While most of Wall Street focuses on large-cap 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 difficult 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. Note that last week’s sizzling under-$10 picks included tech and biotech companies.
While all of these picks are rated Buy at Goldman Sachs, they are much better suited for aggressive investors. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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.
Google announced in August that it is buying a 6.6% stake in the home security firm for $450 million in a deal that will allow it to provide service to customers of its Nest home security devices. ADT said that the companies will work to combine Nest products like cameras, thermostats, doorbells and alarm systems with ADT’s installation, service and professional monitoring network.
The company also expects to offer certain Google devices to its customers beginning this year and to expand the integration in 2021.
The Goldman Sachs price target of $13 compares with a lower $10.78 consensus target on Wall Street. ADT stock recently has traded between $9 and $10 a share.
Adverum Biotechnologies
This microcap biotech could prove to be a gigantic winner. Adverum Biotechnologies Inc. (NASDAQ: ADVM) is a clinical-stage gene therapy company that develops gene therapy product candidates to treat ocular and rare diseases.
Its lead product candidate is ADVM-022, a single intravitreal injection gene therapy candidate used for the treatment of patients with chronic retinal diseases, including wet age-related macular degeneration and diabetic macular edema. Adverum Biotechnologies has license and collaboration agreements with the University of California, Cornell University, GenSight Lexeo and Virovek.
The stock was hit hard recently in reaction to a suspected unexpected serious adverse reaction of hypotony (clinically relevant decrease in ocular pressure). The event happened during a Phase 2 trial valuating ADVM-022 gene therapy to treat diabetic macular edema. The company immediately decided to unmask the 36-patient trial to determine if any other treated patients might have similar issues.
Despite the setback, Goldman Sachs kept its Buy rating but lower the price target to $10. The consensus target on Adverum Biotechnologies is $7.88. Shares have traded below $4 so far this month.
Infinera
Some feel that this top company would be an outstanding addition to a networking giant as a takeover candidate. Infinera Corp. (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations.
Infinera’s portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, optical line systems, router platforms and a suite of networking and automation software offerings.
Last summer, Infinera and Windstream completed a live network trial that successfully achieved 800G single-wavelength transmission over 730 km across Windstream’s long-haul network between San Diego and Phoenix. The results of the trial mark a major milestone in optical networking by demonstrating that ultra-high-speed optical transmissions, such as 700G and 800G, powered by Infinera’s ICE6 optical engine and Windstream’s high-performance fiber network, can be deployed in real-world network applications over significant distances.
The $12 Goldman Sachs price objective is above the $10.83 consensus target. Infinera stock was trading $8.50 late last week.
Kosmos Energy
This is a solid energy exploration and production play, and with oil and gas prices rising, it could be an outstanding idea now. Kosmos Energy Ltd. (NYSE: KOS) is a deepwater independent oil and gas exploration and production company focused along the Atlantic Margins.
The company’s primary assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as a gas development offshore Mauritania and Senegal. It also maintains a proven basin exploration program.
Kosmos Energy’s focus is on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.
Goldman Sachs has a $4.50 target on Kosmos Energy stock. The posted consensus target is $3.55, and shares faced resistance at the $3 mark late last week.
Southwestern Energy
This stock has traded sideways all year long and could be ready to run. Southwestern Energy Co. (NYSE: SWN) is one of the largest U.S. natural gas producers. Its primary producing locations are in the Fayetteville region and the Marcellus Shale. The company has acquired acreage in southwest Appalachia, is exceeding expectations and provides a runway to growth.
The company’s estimated proved natural gas, oil and natural gas liquid reserves comprise 12,721 billion cubic feet of natural gas equivalent (Bcfe) and 929 Bcfe of proved undeveloped reserves. It also engages in marketing of natural gas, oil and natural gas liquids. Southwestern Energy serves energy companies, utilities and industrial purchasers of natural gas.
Goldman Sachs has set its price target at $5, but that may be ready to move higher. The consensus target is $5.24, and Southwestern Energy stock saw a nice pop on Friday to push it back over the $5 level.
These are five stocks for aggressive investors looking to get share count leverage on companies that have sizable upside potential. While not suited for all investors, these are not penny stocks with absolutely no track record or liquidity, and Goldman Sachs has research coverage.
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