The following companies are considered "falling knives" because their share prices have tumbled more than 59% over the past year through Aug. 2. Some investors are interested in these stocks because they are expected to recover.
While such deep depreciation could signal the companies are having serious financial issues, some are simply out of favor. Investors usually pick the falling knives whose balance sheets have moderate-to-low debt-equity ratios because it meaningfully lowers the risk of loss.
In addition to the moderate-to-low financial burden, the following stocks have received a strong buy recommendation rating from sell-side analysts on Wall Street, increasing the odds they will bounce back.
Here are some results from my search.
Shares of SRC Energy Inc. (SRCI, Financial) closed at $4.16 on Friday for a market capitalization of $1.01 billion. The stock declined 62% over the last 52 weeks through Aug. 2.
The Denver-based oil and gas producer has a debt-to-equity ratio of 0.42 versus the industry median of 0.49.
Further, GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability and growth rating of 7 out of 10.
The stock is trading below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $3.17 to $12.04.
The price-book ratio is 0.59 versus the industry median of 0.98 and the enterprise value-Ebitda ratio is 3.15 versus the industry median of 5.35.
The 14-day relative strength index of 48 suggests the stock is neither overbought nor oversold.
Analysts issued a strong buy recommendation rating with an average target price of $7.
Shares of Atara Biotherapeutics Inc. (ATRA, Financial) closed at $12.87 per share on Friday for a market capitalization of nearly $600.60 million. The stock declined 66% over the past 12 months through Aug. 2.
Atara Biotherapeutics is a California-based biotechnology company focusing on developing off-the-shelf T-cell immunotherapies for patients with cancer as well as autoimmune and viral diseases.
The stock has a debt-equity ratio of 0.05 versus the industry median of 0.22. GuruFocus assigned a high financial strength rating of 7 out of 10, but a low profitability and growth rating of 3 out of 10.
The share price is below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $12.78 to $43.95.
The price-book ratio is 2.08 versus the industry median of 3.31.
The 14-day relative strength index of 18 suggests the stock is oversold.
Analysts issued a strong buy recommendation rating with an average target price of $45.40.
Disclosure: I have no positions in any securities mentioned.
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