Low priced stocks tend to have more risk and more potential reward. The stocks below are trading at valuations that appear to be a buying opportunity for some investors. Many of these stocks fell on earnings disappointments, analyst downgrades, competitive concerns or lowered guidance. Others have just been seemingly ignored by the stock market and do not appear to be fully valued. Often these are short term events, so these situations and low prices often provide great buying opportunities. I have reviewed a number of stocks which are trading around $5 or less and listed reasons why these shares might double in value. Here are the stocks:
RAIT Financial Trust (RAS) shares are trading at $2.42. RAS is a real estate investment trust, based in Pennsylvania. These shares have traded in a range between $1.30 to $4.75 in the last 52 weeks. The 50 day moving average is $2.92 and the 200 day moving average is $2.14. You can see the repeated insider buying here.
Why RAS shares could double: Financial results and the balance sheet have been improving. This stock trades at a significant discount to the book value which is currently stated at $8.67. The stock dropped hard a few weeks ago from about $3, when RAS announced an offering of $100 million in convertible notes. This has created a buying opportunity to pick up cheap shares. If RAS puts in a couple of good quarters, these shares could back to the 52 week high of $4.75.
Dry Ships (DRYS) shares are trading at $4.70. Dry Ships operates drybulk ships and drilling rigs. The stock has dropped from 52 weeks highs of $6.82 per share. The 50 day moving average is $4.88 and the 200 day moving average is $4.76. The earnings estimates for DRYS are $1.11 for 2011.
Why DRYS shares could double: These shares are cheap and trade at less than 5 times earnings. They also trade below book value which is stated at $10.92. Credit Suisse (CS) reiterated a outperform rating with a $9 price target for DRYS which you can read here.
General Steel Holdings, Inc., (GSI) shares are trading at $2.33. GSI is a manufacturer of steel products, based in China. These shares have traded in a range between $2.21 to $4.25 in the last 52 weeks. The 50 day moving average is $2.46 and the 200 day moving average is $2.66.
Why GSI shares could double: Financial results have been improving. GSI recently reported a rise in revenues and a profit for the quarter which you can read about here. The stock trades just slightly over the book value which is currently stated at $1.82. Insiders seem to believe these shares are a good value and they have been buying shares heavily over the past several months. You can see the repeated insider buying here. This company could benefit directly or indirectly from the rebuilding efforts in Japan. The demand for steel in Asia could result in higher prices and/or more orders for GSI.
Northgate Minerals (NXG) shares are trading at $2.76. NXG is a gold miner based in Vancouver, Canada. The 50 day moving average is about $2.77 and the 200 day moving average is about $2.93. Earnings estimates for NXG are 4 cents per share in 2011 and 21 cents for 2012.
Why Northgate shares could double: Northgate reported adjusted net earnings of $17.2 million or $0.06 per diluted share and cash flow from operations of $56.5 million or $0.19 per diluted share for the fourth quarter of 2010. This shows improved results and Northgate's cash balance at the end of the year (2010) was $334.8 million. Northgate has the Young-Davidson mine which is projected to achieve open pit production and the first gold pour in the 1st half of 2012. The Young-Davidson mine will provide a new catalyst for growth as the production date comes closer at this mine the shares could rise significantly. With gold prices continuing to advance this increases the prospects for NXG shares.
Crocodile Gold (OTC:CROCF) shares are trading at about $1. Crocodile Gold is based in Canada with mines in Australia. The 50 day moving average is $1.15 and the 200 day moving average is $1.26. Crocodile Gold just raise a significant amount of capital to fund more development. With the capital raise behind them, they have the cash needed to fully develop their properties. This company has many exciting plans for the future. Read the investor presentation from Crocodile here.
Why Crocodile shares could double: Crocodile Gold has an experienced management team with several top executives having been previously employed at Goldcorp (GG). When you see several executives leave a major, well established company like Goldcorp, they must be seeing serious upside in Crocodile. This company appears to be developing itself to be a prime acquisition target in the future. Crocodile is currently developing the Cosmo underground mine which has great potential and is expected to start production around mid 2011. A couple of analysts have price targets of about $2 per share for this stock. You can read more about those projections and other analyst comments here.
The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.