8 Stocks Under $8 With Upside

NEW YORK (TheStreet) -- US Airways (LCC), MEMC Electronic Materials (WFR), Delta Air Lines (DAL), Micron Technology (MU), Amkor Technology (AMKR), Advantage Oil & Gas (AAV), Hecla Mining (HL) and Gran Tierra Energy (GTE) are expected to return an average of up to 65% over the next year. These eight stocks are mid-sized companies with market caps of around $3 billion and are trading at less than $8 a share.

Analysts expect these eight stocks to outperform their peers and broader markets, based on their respective 12-month price targets. These stocks were plucked from diverse sectors, such as energy, airlines, mining and semiconductor. Analysts' buy ratings are about 57%, estimating the stock has upside potential of 43% to 123%.

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The stocks are stacked in terms of upside, great to greatest.


8. Advantage Oil & Gas ( AAV) engages in the exploration and production of oil and natural gas at its Glacier property in Alberta, Canada.

The company reported first-quarter 2011 production of 24,775-barrel oil equivalent per day, increasing 19%, due to better-than-expected well performance at its Glacier property. Lower natural gas prices reduced operating cash flows to $40 million from $49 million in the same quarter the prior year.

Capital expenditure during the first quarter of 2011 amounted to $77 million and the majority of capital spending was made at Glacier. The phase 3 development program at Glacier was ahead of schedule, which augurs well for future drill inventory.

Management estimates production at around 23,500 boe/d for the second quarter of 2011. The stock has 43% upside over the next year with 67% analysts recommending a buy, as per a Bloomberg consensus.

7. Hecla Mining ( HL) is the largest producer of silver in the U.S. with two mining properties. It has four exploration properties in the U.S. and Mexico.

Revenue for the first quarter of 2011 was $136 million, up $57 million from the same period last year, benefiting from stable production and higher silver prices.

The company's margins improved during the quarter. EBITDA margin rose to 60% during the quarter versus 40% in the corresponding quarter of 2010. EBITDA increased from $31.7 million during the first quarter of 2010 to $81 million during the quarter under review. Net income margins came higher, at 32% vs. 27% in the comparable quarter of 2010.

As of March 2011, Hecla's cash position was $322 million compared to $116.3 million cash on hand during the same period in 2010. Capital expenditure totaled $22 million for the first quarter of 2011. Analysts expect the stock to gain around 45% over the next year.

6. Gran Tierra Energy ( GTE) is a Canada-based upstream energy company. The company owns oil and gas properties in Colombia, Argentina and Brazil.

Revenue increased 32% to $123 million during the first quarter of 2011 compared to $93 million in the same quarter in 2010, attributable to a 36% increase in realized crude oil prices. Net income stood at $13.7 million versus $10 million for the same period in 2010.

As of March 2011, cash and cash equivalents were $254 million compared to $355 million in the previous quarter, driven by capital spending.

Commenting on the exploration portfolio, Dana Coffield, the company's CEO, said in a press statement, "Gran Tierra Energy continues to expand its exploration and development portfolio through the successful completion of the Petrolifera acquisition in March. This acquisition added production enhancement opportunity in Argentina, reserve development opportunity in Colombia, and exploration opportunity in Colombia and Peru.

In parallel with the integration of the newly acquired assets, Gran Tierra Energy is continuing appraisal of the Moqueta oil field in Colombia in preparation for long-term testing expected to start in May for the new reserves that continue to grow with each new delineation well." Analysts expect the stock to gain around 47% over the next one year, and it is trading at 10.1 times its estimated 2012 earnings.

5. Amkor Technology ( AMKR) is a leading provider of semiconductor assembly and test services.

Net sales for the second quarter of 2011 stood at $688 million, up 3% from the same quarter prior year. Gross margin was flat at 19% in the second quarter of 2011. Net income was $14 million, down from $25 million in the second quarter of 2010. Second-quarter 2011 net income includes $16 million related to debt refinancing charges.

On the business forecast, Ken Joyce, Amkor's CEO, said, "Strong demand for communications and the seasonal increase in gaming is expected to drive sequential revenue growth of 5% to 12%. To continue driving technology leadership and innovation and meet the capacity requirements of our leading customers, we are currently planning capital additions of approximately $225 million for the second half of 2011."

