U.S. markets open in 7 hours 13 minutes
  • S&P Futures

    3,807.25
    -20.75 (-0.54%)
     
  • Dow Futures

    31,176.00
    -195.00 (-0.62%)
     
  • Nasdaq Futures

    12,706.25
    -125.50 (-0.98%)
     
  • Russell 2000 Futures

    2,168.30
    -31.70 (-1.44%)
     
  • Crude Oil

    62.68
    -0.85 (-1.34%)
     
  • Gold

    1,760.40
    -15.00 (-0.84%)
     
  • Silver

    26.94
    -0.74 (-2.69%)
     
  • EUR/USD

    1.2142
    -0.0044 (-0.36%)
     
  • 10-Yr Bond

    1.5180
    0.0000 (0.00%)
     
  • Vix

    28.89
    +7.55 (+35.38%)
     
  • GBP/USD

    1.3929
    -0.0084 (-0.60%)
     
  • USD/JPY

    106.1350
    -0.0950 (-0.09%)
     
  • BTC-USD

    46,221.42
    -4,232.15 (-8.39%)
     
  • CMC Crypto 200

    920.47
    -12.66 (-1.36%)
     
  • FTSE 100

    6,651.96
    -7.01 (-0.11%)
     
  • Nikkei 225

    28,966.01
    -1,202.26 (-3.99%)
     

2 Falling Knives to Catch

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
GuruFocus.com
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

- By Alberto Abaterusso

It sounds quite surprising that Wall Street recommends buying shares of Just Energy Group Inc (NYSE:JE) and Phoenix Tree Holdings Ltd (NYSE:DNK), as these two stocks performed so badly over the prior 52 weeks that they each lost more than 59%. As a result of being recommended by analysts despite their share price tumbles, these holdings are known as "falling knives."


Investors who purchase falling knives are trying to catch them near their lowest levels because they hope to make impressive gains out of their investments as a result of an expected strong rebound of the share price. However, investors should be aware that trading falling knives involves a remarkable risk as the strong decline in the share price could signal the onset of permanent issues.

Just Energy Group Inc

Based in Toronto, Canada, Just Energy Group Inc (NYSE:JE) is a provider of energy management solutions to households and businesses in North America and internationally.

Shares of Just Energy Group Inc were trading at around $7.48 per share at close on Tuesday following a 79.52% fall in the share price over the past 52 weeks.

The stock has a market capitalization of $364.05 million, a 52-week range of $4.27 to $38.61 and a 14-day relative strength index of 60, which indicates the stock is still trading far from oversold levels despite the share price tumble.

GuruFocus assigned a score of 4 out of 10 for the financial strength rating and of 5 out of 10 for the profitability rating of the company.

A Piotroski F-Score of 4 out of 9 and an Altman Z-Score of 0.35 tells that there is a chance for the business to go bankrupt within the next two years, as the financial situation is precarious.

On Wall Street, the stock has a median recommendation rating between strong buy and buy.

Phoenix Tree Holdings Ltd

Based in Beijing, China, Phoenix Tree Holdings Ltd (NYSE:DNK) is a real estate services company that gives apartments for rent to residents and corporate clients in China, after the properties have been leased from their owners.

Shares of Phoenix Tree Holdings Ltd were trading at around $2.86 per unit at close on Tuesday as a result of a decline of 78.54% that occurred over the past 52 weeks.

The stock has a market capitalization of $541.33 million, a 52-week range of $1.27 to $13.70 and a 14-day relative strength index of 50, which signals that the share price is still far from oversold levels.

GuruFocus assigned a score of 2 out of 10 for the financial strength rating of the company.

An Altman Z-Score of 1.9 tells there is a chance that the business could go bankrupt within the next two years.

On Wall Street, the stock has one recommendation rating of buy with a price target of 79.41 Chinese yuan (about $12.33) per share.

Disclosure: I have no positions in any securities mentioned.

Read more here:



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.