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Alberto Abaterusso
Alberto Abaterusso
Articles (2279) 

Wall Street Analysts Recommends Catching These 2 Falling Knives

A low debt-equity ratio lowers the investment risk

February 17, 2020 | About:

Wall Street analysts have released positive recommendations on Tuniu Corp (NASDAQ:TOUR) and RiceBran Technologies (NASDAQ:RIBT) for the 12 months ahead, even though their share prices have dropped more than 59% in the past year through Feb. 14. Due to such sharp declines, these stocks are known as falling knives.

Some investors hold shares of falling knives because they expect to receive impressive recompenses after the share prices bounce back. However, they also know that this type of investment implies a significant risk of loss as the portfolio may incur major damage if the underlying business goes bankrupt.

Investors can reduce such risk if they choose falling knives with a moderate to low financial burden.

Tuniu Corp

The share price of Tuniu Corp closed at $1.85 on Feb. 14 for a market capitalization of $227.61 million. The stock price has fallen 61% over the past 52 weeks through Feb. 14.

The Chinese online leisure travel company has a low debt-equity ratio of 0.1 versus the industry median of 0.48.

Wall Street recommends holding shares of this company and has established an average target price of ¥22.72 Chinese Yuan (approximately $3.25) per share as of Feb. 14, which reflects a 75.7% upside to hit within a year.

Friday’s closing price was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.84 to $5.79.

The price-book ratio is 0.53 versus the industry median of 1.49 and the price-sales ratio is 0.69 compared to the industry median of 1.51.

The 14-day relative strength index of 32 suggests the stock is close to oversold levels.

RiceBran Technologies

The share price of RiceBran Technologies closed at $1.27 on Feb. 14 for a market cap of $50.77 million. The stock price has fallen 61% over the past year through Feb. 14.

The Woodlands, Texas-based producer and seller of products derived from raw rice bran has a low debt-equity ratio of 0.17 compared to the industry median of 0.45.

Wall Street recommends buying shares of this stock and has set an average target price of $2.50, which reflects a 97% upside.

The closing share price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $1.19 to $3.87.

The stock has a price-book ratio of 1.56 compared to the industry median of 1.42 and a price-sales ratio of 1.73 versus the industry median of 0.9.

The 14-day relative strength index of 43 suggests that the stock is still not at oversold levels, despite the huge depreciation of the share price.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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