Divergent monetary policy paths between the U.S. and the Eurozone, oil prices touching 6-year lows, and speculation surrounding when the Federal Reserve will tighten its monetary policy are rife in the markets, bringing in fresh bouts of volatility every day. Such volatility usually translates into frenzied trades by investors, as every little movement in a company seems to have huge implications for its future. Well, this is not necessarily so.
Time and again, the herd mentality of investors comes into play and they dump a beaten down stock simply because that seems to be the common trend. However, investors should take a hard look at whether the market has exaggerated the bad developments of a company before dismissing these beaten-down stocks.
For instance, certain stocks trading near their 52-week lows are, at times, windows of opportunity for patient investors, and offer huge return potential. Here we offer three such stocks that have been out of favor with investors lately, but have promising future prospects coupled with a great Zacks Rank.
3 Beaten Down Stocks to Buy Now
These stocks have tumbled over the past due to an assortment of reasons, be it company-specific or macroeconomic, and stand in sharp contrast to the S&P 500’s 11.5% gain over the same time frame. However, these companies’ fundamentals and future prospects still shine bright, and the low valuation serves as the perfect opportunity for investors to jump in and ride the anticipated growth. And to top it off, all these stocks sport a solid Zacks Rank, thus we recommend buying these angels who seem to have fallen from grace.
Galena Biopharma, Inc. (GALE)
Shares of this biopharmaceutical company, which specializes in developing and commercializing oncology drugs, have tumbled nearly 55% over the past year, following allegations that the company was paying a marketing firm called The DreamTeam Group to pump its stock. Company insiders made millions of dollars by selling company shares during that period, and the biotech company is still under active SEC investigation.
However, since then, the company has moved mountains in order to distance itself from its scandalous past. In a drastic change, nearly half of Galena’s management has been replaced with industry veterans. Also, the company still has an impressive product pipeline and is seeing significant advancements in its promising new drug NeuVax, which is used to prevent recurring cancers in survivors. Also, its products Abstral and Zuplenz are showing robust performance.
We believe that the shares are undervalued at present, and that despite the scandal, the essential science behind the business remains intact, making it a worthwhile investment.
The stock has been seeing positive estimate revision activity over the past month, as the current year loss consensus estimate has narrowed 2.9% over the same time frame.
Current Price: $1.42
52 Week Low: $1.33
Zacks Rank #2 (Buy)
Africa Oil Corp. (AOIFF)
The oil and gas exploration and development company has lost 79.7% in the past year, as oil prices continue to plummet on oversupply concerns. However, the company has a number of short-term growth drivers at present.
The company has made several oil discoveries in recent times, which never got factored in the share price. It has 13 basins open for exploration in the coming 18 months, which can prove to be a strong boost for the company’s stock price. The East Africa oil exploration industry is an emerging market, and efforts are underway to resolve infrastructure issues and make way for exports to international markets.
Moreover, the sustained weakness in oil prices is actually a reason to go on the offensive in the industry. It’s doubtful that oil and natural gas prices will continue their trend for an extended period of time, hence any bounce back would represent a catalyst for this space.
The stock has been seeing positive estimate revision activity over the past month, as the current year loss consensus estimate has narrowed 17.6% over the same time frame.
Current Price: $1.59
52 Week Low: $1.54
Zacks Rank #2 (Buy)
CTI BioPharma Corp. (CTIC)
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The biopharmaceutical company is focused on the acquisition, development and commercialization of therapies covering a spectrum of blood-related cancers. The company faced a massive rush of sellers after it released its fourth-quarter and full-year 2014 earnings results last week, and shares have tumbled nearly 5% since then. The stock has shed 49.4% of its value over the past year.
The company recently entered into a global development and commercialization collaboration for its product PIXUVRI. There has been some uncertainty surrounding its Phase 3 PERSIST-1 study assessing pacritinib in patients with primary or secondary myelofibrosis, a rare cancer of the bone marrow. However, the FDA granted pacritinib fast-track designation some time back, which could translate into a speedier evaluation.
The stock has been seeing positive estimate revision activity over the past couple of months, with the current year loss consensus estimate narrowing 11.8% over the same time frame.
Current Price: $1.97
52 Week Low: $1.93
Zacks Rank #2 (Buy)
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