That's why I stand up and take note when price targets are far above or far below the current stock price. These are usually issued by analysts that tend to look further down the road -- to where a company's profit picture and business trends will be a year or two from now. And this is the kind of longer-term view I believe investors should have if they don't want to miss out on making quick gains that might only be disguised by short-term hiccups.
Here's a look at three stocks with price targets handily above current levels:
1. Rite Aid (NYSE: RAD)
Current price: $1.18
Guggenheim price target: $2
This debt-laden drug store chain sprang to life this past winter, as shares surged from under $1 in October 2011 to above $2 by March 2012. Buyout rumors led to a massive short squeeze, but as a buyer failed to emerge, shares quickly gave up almost all of those gains during the following months. Short sellers haven't been deterred: They still hold 41 million shares short.
This trend was in evidence for Rite-Aid in September, according to company data, but on balance, should be a benefit for the bottom line. These Guggenheim analysts say Rite-Aid's third-quarter EBITDA will likely rise 12% from a year ago to $247 million, higher than most analysts are anticipating.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 23rd, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 22nd, 2014 | John Ransom