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These 3 Falling Knives Are Expected to Outperform

- By Alberto Abaterusso

After declining more than 59% over the past year through April 11, the following falling knives may be appealing to investors who believe they can outperform the overall market over the next 52 weeks as a result of strong recommendation ratings.

Further, these companies have a GuruFocus financial strength rating of at least 5 out of 10, reducing the bankruptcy rate risk, which is quite common among falling knives.


Here are the results of my search:

Nektar Therapeutics Inc. (NKTR) closed at $35.75 per share on Thursday after a 60% decline over the past year through April 11, sending the price below the 200-, 100- and 50-day simple moving average lines. The closing price on Thursday was 22.5% off the 52-week low of $29.22 and 193% from the 52-week high of $104.88.

The San Francisco-based biotech company's market capitalization is $6.22 billion. The price-earnings ratio is 9.93 versus the industry median of 28.79, the price-book ratio is 3.60 versus the industry median of 4.10 and the price-sales ratio is 5.43.

GuruFocus assigned a financial strength rating of 8 out of 10 and a profitability and growth rating of 7 out of 10.

Wall Street issued an average target price of $70.83, reflecting 98% upside from the closing price on Thursday.

The 14-day relative strength index of 51.17 suggests the stock is neither overbought nor oversold.

Shares of Stamps.com Inc. (STMP) closed at $78.6 on Thursday for a market capitalization of approximately $1.4 billion. The stock declined 61% over the last 52 weeks through April 11, sending the share price below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $77.57 to $285.75.

Headquartered in California, the provider of internet-based mailing and shipping solutions has a price-earnings ratio of 8.87 versus the industry median of 24.79, a price-book ratio of 2.40 versus the industry median of 2.93 and a price-sales ratio of 2.55 compared to the industry median of 2.86.

GuruFocus assigned a financial strength rating of 8 out of 10 and a profitability and growth rating of 9 out of 10.

Wall Street issued an average target price of $159.60, reflecting 103% upside from Thursday's closing price.

The 14-day relative strength index of 28.47 suggests the stock is approaching oversold levels.

Shares of Adaptimmune Therapeutics PLC (ADAP) closed at $4.4 on Thursday for a market capitalization of $458.64 million. The stock has declined 65% over the past year through April 11.

The chart below shows the stock is trading near the 50-day simple moving average line, but below the 200- and 100-day lines. The closing share price on Thursday was 24% above the 52-week low of $3.55 and 232.5% below the 52-week high of $14.63.

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The U.K.-based biotech company has a price-book ratio of 1.85 versus the industry median of 4.1 and a price-sales ratio of 7.35.

GuruFocus assigned a financial strength rating of 10 out of 10 and a profitability and growth rating of 2 out of 10.

Wall Street issued an average target price of $13, which represents a 195.5% growth from the closing price on Thursday.

The 14-day relative strength index of 48.72 suggests the stock is neither oversold nor overbought.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.