Yahoo Finance 2 Falling Knives to Catch
- By Alberto Abaterusso
Wall Street recommends buying shares of CHF Solutions Inc (NASDAQ:CHFS) and Viveve Medical Inc (NASDAQ:VIVE), which sounds quite unexpected since these two stocks performed very poorly over the prior 52 weeks through Thursday, Jan. 14. Having positive recommendations despite more than 59% declines over the period in question, these two stocks have now earned the name of "falling knives."
Investors who take a stake in falling knives are trying to catch these stocks at prices close to their lowest levels, aiming to earn huge capital gains due to a strong bounce back in the share price. However, investors are taking a high risk with falling knives, as the steep decline in the share price could be reflecting the onset of long-lasting financial issues.
CHF Solutions Inc
Based in Eden Prairie, Minnesota, CHF Solutions Inc is a developer of medical devices to treat patients with ultrafiltration therapy.
CHF Solutions Inc stock was trading at around $8.25 per share at close on Thursday following a 75% price fall over the past 52 weeks.
The stock has a market capitalization of $22.57 million, a 52-week range of $5.80 to $38.70 and a 14-day relative strength index of 58, with the last indicator signaling that the stock is still trading far from oversold levels despite the tumble.
GuruFocus gave a rating of 5 out of 10 for the company's financial strength, driven by a cash-to-debt ratio of 45.67. A Piotroski F-Score of 5 out of 9 indicates a stable financial situation, but an Altman Z-Score of -10.75 indicates the company could go bankrupt within the next two years.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $26.63 per share, which represents a 223% upside from Thursday's closing price.
Viveve Medical Inc
Based in Englewood, Colorado, Viveve Medical Inc is a developer of medical devices for the non-invasive treatment of altered genital functions in women.
Shares of Viveve Medical were trading at around $3.18 per unit at close on Thursday following a 67.76% decrease occurring over the past 52 weeks.
The stock has a market capitalization of $6.89 million, a 52-week range of $3.03 to $20.90 and a 14-day relative strength index of 23, with the last indicator showing that the share price has approached oversold levels following the tumble.
GuruFocus assigned a score of 3 out of 10 for the financial strength rating, driven by a cash-to-debt ratio of 1.55, a Piotroski F-Score of 3 out of 9 and an Altman Z-Score of -18.58. These indicators signal that, due to weak financials, the company could face bankruptcy within the next two years.
On Wall Street, the stock has one recommendation rating of buy with a target price of $22 per share, reflecting an impressive upside of 592% from Thursday's closing price.
Disclosure: I have no positions in any securities mentioned.
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This article first appeared on GuruFocus.