On average, analysts expect the stock to gain 60% over the next one year. The stock's buy rating is 50%, and it is trading at 8.5 times its estimated 2011 earnings.

4. Micron Technology ( MU) provides advanced semi conductor solutions and manufactures DRAM, NAND Flash memory and packaging solutions.

During the third quarter of fiscal 2011, net income stood at $75 million on total revenue of $2.1 billion. The company's consolidated gross margin improved sequentially to 22% from 19% on lower manufacturing costs.

Operating cash flow for third quarter was $589 million and capital expenditure was $534 million. The company repaid $327 million debt and closed the quarter with cash and short-term investments of $2.4 billion.

During the third quarter, the company sold its wafer fabrication facility in Japan to Tower Semiconductor. Operating income for the period also included $8 million receipts from the U.S. government related to anti-dumping duties. Analysts project 59% upside over the next year.

3. Delta Air Lines ( DAL) is a U.S.-based airline engaged in providing passenger and cargo services worldwide.

Delta's revenue during the June quarter grew $1 billion, following a 1% increase in passenger traffic. Passenger revenue, forming about 88% of operating revenue, grew 13%, while cargo was the fastest-growing segment during the quarter, at 25%.

Fuel costs were a major dampener during the quarter, increasing 39% year-over-year to a billion dollars. While the company's liquidity position is strong, it holds $3.8 million in cash and short-term investments, and $1.8 billion in undrawn revolving credit facilities. Operating cash flow during the June quarter was $1 billion.

Hank Halter, Delta's chief financial officer, said, "With strong cash generation despite fuel price pressures, we are making solid progress on our debt reduction goals." He added, "In 18 months, we have reduced our net debt by over $3 billion, while still making significant investments in our product, fleet and facilities."

Analysts' consensus estimate pegs average gains at 68% over the next year with buy ratings of 79%. The stock is trading at 7.7 times its estimated 2011 earnings.

2. MEMC Electronic Materials ( WFR) manufactures silicon wafers. The company operates in segments such as semiconductor materials, solar materials and solar energy.

Net sales for the first quarter of 2011 was $736 million, up 68% from the first quarter of 2010. Sales were robust across all segments, particularly from Solar Materials and SunEdison.

Japan's devastating earthquake and unfavorable legal settlements affected earnings during the first quarter. MEMC reported net loss of $4.5 million for 2011 first quarter vs. a net loss of $9.6 million in the first quarter of 2010.

Capex for the first quarter was $205 million. With cash and cash equivalents of $684.1 million and operating cash of $225 million at the end of March, the company is comfortably paced to fund its capex program. MEMC is making investments in solar wafer capacity, semiconductor wafer production and poly-silicon capacity expansion. Analysts expect an upside of 75% in the next year. The stock is trading at 6 times its 2011 earnings.

1. US Airways ( LCC), through its subsidiaries US Airways Shuttle and US Airways Express, operates more than 3,200 passenger flights per day serving 80 million passengers each year together with affiliate US Airways Express. The company is part of the Star Alliance Network and offers scheduled services in the U.S., Europe, the Middle East and South America.

Total revenue reported for second quarter 2011 was $3.5 billion, up 10.5% from the same quarter prior year. The considerable rise in the overall demand environment coupled with higher passenger yield boosted top-line. The company observed a 3.3% increase in total available seat miles; total revenue per available seat mile rose 7% from the earlier year to 15.36 cents.

Net income stood at $106 million for the second quarter 2011. Doug Parker, US Airways Group's CEO, said "We are pleased to report a profit for the second quarter of 2011 - particularly in spite of a 47% year-over-year increase in fuel price. Overall demand for our services remained strong during the quarter with revenues up more than 10%, while our mainline unit cost excluding special items, fuel and profit sharing increased only one percent." The stock has 123% upside over the next one year with a buy rating of 43%.

>>To see these stocks in action, visit the 8 Stocks Under $8 With Upside portfolio on Stockpickr.

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