Big Upside Potential Seen for These 5 Stocks Trading Under $10

August 17, 2019 by Trey Thoelcke

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.

Each and every week, we screen our 24/7 Wall St. research database looking for stocks with Buy equivalent rating at major firms and priced under the $10 level (last week’s picks included Antero Resources and Northern Oil and Gas), and this week was no exception. We found five more stocks 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.

Encana

This stock has pulled back sharply since May and is offering an outstanding entry point. Encana Corp. (NYSE: ECA) is an energy producer focused on developing its multibasin portfolio of natural gas, oil and natural gas liquids (NGLs) producing plays. Its operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America.

Its Canadian Operations segment includes the exploration for and development and production of natural gas oil and NGLs and other related activities within Canada. This includes Montney in northeast British Columbia and northwest Alberta and Duvernay in west central Alberta. The USA Operations segment includes the exploration for and development and production of natural gas, oil and NGLs and other related activities within the United States.

Raymond James analysts remain positive on the stock and have a $10 price target. The Wall Street consensus target is $8.76, but the shares were trading on Friday’s close at $4.22.

Evolent Health

This is an interesting way to play the expanding health care arena. Evolent Health Inc. (NYSE: EVH) engages in the provision of health care delivery and payment services. Its solutions include population health management, health plan and third-party administration, network performance management, risk adjustment, pharmacy benefit management, analytics and performance improvement, and technology and electronic medical record integration.

The firm’s Services segment includes three types of services designed to help partners manage patient health: value-based care services, specialty care management services and comprehensive health plan administration services.

Its True Health segment, which operates a health plan in New Mexico and provides reinsurance to New Mexico Health Connections, takes on certain insurance and underwriting costs in pricing its premiums.

Cowan has a massive $18 price target for the shares. The consensus target price is $17.08, and the shares were last seen trading at $7.30 apiece.


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 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.

An $8 price target accompanies Citigroup’s Buy rating, although that target is below the $9.28 consensus estimate. The shares closed at $6.30 apiece on Friday.

Sientra

This stock has been blitzed over the past year, and it offers aggressive accounts a timely entry point. Sientra Inc. (NASDAQ: SIEN) is a medical aesthetics company that engages in developing and commercializing plastic surgery implantable devices. It operates through two reportable segments.

The Breast Products segment focuses on sales of its breast implants, tissue expanders and scar management products under the brands Sientra, AlloX2, Dermaspan, Softspan and Biocorneum. The miraDry segment focuses on sales of the miraDry System, consisting of a console and a handheld device that uses consumable single-use bioTips to reduce underarm perspiration.

Stevens has set a $16 price target on the shares, while the consensus figure is $13.25. The shares were trading hands most recently at $6.92.

Vivint Solar

This is a green energy play aggressive accounts may want to study. Vivint Solar Inc. (NYSE: VSLR) finances, installs and services solar power systems on customer premises. The majority of the company’s installations are leased from Vivint by its customers.

The company posted solid second-quarter results, including installing 66 megawatts, which was above the high end of its guidance. That represents 19% growth over the second quarter last year, and management said it does not expect the momentum to slow down.

The company recently entered into a $325 million credit facility that replaces its existing aggregation facility and reduces the cost of debt by 87.5 basis points and significantly increases the amount of upfront proceeds on a per-system basis.

Bank of America has put a $14 price target on the shares, which compares with the posted consensus target of $11.50. The stock closed most recently at $7.98 a share.

These are five 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 absolutely no track record or liquidity, and major Wall Street firms have research coverage on them. Note though that while markets have retreated somewhat from all-time highs, value stocks still come with some risks.

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