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Alberto Abaterusso
Alberto Abaterusso
Articles (1765) 

Analysts See 2 Falling Knives Bouncing Back

They have a low financial burden

November 10, 2019 | About:

Falling knives are stocks whose share price has fallen more than 59% over the past year, drawing interest from investors as these securities can deliver huge rewards if they rebound.

The share price flop, however, could be the beginning of financial troubles, which may hurt the portfolio of an investor severely if the business goes bankrupt.

Investors can significantly reduce potential risks if they pick falling knives with moderate to low debt-equity ratios.

Together with a moderate to low financial burden, the following securities have received positive recommendation ratings on Wall Street, suggesting they are expected to outperform either their industries or the entire market.

Scholar Rock

Shares of Scholar Rock Holding Corp. (NASDAQ:SRRK) closed at $9.01 on Friday for a market capitalization of $267.42 million. The stock declined 61% over the past 12 months through Nov. 8.

The Cambridge, Massachusetts-based biopharmaceutical company, which focuses on developing treatments for serious diseases such as cancer and fibrosis, has a very low debt-equity ratio of 0.04 versus the industry median of 0.12.

GuruFocus assigned a rating of 5.8 out of 10 for the company's financial strength, but a very low rating of 1 out of 10 for its profitability.

The closing price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $8.09 to $30.

The price-book ratio is 1.68 compared to the industry median of 3.25.

The 14-day relative strength index of 44 suggests the stock is still far from oversold levels.

Wall Street issued a buy recommendation rating with an average target price of $31.67.

Fluidigm

Shares of Fluidigm Corp. (NASDAQ:FLDM) closed at $2.33 per share on Friday for a market capitalization of $161.71 million. The share price tumbled 69% over the past 12 months through Nov. 8.

The San Francisco-based life sciences research technologies manufacturer has a moderate debt-equity ratio of 0.35 versus the industry median of 0.27.

GuruFocus assigned a rating of 5 out of 10 for the company's financial strength, but a low rating of 2 out of 10 for its profitability.

The closing price on Friday was below the 200-, 100- and 50-day simple moving average lines. The 52-week range is $2.31 to $14.09.

The price-book ratio is 1.01 compared to the industry median of 3.65 and the price-sales ratio is 1.13 versus the industry median of 3.41.

The 14-day relative strength index of 19 suggests the stock is oversold.

Wall Street issued an overweight recommendation rating with an average target price of $8.30.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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