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. Many of the biggest public companies, especially the technology giants, trade in the hundreds, all the way up to over $1,000 per share or more. At those steep prices, it is 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 screened our 24/7 Wall St. research database looking for companies that are likely to survive the current troubles and could very well offer patient investors some huge returns over the next year or so. Investors that did that in 2008 and 2009 absolutely killed it over the next few years.
While all five of these stocks trade under $5 and are rated Buy at top Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision. It is also important to remember that at one time both Apple and Amazon traded at less than $5 a share.
ADMA Biologics
This is a micro-cap biotech idea for aggressive investors that like the space. ADMA Biologics Inc. (NASDAQ: ADMA) is a biopharmaceutical and specialty immunoglobulin company that develops, manufactures and markets specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases in the United States.
The company offers Bivigam, an intravenous immune globulin product indicated for the treatment of primary humoral immunodeficiency (PI); Asceniv, an intravenous immune globulin product for the treatment of PI; and Nabi-HB, which is indicated for the treatment of acute exposure to blood containing hepatitis B surface antigen and other listed exposures to hepatitis B.
ADMA also develops a pipeline of plasma-derived therapeutics, including products related to the methods of treatment and prevention of Streptococcus pneumoniae infection for immunoglobulin. In addition, the company operates source plasma collection facilities.
Oppenheimer’s Overweight rating comes with a $6 price objective. The Wall Street consensus target is much higher at $10, and shares have traded mostly around $3 since March.
Aphria
This is one of the few marijuana stocks that is not losing money. Aphria Inc. (NASDAQ: APHA) engages in the production and supply of medical cannabis. It operates through the following segments.
The Cannabis Operations segment produces, distributes and sells both medical and adult-use cannabis. The Distribution Operations segment’s operations are carried out through its wholly owned subsidiaries: ABP, FL Group and CC Pharma. The Business Under Development segment includes operations in which the firm has not received final licensing or has not commenced commercial sales from operations.
As of late last year, it had $500 million Canadian on the balance sheet and an additional $100 million Canadian raised from a strategic investor.
Last week, Aphria posted a $98.8 million net loss in the fourth quarter, falling short of analyst estimates. The company said its loss included a $64 million noncash asset impairment expense largely related to the COVID-19 pandemic at some of its international businesses. Despite the hit the shares took, both CIBC and PI Financial raised their price targets on the stock.
Cantor Fitzgerald has an Overweight rating and just raised its price target from $10.50 to $11.00. No consensus target was posted. Aphria stock has retreated from a recent high near $6.
Earthstone Energy
Truist Securities remains very positive on this small cap energy play. Earthstone Energy Inc. (NYSE: ESTE) is a growth-oriented independent oil and gas exploration and production company engaged in developing and acquiring oil and gas reserves through an active and diversified program that includes acquiring, drilling and developing undeveloped leases, asset and corporate acquisitions and exploration activities. Its primary assets are located in the Midland Basin of west Texas, the Eagle Ford trend of south Texas and the Williston Basin of North Dakota.
Truist analyst Neal Dingmann recently upgraded Earthstone Energy to Buy from Hold, saying in a research note that the company represents “deep value” and may be a potential acquisition target.
The $3 Truist price target was lifted to $6 with the upgrade. The consensus target is $4.84, and the stock ended trading near $3 on Friday.
Falcon Minerals
This micro-cap energy company could get scooped up as consolidation play. Falcon Minerals Corp. (NASDAQ: FLMN) acquires and owns mineral, royalty and overriding royalty interests in oil and natural gas properties in North America. It owns interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt and Gonzales Counties in Texas, as well as approximately 75,000 gross unit acres in the Marcellus Shale across Pennsylvania, Ohio and West Virginia.
The company reported net production of 4,450 barrels of oil equivalent per day for the second quarter 2020 (51% oil), and production during the quarter was shut-in/curtailed by about 25% during May and June. The second-quarter dividend of $0.03 per share represents a 20% increase from first quarter. The payout ratio of pro-forma free cash flow increased from 23% in the first quarter 2020 to 91% in the second quarter 2020.
Truist Securities has a $4 price target. The consensus target is $4.55, and the shares have traded below $3 in recent weeks.
QuickLogic
This is a micro-cap idea for investors looking for some value in the technology sector. QuickLogic Corp. (NASDAQ: QUIK) develops semiconductor platforms and intellectual property solutions for smartphones, wearable and hearable devices, tablets and the Internet of Things. It also provides flexible sensor processing solutions, ultra-low power display bridges, ultra-low field programmable gate arrays and programming hardware and design software solutions.
The company’s products include pASIC 3, QuickRAM and QuickPCI. It delivers its solutions through ultra-low power customer programmable system on chip (SoC) semiconductor solutions, embedded software and algorithm solutions for always-on voice and sensor processing, and enhanced visual experiences.
The company markets and sells its products to original equipment manufacturers and original design manufacturers through a network of sales managers and distributors in North America, Europe and Asia. In addition, QuickLogic has a collaboration with Airoha.
Oppenheimer has a large $7.50 target price, well above the $5.67 consensus target. The shares dropped below $4 late last week.
These five companies have all been sent to the single-digit midget penalty box. Some of them may have a difficult road back to prosperity, but given what we have seen in the past, and the massive liquidity being provided by Washington, D.C., the odds are good that each survives this downturn. Again, it’s important to note that these ideas are only suitable for very aggressive investors with a very high risk tolerance.
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