U.S. equities have rebounded from a short-lived scare regarding a possible pullback of Chinese buying of U.S. Treasury bonds. The holiday-season melt has resumed, with stocks enjoying one of their strongest starts to a year on record. Just days after the Dow Jones Industrial Average passed the 25,000 threshold for the first time, the index is now closer to 26,000 than that level.
Just incredible.
For bulls looking to push their long-side exposure, the number of stocks hovering a modicum of value is short. There is no other way to say this: The market is very expensive. But there are still opportunities if you know where to look. Mainly, in biotech and energy. The latter is enjoying a tailwind amid a surge in energy prices, with crude oil closing in on the $64-a-barrel threshold.
Here are seven high-risk, high-reward stocks to consider:
High-Reward Stocks to Buy: JC Penney (JCP)
J C Penney Company Inc (NYSE:JCP) is in the middle of a strategic turnaround, with new management and a new focus on things like appliance sales finally starting to gain traction after its disastrous attempt years ago to move up market and alienate its discount-oriented shoppers.
Buyers are coming in as shares found support near the $3-a-share level, down more than 70% from the levels seen in late 2016.
The company will next report results on Feb. 9, before the bell. Analysts are looking for earnings of 44-cents-per-share on revenues of $4 billion. When the company last reported on Nov. 10, a loss of 33-cents-per-share beat estimates by 10 cents on a 1.8% decline in revenues.
High-Reward Stocks to Buy: Trevena (TRVN)
Trevena Inc (NASDAQ:TRVN) shares are finding support amid a four-month consolidation range near the $1.60-a-share level. The biotechnology company is developing a number of treatments, including a Phase III candidate for acute pain and a drug to combat migraines.
The company will next report results on Feb. 6, before the bell. Analysts are looking for a loss of 26-cents-per-share. When the company last reported on Nov. 7, a loss of 27-cents-per-share was 3 cents better than expected as development continues to be funded by investment capital.
High-Reward Stocks to Buy: Idera Pharma (IDRA)
Shares of Idera Pharmaceuticals Inc (NASDAQ:IDRA), a clinical-stage drug development company looking to treat cancers and rare diseases, are rallying above their late November highs. The company was recently granted fast-track designation by the FDA for a development candidate drug labeled IMO-2125 designed to treat metastatic melanoma in conduction with Ipilimumab.
Shares were initiated with a buy rating by analysts at HC Wainwright back in November with a $4 price target. They cited the company’s two lead products has having significant potential in a fast growing market.
High-Reward Stocks to Buy: Scorpio Tankers (STNG)
Scorpio Tankers Inc. (NYSE:STNG) is a provider of seaborne transportation for refined petroleum products. STNG shares, which have lost more than 60% from their 2015 highs amid a pullback in the energy industry, are enjoying stabilization after hitting a low near $3. Watch for a rally to the 200-day moving average, which would be worth a gain of 13% from here.
The company will next report results on Feb. 15, before the bell. Analysts are looking for a loss of 8-cents-per-share on revenues of $152 million. When the company last reported on Nov. 16, a loss of 15-cents-per-share missed estimates by 3 cents on a 7.8% rise in revenues.
High-Reward Stocks to Buy: Teekay Offshore Partners (TOO)
Teekay Offshore Partners L.P. (NYSE:TOO) provides oil transportation, production and offshore installation support among other activities to the energy industry. TOO shares are emerging from a long, tight consolidation range near the $2.50-a-share level going back to June. This capped a 90% decline from the highs seen back in summer 2014, when energy prices were last peaking.
The company will next report results on Feb. 8 before the bell. Analysts are looking for earnings of 5-cents-per-share on revenues of $279.6 million. When the company last reported on Nov. 9, a loss of 5-cents-per-share missed estimates by a penny on a 4.4% decline in revenues.
High-Reward Stocks to Buy: Baytex Energy (BTE)
Baytex Energy Corp (USA) (NYSE:BTE) is an oil and gas company with operations in the Western Canadian Sedimentary Basin and the Eagle Ford shale complex in the United States. Shares have been oscillating higher since finding a low back in June. BTE shares are down some 90% from their 2014 highs and have been trading near the $4-a-share level since late 2015. A return to the 200-week moving average, which hasn’t been touched in four years, would be worth a triple from here.
The company will next report results on Feb. 1, before the bell. Analysts are looking for a loss of 13-cents-per-share on revenues of $266.5 million. When the company last reported on Nov. 2, earnings of 33-cents-per-share beat estimates by 51 cents.
High-Reward Stocks to Buy: Weatherford (WFT)
Weatherford International Plc (NYSE:WFT) is an oilfield services provider that helps evaluate, drill and produce oil and gas wells. After peaking near $25 back in 2014, shares fell to a low near $3.20 that was twice tested in November before investors starting pushing prices higher. A breakout above the 200-day moving average looks likely now, potentially setting the stage for a return to levels seen last spring for a gain of 50% from here.
The company will next report results on Feb. 2, before the bell. Analysts are looking for a loss of 20-cents-per-share on revenues of $1.5 billion. When the company last reported on Nov. 1, a loss of 22-cents-per-share beat estimates by 3 cents on a 7.1% rise in revenues.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
