1. AMD (Removed From List)
> Market Cap: $2.5 billion
> Share Price: $3.48
> 52-Week Range: $2.26 to $4.65
> Forward P/E: 25
> Stock Options: Yes
Advanced Micro Devices Inc. (NYSE: AMD) is still turning around. The chipmaker has a long history of not living up to investors’ expectations. Shares headed south after AMD issued soft quarterly revenue guidance, and as concerns over the future of the PC market continue to linger. But it’s AMD’s graphics operations that may be the driving force here. The company’s recently introduced new ARM server chips could further build on its video game segment. AMD won both the PS4 and Xbox One graphics and processor designs.
AMD shares are trading around $3.50. AMD has a relatively young team that could help push the company in the right direction. Also, it has spun off its lagging GlobalFoundries chip manufacturing business — and it is moving away from simply being Intel’s rival.
It is even conceivable an outfit like Qualcomm could decide to tap its war chest and acquire AMD.
The highest official analyst price target on AMD is $5.50, although Wells Fargo opined last year that the stock could go as high as $7 within a year. Analysts are calling for an 8% sales growth to about $5.7 billion in 2014, but any gains in any of its new ventures could allow for serious upside as well.
AMD Update July 20: At $3.83, after a massive earnings drop, we have conceded that the change in sentiment on its turnaround has likely all but destroyed AMD’s chance of doubling in 2014. At least it is up almost 10% from the inclusion price in February, but that is far from a double even if it was up well over 30% from inclusion to the pre-earnings peak.
AMD Update June 14: Two different analysts have upside price target of $5 now.
AMD Update on April 17: Impressive Earnings Makes AMD Remain a Candidate for Doubling – Share Price $3.69 close, $3.85 after report
AMD Update on March 8: AMD media appearance makes big boost – Share Price $3.95
AMD Update on February 20: AMD Can Still Double After Capital Raise – Share Price $3.71
2. Arch Coal (Removed From List)
> Market Cap: $870 million
> Share Price: $4.10
> 52-Week Range: $3.47 to $7.47
> Forward P/E: Negative
> Stock Options: Yes
Arch Coal Inc. (NYSE: ACI) is in the currently reviled coal sector. With President Barack Obama Administration’s more stringent environmental regulations, the industry, and with it the company, are facing several serious challenges.
Still, with soaring demand for heating fuel as a result of this winter’s brutal cold weather, some utilities may be allowed to use coal as a backup energy source — despite EPA regulations. Arch supplies coal to utility companies for power generation and metallurgical coal used in steelmaking.
Most energy plants in the U.S. are indeed migrating away from coal. But experts say coal will remain an important part of the world’s power sector for decades to come.
Arch recently lowered its production levels.The company’s lowered revenue expectations follow two years of declining sales. But if that decline turns out to be less than expected, value investors may pile into the stock, despite almost certain losses from operations. Arch was a $10 stock back in early 2012, and it traded as high as about $35 back in 2011.
Arch Coal Update July 21: After having risen to just over $5 (from an inclusion price of $4.10), the scenario that would have let Arch Coal double in 2014 has all but died. Shares have broken under $3 and the news of yet another complex being idled has turned a Hail Mary touchdown pass into an interception that leaves less than 4 minutes on the clock with no timeouts. Adios, or if not you have to use options to prove that sanity at least is offsetting unrealistic optimism.
Arch Coal Update February 25: After Earnings Trouble, Arch Can Still Double
3. Ceragon Networks
> Market Cap: $118 million
> Share Price: $3.15
> 52-Week Range: $2.35 to $4.96
> Forward P/E: 53
> Stock Options: Yes
Ceragon Networks Ltd. (NASDAQ: CRNT) is a top high-capacity wireless hauling specialist. This Tel Aviv-based company provides innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers.
Ceragon recently bolstered its balance sheet by raising about $30 million in a rescue offering that offered the stock at a considerable discount of $2.40 per share. This means that many new shareholders are sitting on gains of 30% and could decide to take profits. Another risk factor to consider is the business’ dependance on possibly spotty new orders. In early January, Ceragon said it had received two larger operator orders from North America and India.
Ceragon is hardly followed by Wall Street, but Needham & Co. recently issued a Strong Buy rating with a price target of $8.00 per share — more than double the current stock price. The stock traded near $14 in 2011. The company is expected to be profitable in 2014 and beyond, but revenue may have been down close to 20% in 2013, after peaking at $446 million in 2012.
> Market Cap: $533 million
> Share Price: $23.00
> 52-Week Range: $13.77 to $32.50
> Forward P/E: 53
> Stock Options: When first added No, but options do exist now
Control4 Corp. (NASDAQ: CTRL) made headlines recently when Google announced its $3.2 billion acquisition of Nest Labs — Control4’s rival player in the home automation market. Control4 operations include home theater automation and smart business place solutions. The company also seems further along than Nest in its operations. The consensus analyst price target of $25.20 per share is above the current share price, and the highest analyst target is $30.00 per share.
There are actually four factors to consider when it comes to risk: The stock price has already doubled once; competition in this space will be fierce and there may be a dependence on new construction trends; Control4 has only been public since the summer of 2013; and finally, there are also no stock options for hedging, but that should change very soon.
Control4 shares already more than doubled from the lows of last year, following the Google-Nest news, but the stock has since come back to earth. Analysts see sales growth of about 17% to $150 million in 2014, and earnings growth is expected to be close to 30%. The competition in this field of home automation and smarter “places” is only going to grow because of the immediate money-saving potential. The adoption rate, however, will depend largely on new construction trends, and existing competition from home security providers will grow. The good news is that Control4 could easily be acquired.
Control4 Update February 12: After Earnings, Control4 Can Still Double with stock price at $22.60.
> Market Cap: $1.04 billion
> Share Price: $17.00
> 52-Week Range: $10.22 to $18.50
> Forward P/E: 30
> Stock Options: Yes
GenCorp Inc. (NYSE: GY) is all about its Aerojet Rocketdyne unit, although the company is also a California acreage play. Investors will have to be patient here, because GenCorp has close to no analyst coverage. Its Aerojet Rocketdyne unit, which manufactures rockets and missile propulsion, has supported recent NASA activities, and it has deep space aspirations as well.
Perhaps the company’s biggest opportunity ahead lies with the Air Force’s Nuclear Weapons Center Propulsion Applications Program, where Aerojet Rocketdyne was recently awarded a contract to develop new Medium Class Stage III motors for America’s aging Minuteman Intercontinental Ballistic Missiles. While no financial details were released, one outside report estimates the contract’s value at around $11 billion or more.
Of course, GenCorp’s business revenue is subject to many variables, including cuts to defense spending and space exploration, any of which could derail its growth.
Still, even a partial success here – or any hint of a potentially big contract in the works — could propel the stock higher. At that point, analysts would likely be coming out of the woodwork to call GenCorp the next undiscovered company.