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Alberto Abaterusso
Alberto Abaterusso
Articles (2612) 

Will These 2 Falling Knives Bounce Back?

The stocks have a buy recommendation rating

September 09, 2019 | About:

Falling knives are companies whose share prices have declined more than 59% over the last 12 months. Some investors hold these stocks because they believe that the share price will bounce back.

Such deep depreciation implies a remarkable risk of loss, as it could signal that the companies are having serious financial issues. However, investors can significantly reduce the risk if they select falling knives with moderate-to-low debt-equity ratios.

In addition to moderate-to-low financial burdens, the following stocks have a recommendation rating of buy.

Here are some results from the search.

Shares of Callon Petroleum Co. (NYSE:CPE) closed at $4.08 on Friday for a market capitalization of $931.48 million. The stock price decreased 61.76% over the last 12 months through Sept. 6.

The Houston, Texas-based independent oil and natural gas company has a debt-equity ratio of 0.45 versus the industry median of 0.48. The debt-equity ratio of Callon Petroleum is ranked higher than 181 out of 340 companies operating in the oil and gas exploration and production industry.

GuruFocus assigned a moderate financial strength rating of 5.3 out of 10 and a very positive profitability and growth rating of 7 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 $3.75 to $13.09.

The price-book ratio is 0.39 versus the industry median of 0.91, and the enterprise value-Ebitda ratio is 4.18 versus the industry median of 4.83.

The 14-day relative strength index of 42 suggests the stock is still far from oversold levels.

Wall Street issued a recommendation rating of buy with an average target price of $8.67.

Shares of Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI) closed at $7.55 on Friday for a market capitalization of approximately $852.06 million. The stock price has declined 63.26% over the past 12 months through Sept. 6.

The Henderson, Nevada-based biotechnology company has a debt-equity ratio of 0.02 versus the industry median of 0.18. The debt-equity ratio of Spectrum Pharmaceuticals is ranked higher than 667 out of a total of 763 companies operating in the biotechnology industry.

GuruFocus assigned a positive financial strength rating of 6.1 out of 10, but a very low profitability and growth rating of 2 out of 10. Thus, investors need to be careful with this stock.

Friday's closing share price was below the 200-, 100- and 50-day simple moving average lines. The 52-week range was $6.22 to $23.4.

The price-book ratio is 3.26 versus the industry median of 3.25, and the price-sales ratio is 14.46 versus the industry median of 9.

The 14-day relative strength index of 48 suggests the stock is neither overbought nor oversold.

Wall Street issued a recommendation rating of buy with an average target price of $23.20.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master\\\'s Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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