Analysts Recommend These 2 Falling Knives
Falling knives are companies whose share prices have declined more than 59% over the last 52 weeks. Some investors purchase shares of these securities because they expect that the prices will rebound enough to deliver large returns.
The sharp decline in the share price, however, could signal the beginning of financial problems for the company, which may hurt the portfolio of an investor severely if the business fails.
However, if an investor chooses falling knives with a moderate to low financial burden, he can significantly lower the risk of loss.
The following securities also have recommendation ratings of moderate buy to strong buy, which increases the odds the investment will turn out to be a successful one.
Calyxt
Shares of Calyxt Inc. (NASDAQ:CLXT) closed at $3.94 on Friday for a market capitalization of $129.83 million. The stock declined 67.42% over the last 12 months through Nov. 15.
The Roseville, Minnesota-based developer of healthier specialty food ingredients and food crops has a debt-equity ratio of 0.26, which is below, therefore better than, the industry median of 0.43.
GuruFocus assigned a positive rating of 5.8 out of 10 for the company's financial strength, but a low rating of 2 out of 10 for its profitability.
The closing price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $3.83 to $19.3.
The price-book ratio is 1.8 compared to the industry median of 1.39 and the price-sales ratio is 36.82 versus the industry median of 0.89.
The 14-day relative strength index of 37 suggests the stock is approaching oversold levels.
Wall Street issued a moderate buy recommendation rating with an average target price of $15.
KushCo Holdings
Shares of KushCo Holdings Inc. (KSHB) closed at $1.55 per share on Friday for a market capitalization of $166.41 million. The stock declined 70% over the past 52 weeks through Nov. 15.
The Cypress, California-based vendor of packaging supplies and personalized branding solutions in North America and Europe has a debt-equity ratio of 0.31, which is higher than the industry median of 0.5.
GuruFocus assigned a moderate rating of 5 out of 10 for the company's financial strength, but a low rating of 3 out of 10 for its profitability.
The closing price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.26 to $7.2.
The price-book ratio is 1.38 compared to the industry median of 1.02 and the price-sales ratio is 0.9 versus the industry median of 0.63.
The 14-day relative strength index of 40 suggests the stock is neither oversold nor overbought.
Wall Street issued a strong buy recommend rating and analysts have established an average target share price of $4.83.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.
