Investing

Goldman Sachs Has 5 Stock Picks Under $10 With Massive Upside Potential

Lee Jackson

Published: November 10, 2018 7:20 am

Last Updated: January 11, 2020 3:06 pm

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 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.

Goldman Sachs is the premier investment bank in the world, so we screened the firm’s outstanding research database and found five stocks trading under the $10 level that could provide investors with some solid upside potential. While much better suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.

ADT

This top security company is a well-known protector of homes and businesses. ADT Inc. (NYSE: ADT) is the largest residential and second-largest commercial security monitoring company in North America. The company serves over 7 million customers, installing over a million systems per year. Roughly 94% of revenue is generated in the United States, with the remainder from Canada.

ADT reported good third-quarter results that slightly beat on revenue and adjusted EBITDA, and it moved 2018 guidance higher. Third-quarter revenue rose 6% and adjusted EBITDA 3% year over year, with both 1% ahead of estimates. So far this year, free cash flow rose a strong 26% year over year. While competitive fears still linger, undemanding valuation and strong free cash flow growth make the stock very attractive here.

The Goldman Sachs price target on the shares is a whopping $15, which compares with a Wall Street consensus target of $12.94. The stock traded on Friday at $8.25 per share.

Kosmos Energy

This is a solid energy exploration and production play. Kosmos Energy Ltd. (NYSE: KOS) is a conventional oil and gas exploration and production company focused on the Atlantic margin. The company’s focus is on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.

Although many companies in the industry have scaled back exploration, Kosmos believes this is the best route to generating value, seeking to replicate its discovery and development of the Jubilee field in Ghana.

Goldman Sachs has a $9 price objective for the shares, while the posted consensus target price was last seen at $10.21. The shares were changing hands on Friday at $5.75 apiece.

24/7 Wall St.
5 Merrill Lynch US 1 Health Care Stocks Could Be Big 2019 Winners

Newmark

This real estate firm has been a rumored a takeover target. Newmark Group Inc. (NASDAQ: NMRK) is a leading U.S. commercial real estate brokerage firm. Its more than 1,500 producers operate from over 120 offices in North America, and they generated $1.6 billion in revenue in 2017.

Services offered include leasing (39% of revenue); capital markets (25%); mortgage origination (13%); mortgage servicing (7%); and property management, technology solutions, valuation and advisory and consulting (17%).

The $16 Goldman Sachs price objective is a little lower than the consensus target of $16.50. The stock was last seen trading at $9.75 per share.

Snap

This social media darling’s initial public offering was red hot out of the gate but the stock has tumbled back to earth over the past year. Snap Inc. (NYSE: SNAP) is a social media company consisting of leading social media platform Snapchat and hardware device Spectacles. Through Snapchat, the company facilitates communication through visual media, enabled by the mobile camera.

Users are able to share photos, videos and text and are exposed to publisher content from top media companies such as The Wall Street Journal, Vogue, People, MTV and CNN. Advertisers use the platform to promote products, which has a strong reach with the coveted millennial demographic.

Goldman Sachs has set its price target at $10. The consensus target is much lower at $8.02, and the shares traded at $6.90 on Friday.

Vivint Solar

Aggressive accounts may want to study this green energy play. Vivint Solar Inc. (NYSE: VSLR) finances, installs and services solar power systems on customer premises. The majority of the company’s installations are leased from Vivint by its customers.

The company posted solid third-quarter results, and Vivint is seeing stronger growth in key California and Northeast markets in particular due to its dynamic pricing model introduced earlier this year. Company management recently emphasized expectations for growth at or above general residential solar market growth rates, estimated at around 10% going forward, with current growth trends expected to continue supported by growing bookings to backlog.

The Goldman Sachs price target is $7.50. That compares with the consensus target of $8.10 and the recent share price of $5.80.

These are five stocks trading under the $10 level that have big upside to the analysts’ price targets. Again, while not suitable for conservative accounts, aggressive investors can get some solid share leverage buying 5,000, 10,000 or more shares and can make money on a much smaller share price move. Plus they are all covered with a Buy rating at the top firm on Wall Street, Goldman Sachs.