One of the first lessons I learned when I started investing was that you should always do your own homework before putting your money to work in a stock.
It is important to pay attention to what the experts have to say regarding a security, since they analyze the market for a living, but you should always follow up their research with a little work of your own.
Analyst recommendations and price targets offer a good insight for the average investor. If you see a large number of analysts rating a stock as a “strong buy”, it provides a good reason to dig deeper into the stock to determine if it is worth adding to your portfolio. The same can be said for a stock’s price target.
We are going to take a look at five stocks that are currently trading at least 20% below the street’s average price target, and dig a little deeper to decide whether or not now would be a good time to jump into the stock and expect a nice uptick.
In a couple cases, there is enough information to justify building a position in the stock, but that will not be the case with every stock in our list, with three of the five stocks looking a bit too risky even at their current price.
As always, be sure to do your own homework before jumping into any of the following stocks.