5 Oversold Small Cap Stocks to Buy Now

4. Burford Capital Ltd. (NYSE:BUR)

Burford Capital Ltd. (NYSE:BUR) is one of the 10 oversold small cap stocks to buy now.

On March 30, Wedbush downgraded Burford Capital Ltd. (NYSE:BUR) stock rating to Neutral from Outperform. The firm also cut down the target price from $6 to $4.75. This came after the company released a press statement regarding their stance on the decision by the U.S. Appeals Court concerning YPF.

In the statement, the company indicated that any fair value marks would trigger net worth requirements, which would prevent further debt issuance. Although there is no problem now, the limitation may lead to changes in the company’s growth plans to generate more cash. It introduces another dimension of risk in terms of financial considerations, along with legal risks that have been discussed earlier.

On March 30, Mark DeVries from Deutsche Bank decreased the price target for Burford Capital Limited (NYSE:BUR) from $17 to $15, while reiterating a Buy rating on the stock. Despite the downward revision in price target, the stock still yields more than 207% upside potential, which should garner investor interest in this oversold small-cap name.

DeVries reflected on the reversal issued by the U.S. Court of Appeals for the Second Circuit against a previous ruling issued by the District Court, which held the Argentine Republic accountable for a contract breach.

According to DeVries, the market’s performance since the first appeal hearing already suggested that this result was very likely. However, based on the facts of the case, the analyst still sees the final judicial reversal as highly unexpected and disappointing. Despite these immediate legal obstacles, DeVries asserts that the company remains significantly oversold at current trading levels.

Burford Capital Ltd. (NYSE:BUR) is a provider of legal finance goods and services globally. Its services include providing capital against the high-value litigation and arbitration cases, legal risk management, managing legal finance assets on behalf of third-party investors, and providing other services to the legal industry.