Judging from my mail, many of
you are looking for beaten-down stocks trading in the under $5 per
share range.
Wrong!
But don’t go there. Cheap
stocks get that way because most market players see them as “done
for.” And in my experience, they’re usually right.
In fact, I recently spent some
time researching whether, on average; you’d make more money buying
cheap stocks or expensive stocks. Guess what?
Research Says
All else equal, you’d score
higher returns buying $10 stocks than $5 stocks, $20 stocks than $10
stocks, etc. In fact, that relationship goes all the way up to $200.
That is, stocks priced at $200 per share average higher returns than
those going for $100 per share.
Also, my research has found
that stocks that have either been upgraded to “strong buy” or “buy,”
and/or had their price targets raised by two or more analysts, tend
to outperform the overall market.
Not Cheap & Analyst
Upgrades
With all that in mind, here
are four stocks; trading for $11 or more per share, that were also
upgraded (buy/sell rating or price target) by at least two analysts
within the past few days.
•
Atlas Air Worldwide (AAWW)
operates a cargo airline, provides passenger charter services, and
leases aircraft to commercial airlines. Recently traded around $28,
roughly at breakeven for the year, but down from its February $34
peak. Recent analyst actions include ratings upgrades from
“neutral” to positive” and from “peer perform” to “outperform” with
target prices of $39 and $32, respectively.
•
Intercontinental Exchange (ICE) operates global online
financial marketplaces used to trade stock futures and other exotic
securities. Recently traded at $88 per share, about 7% off of its
February high, Year-to-date, it’s only down around 4%. Recent
analyst actions include an upgrade to “buy” with at $106 price
target from “hold” and a lift in price target to $102 from $93.
•
Science Applications International (SAIC) is a technology
consultant to U.S. government agencies on projects involving
defense, intelligence and space issues. Recently traded at $82, down
14% from its February high and down 7% year-to-date, Recent analyst
actions include an upgrade from “neutral” to “buy” with a $97 price
target and another price target boost to $94 from $91.
•
Ares Capital (ARCC) is a Business Development Company
(BDC). BDCs are a special type of corporation created by Congress to
encourage lending to middle market sized businesses. BDCs can pay
high dividends because they don’t pay federal income taxes as long
as they distribute at least 90 percent of taxable income to
shareholders. Ares currently pays a 14.3% dividend yield. Recently
traded at around $11.50 per share, down 40% from its February high
and down 39% year-to-date. Recent analyst actions include ratings
upgrades from “neutral” to buy” and from “market perform” to
“outperform” with target prices of $16 and $14, respectively.
Those are
my ideas. But do your own due diligence, the more you know about
your stocks, the better your results.
published 4/28/20
