Investing

5 Analyst Stock Picks Under $10 Given Massive Upside Targets

Jon C. Ogg

Published: August 25, 2018 7:15 am

Last Updated: January 11, 2020 6:50 pm

Investors have gone through a lot in 2018, seeing much more volatility but also seeing the stock market hit all-time highs. The market’s bottom was almost 10 years ago, and the bull market is now the longest running on record. Now investors are looking for new ideas on how to position their assets and holdings for the coming months and beyond.

24/7 Wall St. reviews dozens of analyst upgrades, downgrades and initiations each day. This ends up being hundreds of analyst calls each week. Many speculative stocks are mixed in with the major index and large companies in the research calls, and some of these offer major upside price targets.

Some investors and speculators have kept an eye on lower-priced stocks as a way to reach for outsized market gains. After screening the daily 24/7 Wall St. analyst research database, we found stocks trading under $10 that analysts feel could bring investors solid upside potential. These analyst picks are only suited for aggressive investors. Another consideration is that most Dow Jones industrials or S&P 500 stocks are given upside targets of about 8% to 10% with most new analyst Buy and Outperform ratings, which means that low-priced analyst stock picks with big upside projections automatically come with more risk than larger and more established companies.

These five stocks trading under $10 were given the equivalent of Buy ratings and large projected upside by analysts during the week of August 24, 2018.

Ardelyx Inc. (NASDAQ: ARDX) was started with a Buy rating at Jefferies on Friday, and the $7 price target compared with a $4.15 prior close. Its shares were up about 3% at $4.30 in the morning the call was made, and the market cap was roughly $265 million. Ardelyx also has a 52-week trading range of $3.58 to $8.65. While this may imply major upside of more than 60% if the analyst call proves correct, Leerink had resumed coverage on Ardelyx with an Outperform rating and a $13 price target back in March of 2018. Investors may want to keep in mind that Ardelyx sold $50 million worth of shares at $4.00 per share in May of this year. Jefferies and Leerink were the joint book-running managers for that offering.

Plug Power Inc. (NASDAQ: PLUG) was started with an Outperform rating and assigned a $2.50 price target at Oppenheimer on Thursday. This call represented 28% in implied upside from the prior $1.95 closing price, but its shares were at $1.98 late on Friday. Plug Power has a small following with a consensus analyst target of $3.54, and this call was targeting fuel cell systems for the material handling and stationary power markets. Plug Power’s 52-week range is $1.53 to $3.21.

Vital Therapies Inc. (NASDAQ: VTL) was started as Overweight and assigned an $18 price target at Cantor Fitzgerald on Tuesday, effectively representing a “double-your-money” call if the target proves to come true. The shares were indicated up over 7% at $9.70 on Tuesday, but this stock had slid lower to under $8.50 by the end of the week. Vital Therapies has traded in a 52-week range of $2.75 to $9.75.

WMIH Corp. (NASDAQ: WMIH) was started with an Outperform rating and assigned a $1.90 price target at Wedbush Securities on Thursday, and note the prior closing price of $1.57. Unfortunately for WMIH, its shares were lower on Friday after a competing call rated the stock with the equivalent of a Sell rating and assigned a mere $1.25 price target. WMIH also has a one-for-12 reverse stock split coming soon.

YRC Worldwide Inc. (NASDAQ: YRCW) was raised to Buy from Hold at Deutsche Bank on Wednesday. The stock was barely under $10 at $9.93 late on Friday, but the close before the call had been $9.18. This particular call talked up the investment of renewing its aging truck fleet and opportunities to improve labor flexibility and driver productivity. YRC Worldwide has a very thin analyst coverage universe. It has a $340 million market cap and a 52-week trading range of $8.07 to $17.61.

The list of analyst stocks under $10 for the week of August 17 included Caesars Entertainment, Cidara Therapeutics, Ford, Kosmos Energy and Rigel Pharma. Some are well-known names, while others are not.

As always, particularly with stocks that are obviously very speculative by nature, caveat emptor!