With less than a week left in what has been the best year for the S&P 500 since 1997, we have reviewed our top Wall Street firms for their stocks priced under $10 that may have gigantic upside potential for 2014. Investors that carve out part of their investment capital for these top stocks to buy may be in for a solid start to the new year.
As a rule, Wall Street brokers and financial advisors typically try to steer their clients away from stocks that trade under $10, and they avoid like the plague stocks that trade for less than $5. There are myriad reasons, not the least of which is the broker or advisor faces scrutiny from the compliance manager.
The flip side to these generalities is that stocks trading under $10 can offer investors the ability to accumulate relatively large position in their portfolios. These companies often have the highest risk-reward profiles, and often offer investors the most perceived leverage as well. Here are some of the top analyst stocks to buy for 2014 that trading under $10.
Alcatel-Lucent S.A. (ALU) remains a top name to buy at Merrill Lynch. The ill-fated merger between the two companies has taken many years and many CEOs to find any traction. However, the big carriers are starting to increase orders and the company is getting a nice share of them. Merrill Lynch has a $6.58 price target. The consensus estimate is at $4. The stock closed Thursday at $4.34.
Cyan Inc. (CYNI) has missed two quarters in a row following its initial public offering. In addition, management has materially lowered expectations for 2014 growth. On the positive side, the stock now discounts a lot of bad news and may provide solid upside as business improves. The company provides carrier-grade networking solutions that transform disparate and inefficient legacy networks into open, high-performance networks. The J.P. Morgan price target is $8, and the consensus is at $6.75. Cyan closed Thursday at $4.70.
Galena Biopharma Inc. (GALE) may be the home run that biotech investors are looking for. With an FDA approved pain medication, a partnership with generic giant Teva Pharmaceuticals Inc. (TEVA) and a superior pipeline, the stock may be an acquisition target. Aegis Capital has a $5 price target on the stock, while the consensus is at $4.50. Galena closed on Thursday at $4.07. In recent trading the stock has seen huge volume increases. Big investors may be building a big position.
Glu Mobile Inc. (GLUU) is a top mobile gaming stock to buy at Cowen and Company for 2014. The company releases its video games internationally via multiple platforms, including iOS, Android, Amazon, Windows Phone and Google Chrome. Embodying the "freemium" model, games created by Glu are typically free to play. Glu generates revenue through in-game micro-transactions consisting of $1.99 or less. The Cowen price target for the stock is $5 and is the highest on Wall Street. The consensus target is posted at $4. Glu Mobile closed Thursday at $3.76. So a move to the Cowen target would represent a 40% gain for investors.
Infinera Corp. (INFN) is a company that J.P. Morgan sees benefiting from the continued increase optical spending. FBR Capital initiated coverage on the stock last week with an Overweight rating. The J.P. Morgan price target is $13, and the consensus comes in at $12.75. Infinera closed Thursday at $9.71.
Nokia Corp. (NOK) is a top name to buy at Merrill Lynch. A former mega cap European leader, Nokia recently sold its handset business Microsoft Corp. (MSFT) for what was considered a low 5.5 billion euros. Even though it is selling a business representing half of its sales, Nokia's share price has doubled since the deal was announced in early September. Investors may well be more optimistic, but they also have big questions about the future direction of the new Nokia. Merrill Lynch has a $9.65 price target on the stock. The Thomson/First Call estimate is posted at $7.67. Nokia closed Thursday at $7.89.
Novavax Inc. (NVAX) makes the Piper Jaffray list of top stock o buy for 2014 and is also a buy at Lazard and FBR Capital and made our five big analysts stock picks for 2014 list. This clinical-stage biopharmaceutical company uses recombinant nanoparticle technology to develop vaccines for a wide variety of infectious diseases. The company presently has six vaccine candidates undergoing clinical trials, with a seventh (rabies) being readied for a Phase I study later this year. The Piper Jaffray price target is $7. The consensus estimate is at $4 and the stock closed Thursday at $5.13.
ON Semiconductor Corp. (ONNN) is another tech name to buy at Merrill Lynch. The company is driving energy efficient innovations, empowering design engineers to reduce global energy use. The company offers a comprehensive portfolio of energy efficient power and signal management, logic, discrete and custom solutions to help customers solve their unique design challenges in automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace and power supply applications. The Merrill Lynch price target for the stock is $9, and the consensus is at $8.80. ON closed Thursday at $7.10.
Sirius XM Radio Inc. (SIRI) continues to draw new subscribers with its programming, and it is also a top stock to buy at Merrill Lynch for 2014. Despite challenges from other companies offering audio programming, Sirius XM has continued to be a strong player despite the fact that the stock has the highest short interest on Wall Street. Merrill Lynch has a $5 target, and the consensus target stands at $4.45. The stocks closed Thursday at $3.59.
Zogenix Inc. (ZGNX) is a top name to buy at Oppenheimer for 2014. The FDA recently approved its top new drug Zohydro. The drug is a timed-release form of hydrocodone, which is one of the most highly prescribed pain medications in the world. The Zogenix drug contains no acetaminophen, which has been proven to cause liver damage. This is a boon to patients suffering from oncology-related pain, as often radiation therapy weakens or damages the liver. The Oppenheimer price target for the stock is set at $5, the same as the consensus price target. Zogenix closed Thursday at at $3.34.
With an outstanding year almost in the book for investors, what is the plan for 2014? Thomas Lee, the chief equity strategist at J.P. Morgan, believes that we have entered into a secular bull market that could return double-digit gains again in 2014. Augmenting a quality portfolio of blue chips and solid growth names with some of the top names priced under $10 to buy may add the alpha to portfolios. That could make 2014 another stellar investing year.