Falling knives are companies whose share prices have declined more than 59% over the last 12 months. Investments in these securities are based on expectations of huge rewards following the share price rebound.
Investors are also aware that more than 59% drop in the share price could indicate financial distress, so their portfolio could be damaged if the company fails.
If investors pick shares of falling knives with moderate to low financial burden, they can meaningfully reduce the risk of loss.
Along with a moderate to low debt-to-equity ratio, the following securities have a positive recommendation rating ranging between hold and overweight. The overweight rating means that the stock is foreseen to outperform either its industry or the entire market.
Here are some results from my search.
Shares of Tapestry Inc. (TPR, Financial) closed at $20.31 on Friday for a market capitalization of $5.83 billion. The stock declined 60% over the last 12 months through Aug. 23.
The New York provider of luxury accessories and branded lifestyle products worldwide has a debt-equity ratio of 0.46 versus the industry median of 0.6.
GuruFocus assigned a very positive financial strength rating of 7 out of 10 and a very high profitability and growth rating of 8 out of 10.
The closing price on Friday was significantly below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $18.54 to $52.02.
The price-sales ratio is 0.98 versus the industry median of 0.52.
The 14-day relative strength index of 27 suggests the stock is oversold.
Wall Street issued an overweight recommendation rating with an average target price of $28.26.
Shares of PG&E Corp. (PCG, Financial) closed at $11.04 per share on Friday for a market capitalization of $5.84 billion. The stock declined 75% over the past 12 months through Aug. 23.
The San Francisco-based electricity and natural gas provider has a debt-equity ratio of 0.40 versus the industry median of 0.98.
GuruFocus assigned a moderate rating of 5 out of 10 for the financial strength and for the profitability and growth of the company.
The closing price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $5.07 to $49.42.
The price-sales ratio is 0.35 versus the industry median of 1.38.
The 14-day relative strength index of 26 suggests the stock is oversold.
Wall Street issued a hold recommendation rating with an average target price of $18.91.
Shares of ANGI Homeservices Inc. (ANGI, Financial) closed at $8.02 on Friday for a market capitalization of $4.07 billion. The stock declined 64% over the last 12 months through Aug. 23.
The Denver-based operator of a digital marketplace for home services has a debt-equity ratio of 0.29 versus the industry median of 0.26.
GuruFocus assigned a very positive financial strength rating of 7.2 out of 10, but a low profitability and growth rating of 3 out of 10.
The closing price on Friday was significantly below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $7.86 to $23.95.
The price-sales ratio is 3.36 versus the industry median of 2.17.
The 14-day relative strength index of 18 suggests the stock is oversold.
Wall Street issued an overweight recommendation rating with an average target price of $13.36.
Disclosure: I have no positions in any securities mentioned.
