Falling knives are companies whose share prices have declined more than 59% over the last 12 months. Some investors take positions in these stocks because they believe that the share price will rebound.
Investors are also aware that a sharp decline in the share price could signal financial distress, so their portfolio could be hurt if the company goes bankrupt.
If investors acquire shares of falling knives with moderate to low debt-to-equity ratios, they can meaningfully lower the risk of loss.
In addition to a moderate to low financial burden, the following stocks have a positive recommendation rating ranging between hold and buy.
Here are some results from my search.
Shares of Veoneer Inc. (VNE, Financial) closed at $16.71 on Friday for a market capitalization of $1.76 billion. The stock declined 68.75% over the last 12 months through Aug. 9.
The Swedish distributor of automotive safety electronic products in the Americas, Europe and Asia has a debt-equity ratio of 0.15 versus the industry median of 0.53.
GuruFocus assigned a positive financial strength rating of 6 out of 10, but a very low profitability and growth rating of 2 out of 10.
The closing price on Friday was significantly below the 200- and 100-day simple moving average lines and slightly underneath the 50-day SMA line. The 52-week range was $15.41 to $57.93.
The price-sales ratio is 0.76 versus the industry median of 0.57.
The 14-day relative strength index of 44 suggests the stock is still far from oversold levels.
Wall Street issued a hold recommendation rating with an average target price of $21.34.
Shares of OPKO Health Inc. (OPK, Financial) closed at $1.79 per share on Friday for a market capitalization of approximately $1.1 billion. The stock declined 66.79% over the past 12 months through Aug. 9.
The Miami-based international health care company has a debt-equity ratio of 0.19 versus the industry median of 0.3.
GuruFocus assigned a moderate financial strength rating of 5 out of 10 and a positive profitability and growth rating of 6 out of 10.
Friday 's closing share price was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.73 to $6.16.
The price-sales ratio is 1.12 versus the industry median of 2.49.
The 14-day relative strength index of 29 suggests the stock is oversold.
Wall Street issued a buy recommendation rating with an average target price of $4.67.
Shares of 2U Inc. (TWOU, Financial) closed at $15.16 on Friday for a market capitalization of $960.16 million. The stock declined 78.98% over the last 12 months through Aug. 9.
The Lanham, Maryland-based international education technology company has a debt-equity ratio of 0.36 versus the industry median of 0.25.
GuruFocus assigned a moderate financial strength rating of 5 out of 10, but a low profitability and growth rating of 4 out of 10.
The closing price on Friday was significantly below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $11.37 to $90.31.
The price-sales ratio is 1.92 versus the industry median of 2.21.
The 14-day relative strength index of 22 suggests the stock is oversold.
Wall Street issued an overweight recommendation rating with an average target price of $33.55. Overweight means that the stock is foreseen to outperform either its industry or the entire market.
Disclosure: I have no positions in any securities mentioned.
