10. Sirius XM ( SIRI) Company Profile: Sirius XM is a subscription satellite radio company, created in the 2007 merger between Sirius and XM Radio. Share Price: $1.90 (Dec. 2) 2011 Stock Performance: 16% Analyst Consensus: Sirius XM shares had an impressive run again this year, although investors can't be happy that the stock trades below $2 after rising as high as $2.44 earlier this year. That said, Sirius XM is only one of two stocks that made this list that also gained ground in 2011. Analysts are looking for more upside in 2012, with 9 of the 12 researchers following the stock saying that it is a "buy." Bullish Case: Barrington Research analyst Jim Goss, who has an "outperform" rating on Sirius XM with a price target of $2.40, raises the idea that the company could initiate a share buyback in 2012 to reduce the massive number of shares outstanding. "Sirius XM Radio continues its story of redefining its growth and profitability potential. Subscriber counts continue to rise, helped importantly by much improved auto sales trends," Goss wrote in a Nov. 28 research report. "Financial position continues to improve, positioning the company to seriously consider the return of capital to shareholders, potentially involving a share buyback as early as next summer."
8. Gastar Exploration ( GST) Company Profile: Gastar is an independent energy company, engaged in the exploration, development and production of natural gas and oil in the U.S. and Australia. Share Price: $3.45 (Dec. 2) 2011 Stock Performance: -20% Analyst Consensus: Natural gas stocks have been a speculative play for traders because of the potential for M&A activity. With the stock down 20% this year, Gastar wasn't one of the lucky buyout targets. Analysts, though, say there is plenty of opportunity for a big winner, with 9 out of 12 analysts following the stock rating it a "buy." An average price target of $5.19 would mean a whopping 50% rally in the stock if that came to fruition over the next 12 months. Bullish Case: KeyBanc Capital Markets analyst David Deckelbaum reiterated a "buy" rating and $5.75 price target on Gastar in November, saying that the company's third-quarter production miss obscured the potential for 2012. "The pipeline issues in the Marcellus are temporary and do not affect our longer term thesis on the stock, as we see significant production growth in the Marcellus and Bossier shale plays providing significant upside in 2012 and beyond," Deckelbaum wrote in a Nov. 6 research report.
6. MEMC Electronic Materials ( WFR) Company Profile: MEMC Electronic Materials manufactures and sells wafers for use in the solar industry. Share Price: $4.28 (Dec. 2) 2011 Stock Performance: -62% Analyst Consensus: Before 2011 began, MEMC Electronic Materials wasn't even close to penny-stock land, with shares trading in the low teens. But what a difference a few months makes. Shares have been on a steady slope downward along with most other solar-related stocks. Like other companies, MEMC is dealing with oversupply issues that have resulted in a weaker earnings outlook than analysts expected. Still, MEMC remains a favorite of analysts in the under $5 world. Nine analysts have a "buy" rating on the stock, although that's only 35% of the total number of researchers following the stock. On the positive side, the average price target of $7.43 implies potential upside of 73% over the next 12 months. Bullish Case: Deutsche Bank analyst Vishal Shah is a believer in MEMC despite the rapid drop in share price this year. In November, Shah reiterated a "buy" rating with a $10 price target after MEMC reported quarterly results. "We acknowledge limited near term catalysts for outperformance but believe semis/solar weakness is already priced into shares," Shah wrote in a Nov. 3 research report. "Bottom line: Q3 results were not ideal, but the worst was likely in the shares. Management is taking the right actions and overall execution seems to be improving - the company generated positive cash flow/free cash flow even in a tough operating environment."
4. Hercules Offshore ( HERO) Company Profile: Hercules Offshore is a provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry. Share Price: $4.03 (Dec. 2) 2011 Stock Performance: 15.8% Analyst Consensus: Like Sirius XM, Hercules Offshore shares had a nice run in 2011. The stock surged in February after the company announced that it would acquire nearly all of Seahawk Drilling's assets for $105 million in cash and stock. However, shares pared those gains in September after Hercules Offshore announced it had increased its stake in Discovery Offshore to more than $34 million. For the most part, analysts like Hercules Offshore, with the stock garnering 10 "buy" ratings out of 24 researchers covering the stock. The average price target of $4.88 would mean an increase of 21% from current levels. Bullish Case: Credit Suisse analyst Brad Handler is optimistic on Hercules Offshore as the Gulf of Mexico market heats up. He has a target price of $6.50, well above the average analyst price target. "We believe continued day-rate and contracting momentum in the Gulf of Mexico should drive a limited number of reactivations by mid-2012, supporting positive share price performance on a relative basis provided macro concerns remain 'eased' on a go-forward basis," Handler wrote in an Oct. 28 research report.
2. Power-One ( PWER) Company Profile: Power-One is the world's second-biggest provider of solar inverters. The company is also among the largest providers of power conversion and power management solutions in the world. Share Price: $4.24 (Dec. 2) 2011 Stock Performance: -58.3% Analyst Consensus: Power-One investors are licking their wounds this year as the stock has fallen from $12 in February to about $4. Power-One has suffered from continually guiding forecasts below analysts' estimates. The company most recently saw a drop in third-quarter profit and offered a weak outlook for the fourth quarter because of the global macroeconomic uncertainty that has dented renewable energy firms around the globe. However, the company still pulls in 11 "buy" ratings from the 20 analysts following the company. The average price target of $6.29 implies upside potential of 48% over the next 12 months, although that would still fail to regain the 2011 high of $12.14. Bullish Case: Cantor Fitzgerald analyst Dale Pfau in late October reiterated a "buy" rating on the stock, noting that Power-One continues to gain market share in a challenging industry. "Based upon the challenging solar environment, investors should be heartened by solid profitability, continuing market share gains, and an outlook for improving margins," Pfau wrote in an Oct. 28 research note. "We believe that the shares are attractively valued at current levels, and we suggest that investors accumulate shares in anticipation of further market share gains."