Put These Flyers Under Your Tree

 | Dec 24, 2012 | 9:30 AM EST
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First of all, happy holidays to Real Money readers and my fellow contributors. I hope you have had a prosperous 2012 and enjoy many happy tidings in 2013.

As my regular readers know, I am mainly a value and contrarian investor. But, let's allow the holiday spirit work its magic today and depart from that a bit -- and go with a couple of speculative picks to put in one's stocking. Both of these stocks are selling at less than $10, and are what I call "leap of faith" names, since they operate in volatile industries and have scant analyst coverage. Even so, both have impressive projected revenue growth ahead, and insiders at both names have recently decided to make fresh purchases of the shares.

Aveo Pharmaceuticals (AVEO) is a company that's targeting cancer therapies using its Human Response Platform. Its lead product candidate is Tivozanib, an oral cancer drug in a Phase III clinical development that's meant to prevent tumor growth by inhibiting angiogenesis. The company also has a pipeline of monoclonal antibodies in development.

Here are four reasons Aveo is good speculative play at $6.50 a share:

1. Numerous insiders have purchased more than $900,000 worth of new shares over the last two weeks.

2. The company has a robust balance sheet, with more than 60% of its market capitalization in net cash on the books.

3. Analysts project the company will more than triple its revenue in 2013 -- to more than $65 million from an estimated $20 million this year. The company is still expected to lose money next year but, over the last two months, consensus earnings estimates for the coming year have improved markedly.

4. The six analysts who cover the stock have set a median price target of $14.50. The targets vary from $9 to $18 a share, all significantly above the current stock price.

Evolution Petroleum (EPM) develops and produces and oil and gas from its properties in Texas, Louisiana and Oklahoma.

Here are four reasons Evolution Petroleum is a good growth play at $8 a share:

1. There have been several insider purchases over the past few months.

2. Wall Street targets have risen more than 50% for fiscal 2013 (ends June 2013) in the last three months. For fiscal 2014, the company is projected to almost triple its earnings to $0.83 a share.

3. Revenue is also expected to nearly triple in fiscal 2014, and the company has quadrupled its operating cash flow in the last three years.

4. The mean price target is $11.75 for the four analysts that cover the stock. Price targets range from $11 to $14. The company has no debt, and has around 10% of its market capitalization in net cash.

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