Looking for Growth Among Stocks Trading Below Analyst Targets

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Stock market analysts are a dime a dozen; they are on television, on the Internet, and even on the street, depending on where you live. I usually take their recommendations with a huge grain of salt, but one of my preferred stock screens actually takes into account analyst target prices.

To begin, I search for stocks that are trading at significant discounts to their fair value, based on analyst target prices. This is done with the assumption that they will move up to their fair value in the near future.

I only include stocks with five or more analyst ratings, and only those that imply a potential upside of at least 15% based on the lowest target price, both of which help narrow down my list.

Also, because analyst prices are notoriously exaggerated, I also compare current price to the lowest target.

Today this screen left me with 85 stocks traded on US exchanges, so next I looked at expectations in earnings per share in order to find stand-outs with high growth prospects.

I limited my search to only those companies with 5-year projected EPS growth above 15%. This brought my results down to just eight companies.

Below are average analyst ratings for the eight stocks on the list.


Source: Zacks Investment Research

1. ADA-ES, Inc. ( ADES ): Provides environmental technologies and specialty chemicals to the coal-burning electric power generation industry primarily in the United States. Market cap at $395.68 million; most recent closing price at $39.27.

Of the five analysts that have set a target price on the stock, the lowest price target stands at $49. This implies a potential upside of 21.65% from current levels around $40.28.

EPS growth over the next five years: 50.00%

2. Capital Senior Living Corp. ( CSU ): Operates senior living communities in the United States. Market cap at $578.43 million; most recent closing price at $20.80.

Of the seven analysts that have set a target price on the stock, the lowest price target stands at $24. This implies a potential upside of 16.17% from current levels around $20.66.

EPS growth over the next five years: 28.38%

3. HudBay Minerals, Inc. ( HBM ): Engages in the discovery, production, and marketing of copper concentrates containing copper, gold, and silver, and zinc metal and zinc oxide in North, Central, and South America. Market cap at $1.16 billion; most recent closing price at $6.73.

Of the eight analysts that have set a target price on the stock, the lowest price target stands at $8.25. This implies a potential upside of 19.22% from current levels around $6.92.

EPS growth over the next five years: 43.00%

4. Himax Technologies, Inc. ( HIMX ): Designs, develops, and markets semiconductors for flat panel displays. Market cap at $500.56 million; most recent closing price at $5.89.

Of the five analysts that have set a target price on the stock, the lowest price target stands at $7.5. This implies a potential upside of 23.56% from current levels around $6.07.

EPS growth over the next five years: 29.45%

5. IPG Photonics Corporation ( IPGP ): Manufactures fiber lasers and amplifiers for use in a range of markets, such as materials processing, advanced technologies, telecommunications, and medical applications. Market cap at $2.86 billion; most recent closing price at $55.65.

Of the six analysts that have set a target price on the stock, the lowest price target stands at $68. This implies a potential upside of 22.72% from current levels around $55.41.

EPS growth over the next five years: 35.00%

6. Macquarie Infrastructure Company LLC (MIC): Operates in a diversified group of infrastructure businesses in the United States. Market cap at $2.76 billion; most recent closing price at $54.24.

Of the five analysts that have set a target price on the stock, the lowest price target stands at $62. This implies a potential upside of 16.89% from current levels around $53.04.

EPS growth over the next five years: 38.48%

7. Silicon Image, Inc. (SIMG): Engages in the design, development, and implementation of semiconductors and intellectual property solutions for the storage, distribution, and presentation of high-definition content in home and mobile environments worldwide. Market cap at $411.72 million; most recent closing price at $5.33.

Of the five analysts that have set a target price on the stock, the lowest price target stands at $7. This implies a potential upside of 31.58% from current levels around $5.32.

EPS growth over the next five years: 27.50%

8. TiVo Inc. (TIVO): Provides technology and services for television solutions, including digital video recorders and connected televisions in the United States and internationally. Market cap at $1.33 billion; most recent closing price at $10.99.

Of the 15 analysts that have set a target price on the stock, the lowest price target stands at $13. This implies a potential upside of 20.82% from current levels around $10.76.

EPS growth over the next five years: 48.00%

Editor's note: This article was written by Emily Smykal, a Kapitall editor.

Kapitall's lists break complex concepts down to their basics, offering education and investing ideas to novices that double as a refresher course for more seasoned investors. Inspired by video game design, Kapitall's revolutionary brokerage platform combines a graphical user interface with tools that make it easy to build portfolios, share ideas and execute trades.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: ADES , CSU , HBM , HIMX , IPGP

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