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Wall Street Suggests These Falling Knives

They have a low financial burden, which decreases bankruptcy risk

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Dec 12, 2019
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Falling knives are companies whose share prices have declined more than 59% over the last 52 weeks. Some investors purchase shares of these securities because they predict that the prices will bounce back enough to deliver large returns.

A share price flop could also be the beginning of financial issues which may seriously damage the portfolio of an investor if the company fails. However, if an investor chooses falling knives with a moderate to low financial burden, they can significantly lower the risk of loss.

Together with a moderate to low financial burden, these falling knives hold positive Wall Street sell-side analyst recommendation ratings, suggesting share prices are expected to start moving upwards.

MOGU

Shares of MOGU Inc. (

MOGU, Financial) closed at $1.93 on Wednesday for a market capitalization of $204.2 million. The stock declined 88.3% over the past 52 weeks through Dec. 11.

The Chinese online fashion apparel retailer is a zero-debt company. GuruFocus assigned a rating of 8.9 out of 10 for the company's financial strength but a rating of 1 out of 10 for its profitability. 

The closing price on Wednesday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.87 to $25.69.

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The price-book ratio is 0.4 versus the industry median of 1.33 and the price-sales ratio is 0.92 versus the industry median of 0.55. The 14-day relative strength index of 38 suggests the stock is not far from oversold levels.

Wall Street issued two recommendation ratings so far this year for shares of MOGU Inc. with an average of 3.3 out of 5, meaning that analysts suggest holding the stock. The average target price of $3.31 reflects a 71.5% upside from Wednesday’s closing price.

Tyme Technologies

Shares of Tyme Technologies Inc. (

TYME, Financial) closed at $1.08 per share on Wednesday for a market capitalization of $117.6 million. The stock declined 74.9% over the past 52 weeks through Dec. 11.

The U.S. biotech developer of cancer metabolism-based therapies has a debt-equity ratio of 0.01 versus the industry median of 0.11.

GuruFocus assigned a rating of 5 out of 10 for the company's financial strength and a rating of 1.7 out of 10 for its profitability. 

The closing price on Wednesday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $0.92 to $4.64.

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The price-book ratio is 16.16 versus the industry median of 3.61. The 14-day relative strength index of 41 suggests the stock is not oversold yet, although the share price suffered a sharp decline.

Wall Street sell-side analysts issued a buy recommendation rating and have established an average target price of $8.5, reflecting 687% upside from Wednesday’s closing price.

Disclosure: I have no positions in any securities mentioned.

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