Top 3 Analyst Stock Picks Under $10 Per Share

by: Simon Monger

Logitech International SA (NASDAQ:LOGI), Flow International Corporation (NASDAQ:FLOW-OLD) and Cost Plus Inc. (NASDAQ:CPWM) are three analyst stock picks priced under $10 per share. In this article, we’ll take a look at these three analyst stock picks, the catalysts driving the bullish predictions, and how investors can capitalize on them over the coming quarters.

Logitech Raises Price Target

Logitech International SA, a provider of personal peripherals for computer and other digital platforms, was recently upgraded to Outperform from Market Perform at Avondale with a price target of $15.00 per share. At a significant 67% premium to the current market price, the analyst’s price target reflects a very bullish outlook on the firm’s future.

With the peripheral provider’s shares trading down more than 50% year to date, many investors are starting to take another look at the name as a value buy. The company may have experienced a loss on Google TV bet, but the iconic company remains a growing company that is nearly debt-free. And with new plans to target emerging markets, its 20x P/E may be a bargain.

Investors may want to consider a pairs trade to isolate this opportunity. By simultaneously buying LOGI and short-selling related ETFs like the SPDR S&P Semiconductor ETF (NYSEARCA:XSD) or Vanguard Consumer Staples ETF (NYSEARCA:VDC), investors can profit from Logitech’s outperformance while protecting themselves from a broad market decline.

Flow International Initiated with a Buy Rating

Flow International Corporation, a technology-based global company offering waterjet cutting, surface preparation and cleaning solutions, was initiated with a Buy rating and $3.50 per share price target by Roth Capital. At a significant 40% premium to the current market price, the analyst’s price target reflects a very bullish outlook on the company’s future.

Earlier this month, the company reported $60 million in revenues and net income of 1 cent per share. While these figures came in below consensus, the stock’s growth year-to-date remains impressive in the face of the macroeconomic slowdown facing its end markets. Meanwhile, recent order patterns appear to be showing continued signs of stability, which could be the first indications of a turnaround.

Investors looking to capitalize on Flow’s outperformance may want to consider buying FLOW and short-selling a broad market ETF like the SPDR S&P 500 ETF (NYSEARCA:SPY). This position hedges against potential downside for the overall market, which would adversely affect the company’s end markets. However, the investors still profits if the company outperforms.

Cost Plus Favorably Mentioned by Two Analysts

Cost Plus Inc., a specialty retailer of casual home furnishing and entertaining products in the United States, was favorably mentioned by two analysts in recent weeks. Earlier this month, Sidoti initiated the company with a Buy rating and $13.00 per share price target, while KeyBanc initiated the stock with a Buy rating and $9.00 per share price target.

During the second quarter, the company reported revenues of $197.95 million and a narrower-than-expected net loss of 36 cent per share. Meanwhile, the firm’s same store sales increased 2.8% during the quarter due to a 5.5% increase in customer count that was partially offset by a 2.5% reduction in the average ticket (order amount) per customer.

In this case, investors may want to consider buying CPWM while short-selling a consumer discretionary ETF like SPDR Retail ETF (NYSEARCA:XRT) or Merrill Lynch Retail HOLDR (NYSEARCA:RTH). This will provide investors with a safety cushion if the retail market softens, while preserving any upside when Cost Plus outperforms its competitors.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.