Wall Street recommends buying shares of CHF Solutions Inc (CHFS, Financial) and Viveve Medical Inc (VIVE, Financial), which sounds quite unexpected since these two stocks performed very poorly over the prior 52 weeks through Thursday, Jan. 14. Having positive recommendations despite more than 59% declines over the period in question, these two stocks have now earned the name of "falling knives."
Investors who take a stake in falling knives are trying to catch these stocks at prices close to their lowest levels, aiming to earn huge capital gains due to a strong bounce back in the share price. However, investors are taking a high risk with falling knives, as the steep decline in the share price could be reflecting the onset of long-lasting financial issues.
CHF Solutions Inc
Based in Eden Prairie, Minnesota, CHF Solutions Inc is a developer of medical devices to treat patients with ultrafiltration therapy.
CHF Solutions Inc stock was trading at around $8.25 per share at close on Thursday following a 75% price fall over the past 52 weeks.
The stock has a market capitalization of $22.57 million, a 52-week range of $5.80 to $38.70 and a 14-day relative strength index of 58, with the last indicator signaling that the stock is still trading far from oversold levels despite the tumble.
GuruFocus gave a rating of 5 out of 10 for the company's financial strength, driven by a cash-to-debt ratio of 45.67. A Piotroski F-Score of 5 out of 9 indicates a stable financial situation, but an Altman Z-Score of -10.75 indicates the company could go bankrupt within the next two years.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $26.63 per share, which represents a 223% upside from Thursday's closing price.
Viveve Medical Inc
Based in Englewood, Colorado, Viveve Medical Inc is a developer of medical devices for the non-invasive treatment of altered genital functions in women.
Shares of Viveve Medical were trading at around $3.18 per unit at close on Thursday following a 67.76% decrease occurring over the past 52 weeks.
The stock has a market capitalization of $6.89 million, a 52-week range of $3.03 to $20.90 and a 14-day relative strength index of 23, with the last indicator showing that the share price has approached oversold levels following the tumble.
GuruFocus assigned a score of 3 out of 10 for the financial strength rating, driven by a cash-to-debt ratio of 1.55, a Piotroski F-Score of 3 out of 9 and an Altman Z-Score of -18.58. These indicators signal that, due to weak financials, the company could face bankruptcy within the next two years.
On Wall Street, the stock has one recommendation rating of buy with a target price of $22 per share, reflecting an impressive upside of 592% from Thursday's closing price.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 High-Quality Picks for the Value Investor
- A Trio of Strong Performers to Consider
- 3 Graham-Style Stocks for the Value Investor
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
