Falling knives are companies whose share prices have fallen more than 59% over the last 12 months. Some investors hold positions in these stocks because they expect impressive returns on of their investments once they rebound.
Investors are also aware that a significant plunge in the market value of the security can indicate financial distress, so they will incur a severe loss if the company goes bankrupt. If investors focus on those falling knives with moderate to low debt-to-equity ratios, they can substantially reduce the risk.
Here are some results from my search.
Shares of Antero Resources Corp. (AR, Financial) closed at $5.9 on Thursday for a market capitalization of $1.82 billion. The stock declined 70% over the last 12 months through June 13.
The Denver-based oil and gas producer has a debt-to-equity ratio of 42% versus the industry median of 46%. GuruFocus assigned a low financial strength rating of 4 out of 10, but a very high profitability and growth rating of 9 out of 10.
The closing price on Thursday was far below the 200-day simple moving average line. The 52-week range was $5.74 to $22.69.
The price-book ratio is 0.23 versus the industry median of 1.3 and the enterprise value-Ebitda ratio is 2.25 versus the industry median of 7.99.
The 14-day relative strength index of 32 suggests the stock is near oversold levels.
Wall Street issued a hold recommendation rating with an average target price of $11.62.
Shares of Sogou Inc. (SOGO, Financial) closed at $4.2 per share on Thursday for a market capitalization of $1.65 billion. The stock declined 70% over the past 52 weeks through June 13.
The Chinese internet content and information company has no debt. GuruFocus assigned a very high financial strength rating of 9 out of 10, but a low profitability and growth rating of 4 out of 10.
Thursday's closing share price was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $3.85 to $15.5.
The price-book ratio is 1.61 versus the industry median of 3.65 and the price-sales ratio is 1.42 versus the industry median of 2.6.
The 14-day relative strength index of 37 suggests the stock is not far from oversold levels.
Wall Street issued a hold recommendation rating with an average target price of $6.01.
Shares of Whiting Petroleum Corp. (WLL, Financial) closed at $16.7 on Thursday for a market capitalization of $1.52 billion. The stock fell 64% over the past year through June 13.
The Denver-based oil and gas producer has a debt-to-equity ratio of 68% versus the industry median of 46%. GuruFocus assigned a low financial strength rating of 4 out of 10 and a moderate profitability and growth rating of 5 out of 10.
The stock was trading below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $16.05 to $56.47.
The price-book ratio is 0.35 versus the industry median of 1.3 and the enterprise value-Ebitda ratio is 3.68 versus the industry median of 7.99.
The 14-day relative strength index of 30 suggests the stock is approaching oversold levels.
Wall Street issued an overweight recommendation rating with an average target price of $34.06.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- Broadcom Falls After Posting 2nd-Quarter Results
- These Stocks Are Outperforming the S&P 500
- Lululemon Jumps on Earnings Beat
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
