 Wall Street consensus target. Shares traded on Friday’s close at $8.06.
Brookdale Senior Living
With an aging U.S. population, this looks like an outstanding idea for investors. Brookdale Senior Living Inc. (NYSE: BKD) operates senior living communities throughout the United States providing room, board and hospitality services to the elderly who are generally in good health but require a base level of health care. The company operates about 800 properties with over 80,000 units, and it is the largest senior housing operator in the country.
With cash flow expected to be positive for the balance of 2019, this may be a good long-term play for investors, given current demographics. After posting first-quarter revenues in excess of $1 billion, and with losses coming below estimates, the risk/reward looks very solid.
Jefferies has a $10 price target, while the consensus target is $9.14. Shares closed Friday at $7.08.
This may be an off-the-radar way for investors to play marijuana with lower name recognition. CannTrust Holdings Inc. (NYSE: CTST) produces and distributes pharmaceutical grade medical cannabis products in Canada. It sells dried cannabis and oil extractions to the client based on the medication document provided by health care practitioner. The company has a partnership with Gold Coast University Hospital.
CannTrust also focuses on developing nanotechnology to create new products in the medical, recreational, beauty, wellness and pet markets. It recently completed a successful secondary offering, and management noted in late April they expect to report a strong first quarter.
Jefferies has a Buy rating but recently lowered its $15 price target to $13 Canadian. That equals about $9.62 in U.S. dollars. The shares traded at $6.00 on Friday’s close.
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. It is focused on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.
Although many peers 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.
The company reported a smaller than expected loss and revenues rose more than 133% year over year and also topped expectations. During the first quarter of 2019, net production volumes from Ghana averaged approximately 28,620 barrels of oil per day, including net volumes from the Jubilee and TEN fields, which averaged approximately 18,315 barrels of oil per day and 10,305 barrels of oil per day, respectively. Kosmos lifted two cargoes, as forecasted, from Ghana during the first quarter.
The $9.20 Jefferies price target is less than the $9.34 consensus figure. Shares ended the week at $6.60.
This stock has been a rollercoaster ride but also has giant upside potential. Noodles and Co. (NASDAQ: NDLS) operates in the restaurant industry, offering lunch and dinner meals. It serves a variety of cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers.
The company claims to serve noodles your way, from noodles and flavors that you know and love to new ones you’re about to discover for the first time. From indulgent Wisconsin Mac & Cheese to good-for-you Zoodles, Noodles serves a world of flavor in every bowl. With more than 450 restaurants and 10,000 employees, the stock looks cheap at current levels
Jefferies recently upgraded this one from Hold to Buy with an $11 price objective. The consensus target is $11.43, and shares closed Friday at $8.54, up more than 11% on strong earnings.
These are stocks for aggressive accounts looking to get share-count leverage on companies with sizable upside potential. While not suited for all investors, they are not penny stocks with no track record or liquidity. Jefferies and other major firms have solid research coverage.