Investing

5 End-of-Summer Stocks Trading Under $10 With Giant Upside Potential

Lee Jackson

Published: August 31, 2019 9:10 am

Last Updated: January 30, 2020 4:43 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. 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.

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

Centennial Resource Development

Shares of this off-the-radar company could have solid upside potential. Centennial Resource Development Inc. (NASDAQ: CDEV) is a pure-play Permian oil and gas producer. The company holds 87.9 thousand net acres across the Delaware Basin, with its largest position in Reeves and Pecos, Texas, (76.1 thousand net acres) and recently acquired a position in Lea County, New Mexico, (11.9 thousand net acres). The company’s legacy position, which it has held since the time of its initial public offering in late 2016, covers 42.5 thousand net acres in Reeves, Pecos and Ward counties.

The company’s early 2019 production guidance was much lower than the Wall Street expectations, but some see the strategy as a solid move, and the firm still plans to complete 65 to 75 wells this year. In addition, the firm’s solid well results suggest good operational momentum.

Barclays just upgraded Centennial Resource Development shares to Overweight from Equal Weight, and the firm has set its price target at $6. That compares with the higher Wall Street consensus target of $8.27. The stock closed trading on Friday at $4.82 per share.

Cision

This Chicago-based public relations (PR) related company could very well be a takeover target. Cision Ltd. (NYSE: CISN) is a provider of PR software. It also provides media distribution, media intelligence and related professional services. The company’s products and services help manage, execute and measure strategic PR and communications programs.

The company’s Cision Communications Cloud is a cloud-based platform that integrates each of its point solutions into a single unified interface and arms brands with the insights they need to link their earned media to strategic business objectives while aligning it with owned and paid channels. Its platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence.

SunTrust has a Buy rating with a price target last seen at $9. That compares to the much higher posted consensus price target of $15.33. The stock closed trading at $6.92 a share on Friday.

This biopharmaceutical company has been mentioned as a possible takeover candidate and the stock has been battered over the past six months. La Jolla Pharmaceuticals Co. (NASDAQ: LJPC) engages in the discovery, development and commercialization of therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases.

Giapreza (angiotensin II), formerly known as LJPC-501, was approved by the U.S. Food and Drug Administration (FDA) on December 21, 2017, as a vasoconstrictor indicated to increase blood pressure in adults with septic or other distributive shock. Furthermore, the company announced last week that the European Commission has approved Giapreza for the treatment of refractory hypotension in adults with septic or other distributive shock. While the news is positive, the SunTrust analysts think additional upside should come if the company joins with a partner for its commercialization efforts in the European Union.

SunTrust has a Buy rating and a whopping $20 price target, while the consensus price objective was last seen at $19.80. The shares ended the week trading at $9.57 apiece.

Northern Oil and Gas

Stifel analysts remain very positive on this small-cap energy play. Northern Oil and 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 the company’s operating partners representing what may be as the best operators in the basin, there is upside potential.

The company recently posted solid second-quarter results, and it also announced that its chief executive officer was stepping down, a move that some on Wall Street welcome after some issues in the past. Moreover, it was noted this week that Northern is expected to have free cash flow equal to almost three-quarters of the stock market capitalization over the next year.

Stifel’s monster $5.80 price target compares to the $3.87 consensus target for the shares, which ended trading most recently at $1.84.

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VEREIT

This solid real estate play could hold some very large total return upside. VEREIT Inc. (NYSE: VER) company owns 4,291 properties located in 49 states, as well as the District of Columbia, Puerto Rico and Canada.

The company owns retail, office and industrial assets. In addition to its owned portfolio, the company manages $7.0 billion of gross real estate investments on behalf of the Cole Capital non-listed real estate investment trusts.

The $11 Goldman Sachs price target on the stock compares with the analysts’ consensus target of $9.75. VEREIT shares closed most recently at $9.75.

These five stocks trading under the $10 level have big upside to the analysts’ price targets. Again, while they are 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, all these stocks are covered with Buy ratings at major Wall Street firms.