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2 Falling Knives Expected to Rebound

Falling knives are companies whose stocks have fallen more than 59% over the last 12 months. Investors hold shares of these companies because they believe their share prices will rebound, rewarding them remarkably.

The tumble in the share price could be the beginning of financial distress which may hurt an investor's portfolio badly if the business goes bankrupt.


If investors choose falling knives with a moderate to low financial burden they can meaningfully lower the risk of loss.

Moreover, the following securities have received positive recommendation ratings ranging between overweight and buy from sell-side analysts on Wall Street, increasing the likelihood they will bounce back.

Here are some results from my search:

Shares of Antero Midstream Corporation (NYSE:AM) closed at $7.04 on Thursday for a market capitalization of $3.57 billion. The stock declined 60% over the last twelve months through Oct. 3.

The Denver-based oil and gas midstream company has a debt-equity ratio of 0.64 versus the industry median of 1.1. Antero's debt-equity ratio is ranked higher than 57 out of 85 operators in the Oil & Gas - Midstream industry.

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

The closing share price on Thursday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $6.55 to $18.82.

The price-book ratio is 0.26 versus the industry median of 1.56 and the enterprise value-Ebitda ratio is 19.85 versus the industry median of 10.86.

The 14-day relative strength index of 42 suggests the stock is neither overbought nor oversold.

On Aug. 7, Antero distributed a quarterly dividend of 30.8 cents per common share, generating a forward dividend yield of 17.18% versus the industry median of 7.25% based on Thursday's closing price.

Wall Street issued an overweight recommendation rating with an average target price of $11.06.

Shares of Cellectis SA (NASDAQ:CLLS) closed at $10.09 per share on Thursday for a market capitalization of $428.32 million. The stock fell 64% over the past 12 months through Oct. 3.

The French biotechnology company has a low debt-equity ratio of 0.13 compared to the industry median of 0.12. Cellectis' debt-equity ratio is ranked higher than 425 out of 856 companies operating in the biotechnology industry.

GuruFocus assigned a positive rating of 5 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 Thursday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $9.92 to $28.56.

The price-book ratio is 1.28 versus the industry median of 3.13 and the price-sales ratio is 114.87 versus the industry median of 9.32.

The 14-day relative strength index of 33 suggests the stock is not far from oversold levels.

Wall Street issued a buy recommendation rating with an average target price of $40.83.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.