Analysts on Wall Street recommend buying shares of Trevi Therapeutics Inc (TRVI, Financial) and Carter Bank & Trust (CARE, Financial), even though their share prices have lost more than 59% over the past 52 weeks through May 29. Due to these two factors, these stocks are known as "falling knives."
Some investors purchase shares of falling knives because they expect to receive large rewards from their investments following a share price rebound. These investors are also aware that this type of investment implies remarkable risk.
Investors can limit the risk if they catch falling knives with low exposure to debt. These two falling knives have low debt-equity ratios, making them less risky investments in my opinion.
Trevi Therapeutics Inc
Shares of Trevi Therapeutics Inc were trading at a price of $2.74 per unit at close on Friday for a market capitalization of $48.87 million. The stock price dropped 73% over the past 52 weeks through May 29.
Currently, the share price trades at a 54% discount to the middle point of the 52-week range of $1.33 to $10.62. The 14-day relative strength index of 48 indicates that the share price is still far from oversold levels, despite the tumble in the share price.
Trevi Therapeutics is a New Haven, Connecticut-based clinical-stage biopharmaceutical developer of therapies for neurologically mediated conditions. The company has a debt-equity ratio of 0.01 versus the industry median of 0.09.
Wall Street sell-side analysts recommend to buy this stock and predict that the share price of Trevi Therapeutics will bounce back up to a target price of $13.25 per share, which represents a 385% upside from Friday’s closing price.
Carter Bank & Trust
Shares of Carter Bank & Trust were trading at a price of $7.06 per unit at close on May 29 for a market capitalization of $185.92 million. The stock price fell by more than 64% over the past 52 weeks through May 29.
Currently, the share price represents a 54% discount to the middle point of the 52-week range of $6.44 to $24.25. The 14-day relative strength index of 42 indicates that the share price is still far from oversold levels, despite the share price plunge.
Carter Bank & Trust is a Martinsville, Virginia-based regional bank in Virginia and North Carolina. The company has no debt, while the industry has an average debt-equity ratio of 1.13.
Wall Street sell-side analysts issued a moderate buy for this stock and predict that the share price of Carter Bank & Trust will bounce back strongly, growing more than 45% from Friday’s closing price to the average target price of $10.25 per share.
Disclosure: I have no positions in any securities mentioned.
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