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 Encana and Vivint Solar), 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.
C&J Energy Services
This smaller cap company is well liked across energy desks on Wall Street. C&J Energy Services Inc. (NYSE: CJ) is a completion and production services company that provides well construction, well completions and well services to the oil and gas industry. The company also manufactures, repairs and refurbishes equipment used in the oilfield services industry.
C&J operates in various North American onshore basins. Its Completion Services segment includes the hydraulic fracturing services, cased-hole wireline services, coiled tubing services and other well stimulation services. Its Well Support Services segment includes services, including rig services, fluid management services and other special well site services.
The company recently announced that it has entered into a definitive agreement with Keane Group in which the companies will combine in an all-stock merger of equals. The combined company will be positioned as an industry-leading, diversified oilfield services provider with a pro-forma enterprise value of approximately $1.8 billion, including $255 million of net debt.
Jefferies has restarted coverage of the stock with a $13.50 price target. The Wall Street consensus target is $12.00, and shares were trading at the close of Friday’s session at $8.93.
Jefferies likes this top mining play. Cleveland-Cliffs Inc. (NYSE: CLF) is a mining and natural resources company. It is a supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. The company’s segments include U.S. Iron Ore and Asia Pacific Iron Ore. Operations of the latter are located in Western Australia and consist of its Koolyanobbing operation.
While the company is a pure play iron ore miner, Cleveland-Cliffs offers high leverage to U.S. steel prices and production as U.S. contracts are linked to a mix of seaborne iron ore and U.S. steel prices.
Cleveland-Cliffs investors are paid a 2.91% dividend. The Jefferies price target set at $15, and the posted consensus target is $13.30. The stock closed well below those levels on Friday at $7.97.