Investing

5 Red-Hot Stocks Trading Under $10 With Incredible Upside Potential

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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.

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Every week, we screen our 24/7 Wall St. research database looking for stocks with Buy equivalent ratings at major firms and priced under the $10 level (last week’s picks included Aphria), and this week was no exception. We found five new stocks that could provide investors with some solid upside potential. While more suited for aggressive accounts, they could prove to be exciting additions to portfolios looking for solid alpha potential.

Cerus

Shares of this little-known health care company have been battered and offer an incredible entry point. Cerus Corp. (NASDAQ: CERS) engages in the research, development and manufacture of biomedical and surgical products. The company produces a blood system for platelets and plasma.

Cerus develops and markets the INTERCEPT Blood System and remains the only company in the blood transfusion space to earn both CE Mark and FDA approval for pathogen reduction of both platelet and plasma components. Cerus currently markets and sells the INTERCEPT Blood System in the United States, Europe, the Commonwealth of Independent States, the Middle East and selected countries in other regions around the world. The INTERCEPT Red Blood Cell system is in clinical development.

Stifel has a $7 price target on the shares, while the Wall Street consensus target is higher at $8. The shares were trading on Friday’s close at $4.64.

Nephros

This small-cap medical devices company’s stock could explode higher for investors. Nephros Inc. (NASDAQ: NEPH) engages in developing and selling liquid purification filters and an online mid-dilution hemodiafiltration system. The company operates in two segments. The Water Filtration segment includes both the medical device and commercial filtration product lines.

The Renal Products segment is comprised of SRP, which is focused on the development of medical device products for patients with renal disease, including a second-generation HDF system for the treatment of patients with ESRD. Its ultrafilters are used in dialysis centers for the removal of biological contaminants from water, bicarbonate concentrate and blood.

Benchmark recently started coverage with a $16 price target, and the posted consensus target was last seen at $14. The stock was trading at $8.85 a share on Friday’s close.


Northern Oil & Gas

Stifel analysts remain very positive on this small-cap energy play. Northern Oil & Gas Inc. (NYSE: NOG) is engaged in the acquisition, exploration, development and production of oil and natural gas properties, primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana. It is the largest non-operator in that basin.

With Bakken returns continuing to improve to well above 50%, and Northern’s operating partners representing what may be as the best operators in the basin, there is upside potential.

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The company pre-announced solid third-quarter production activity, and while the weather curtailed some results, the company kept 2019 final estimates intact. It was noted this week the company is expected to have free cash flow equal to almost three-quarters of the stock market capitalization over the next year.

The monster $5.70 Stifel price target compares the posted consensus target of $3.42 and the closing share price of $2.06 seen on Friday.

Syros Pharmaceuticals

This small-cap biotech stock has serious upside possibilities. Syros Pharmaceuticals Inc. (NASDAQ: SYRS) engages in the development of novel gene control therapies for cancer and other diseases. It has developed a proprietary platform that is designed to systematically and efficiently analyze unexploited regions of DNA in human disease tissue to identify and drug novel targets linked to genomically defined patient populations.

The firm focuses on developing treatments for cancer and immune-mediated diseases and is building a pipeline of gene control medicines and recently presented new preclinical data for SY-5609, its highly selective and potent oral inhibitor of cyclin-dependent kinase 7 (CDK7). The data demonstrate that SY-5609 induces deep and sustained anti-tumor activity, including complete regressions, in multiple preclinical models of solid tumors at doses below the maximum tolerated dose. These data were presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in Boston.

Oppenheimer has set its price objective at $11. The consensus target is higher at $13.50, but the stock ended the week at $5.34.

Zynga

This very aggressive tech play could have upside above the Jefferies target. 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.

With live events growing the company’s revenues, cost-cutting should drive margin expansion, which is very positive. The company also pops up in takeover chatter, and the low price makes it even more attractive.

Zynga posted a healthy top and bottom line third-quarter beats, coupled with an above consensus fourth-quarter guide. The Jefferies analysts continue to believe investors are too focused on potential near-term M&A and are overlooking the fundamental strength in the core business. They view Zynga as the best way to play the industry tailwinds within mobile gaming.

The Jefferies price target is $7.50. The consensus target price is $7.41, and the shares were changing hands on Friday’s close at $6.35 apiece.

These five stocks for aggressive accounts looking to get share count leverage on stocks 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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