5 More Stocks Priced Under $10 With Massive Implied Upside

June 1, 2019 by Lee Jackson

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. Often 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 screen our 24/7 Wall St. research database every week looking for stocks trading under the $10 level that could provide investors with some solid upside potential (last week’s picks focused on cannabis stocks). While more suited for aggressive accounts, these stocks could prove exciting additions to portfolios looking for solid alpha potential. Plus, considering the May sell-off, these five look even better now.

Adaptimmune Therapeutics

This small-cap name could have big upside for aggressive investors. Adaptimmune Therapeutics PLC (NASDAQ: ADAP) is a clinical-stage biotechnology company focused on the development of novel T-cell therapies to treat cancer. Adaptimmune proprietary technology platform engineers novel T-cell receptors to target and destroy cancer cells.

The company ended the first quarter with $168.2 million in cash, cash equivalents and marketable securities, which management expects should fund operations into the third quarter of 2020. Research and development expense was $22 million in the first quarter, which decreased 14% year over year, primarily due to the transfer of the NY-ESO program to GlaxoSmithKline.

Citigroup analysts assumed coverage recently with a Buy rating and an $8 price target, which is in contrast to the higher Wall Street consensus target price of $11. The stock was trading on Friday’s close at $3.46 a share.

Cloudera

This stock has taken a beating over the past two months and now offers a prime entry point. Cloudera Inc. (NYSE: CLDR) is a leading next-generation data management company, calling itself “the modern platform for machine learning and advanced analytics.”

Cloudera co-created and commercialized open-source Apache Hadoop, a data management ecosystem. Hadoop introduced a new way of storing and processing data, dramatically reducing the economics of data. Cloudera has developed proprietary enterprise-grade solutions on top of Hadoop.

Cloudera is a high-quality company disrupting the software data management market, currently addressing an addressable market according to its own estimates of more than $22 billion. Cloudera’s platform approach is unique in the marketplace, and many see a clear path to above $1 billion in revenues, once execution improves.

Nomura Instinet rates the shares a Buy and has a $14 price objective. The posted consensus target for the stock is even higher at $18.19, but the stock closed trading at $9.17 a share on Friday.

Falcon Minerals

This company provides investors with a unique way to be involved in the energy sector. Falcon Minerals Corp. (NASDAQ: FLMN) engages in the provision of oil and gas minerals. It also owns mineral, royalty and overriding royalty interests in the Eagle Ford and Austin Chalk in Karnes, DeWitt and Gonzales counties in Texas.

The company also owns additional assets of approximately 68,000 gross unit acres in Pennsylvania, Ohio and West Virginia prospective for the Marcellus Shale. Falcon Minerals recently averaged 150 line-of-sight wells in various stages of development on its Eagle Ford minerals position, as well as 28 wells turned in line during the first quarter of 2019. There recently were 10 active rigs operating on Falcon’s Eagle Ford position, which is an increase from an average of five active rigs at the beginning of the year.

Stifel’s Buy rating is accompanied by a $10 price target, which is right in line with the $10.25 consensus estimate. The shares closed trading at $7.38 apiece on Friday.

Kindred Biosciences

This is another small-cap biotech with big upside potential. Kindred Biosciences Inc. (NASDAQ: KIN) is a commercial-stage biopharmaceutical company focused on saving and improving the lives of pets. Its mission is to bring to pets the same kinds of safe and effective medicines that human family members enjoy.

The company’s strategy is to identify compounds and targets that already have demonstrated safety and efficacy in humans and to develop therapeutics based on these validated compounds and targets for dogs, cats and horses.

Kindred Biosciences has a deep pipeline of novel drugs and biologics in development across many therapeutic classes. The company’s first approved drug is Mirataz (mirtazapine transdermal ointment) for the management of weight loss in cats.

The $14 Stifel price target for the Buy-rated stock is lower than the $18.60 consensus price objective but well above the $7.94 at which shares traded hands at week’s end.

Zynga

This very aggressive tech play could have upside above the current targets on Wall Street. 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 on Facebook and several top-grossing mobile apps. Key franchises include FarmVille, Zynga Poker, Hit It Rich Slots and Words With Friends.

The company posted very solid first-quarter results that beat Wall Street estimates, and it also raised forward guidance. Early acquisitions traction and a strong marketing push drove bookings upside. Organic growth, however, remains soft, and with Wall Street looking for upside, new title traction will be a key driver for the remainder of 2019.

Stephens rates the stock at Overweight with an $8.50 price target. That compares to a lower consensus target of $6.39, which was close to Friday’s closing share price of $6.29.

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, these are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage.

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