3 Stocks At 52-Week Lows That Could Bounce Big
One trading strategy an investor can profitably employ is to pick up an undervalued asset that has sold off due to factors that are extraneous or intrinsic to it. The strategy is premised on the belief that the asset can only go higher from this level.
52-week Low As A Trading Signal: How do you zero in an undervalued stock? One approach would be to look around for a stock, or for that matter any asset, which is trading at or near its 52-week low. A 52-week low is the lowest level at which the stock has traded for the year.
Not all stocks that hit the lows for the year could turn out to be a profitable trade. Some of these stocks may have deteriorating fundamentals, and this could precipitate the weakness further. An astute investor, therefore, should also weigh in several other factors such as competitive positioning, market opportunity, regulatory environment, financial soundness, etc.
This approach is similar to "value buying" propounded by the likes of Warren Buffett. A value investor will focus on buying undervalued shares of companies, which have fairly robust fundamentals.
Here are three stocks trading at or near their 52-week lows and promise strong upside potential.
ADC Therapeutics SA (NYSE:ADCT)
This Swiss-based biopharma focuses on developing antibody-drug conjugates for treating patients with hematological malignancies and solid tumors.
The company's shares hit a 52-week low of $21.51 in early March and have come off the level since then.
ADC reported in mid-March a wider loss for its fourth quarter and fiscal year 2020, amid ballooning operating expenses. The company had a cash balance of $439.2 million as of Dec. 31.
Its lead candidate is loncastuximab tesirine, called Lonca, which has demonstrated significant single-agent clinical activity across a broad population of patients with relapsed or refractory diffuse large B-cell, mantle cell, and follicular lymphomas.
ADC has several upcoming catalysts and if these play out positively, its stock could be in for a big reversal. The company's biologic license application for Lonca in relapsed or refractory DLBCL has a PDUFA action date of May 21. H.C. Wainwright ascribes a 75-95% probability of Lonca being approved.
The average price target of analysts covering the biopharma's stock is $48.
Related Link: Why It's A Great Time To Be A Value Investor
BigCommerce Holdings, Inc. (NASDAQ:BIGC)
BigCommerce is an open SaaS e-commerce platform for brands. The company offered its shares to the public in the middle of the COVID-19 pandemic. After a whopping listing gain of about 200%, the stock ran up to a high of $162.50 in the first month of listing.
On Tuesday, the stock hit a 52-week low of $50.59.
Piper Sandler analyst Brent Bracelin said in a note in early March that he sees multiple upside levers to growth estimates of 25%+ over the next one to three years. Incremental growth could come from new $1 billion, plus, gross merchandise value merchants, international expansion, accelerating partner-driven new merchants, new investments and further expansion into B2B.
"As a cloud commerce pure-play with what we see as $1B+ revenue potential, we would be aggressive buyers of BIGC on the recent pull-back and view it as a core small-cap growth holding," Bracelin said in the note.
Ganfeng Lithium Co., Ltd. (OTC:GNENF)
Ganfeng Lithium is a China-based supplier of lithium, which is used in the batteries of EVs. It counts Tesla, Inc. (NASDAQ:TSLA) and Bayerische Motoren Werke Aktiengesellschaft (OTC:BMWYY) among its customers.
Rising demand from the booming EV industry led to a strong financial performance by the company in fiscal year 2020. The industry is gradually shifting from a balanced supply and demand to a tight supply situation, the company said. This is validated by Romeo Power, Inc.'s (NASDAQ:RMO) warning that it won't be able to meet battery pack delivery commitments to customers in 2021 due to a shortage of batteries.
Ganfeng Lithium stock, which is traded over the counter, hit a 52-week low of $11 on March 8 and is currently trading around $12.50.
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