(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA)
If you’re looking for stocks with extremely positive outlooks, you might be interested in a list like this.
To create the list below, we started with names that are already proving themselves valuable: We created a universe of rallying stocks. By this we mean all of the stocks are performing above their 20, 50, and 200-day moving averages.
This signals that the company is rapidly increasing in value and surrounded by positive market sentiment
In addition we screened for companies that Wall Street analysts project rapid earnings growth over the next five years. Specifically, analysts expect earnings per share growth of more than 15%.
Searching for Undervalued Stocks
Of course, the investor’s goal should always be to buy into earnings growth at a reasonable price. So we ran an additional screen on the names for share prices trading at significant discounts to analyst target price.
This reflects analyst expectations of where the stock is headed within the next year, and if a stock is trading at a steep discount to this number, it may be currently undervalued.
Because target prices are notoriously inflated, it helps to focus on the most pessimistic (the lowest) target prices, as well as those with sufficient analyst coverage of 5 or more analyst ratings.
Without further adieu, here are the three rallying and high growth stocks undervalued to target price.
Do you think these names will rally higher?
Analyze These Ideas (Tools Will Open In A New Window)
1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned
1. Body Central Corp. (BODY): Operates as a specialty retailer of young women's apparel and accessories in the South, Mid-Atlantic, and Midwest regions of the United States. Earnings projected to grow by 20.0% over the next five years. The stock is currently trading 6.55% above the 20-day SMA, 8.28% above the 50-day SMA, and 6.45% above the 200-day SMA. Of the 5 Wall Street analysts that research the stock, the lowest target price stands at 26, which implies an upside of 17.81% from current levels around 22.07.
2. Mine Safety Appliances Co. (MSA): Develops, manufactures, and supplies health and safety products used by workers in the fire service, homeland security, construction, and other industries, as well as the military. Earnings projected to grow by 18.25% over the next five years. The stock is currently trading 0.43% above the 20-day SMA, 3.93% above the 50-day SMA, and 1.42% above the 200-day SMA. Of the 5 Wall Street analysts that research the stock, the lowest target price stands at 41, which implies an upside of 27.01% from current levels around 32.28.
3. Omnicell Inc. (OMCL): Omnicell, Inc. offers automated solutions for hospital medication dispensing and supply management primarily in the United States and Canada. Earnings projected to grow by 26.50% over the next five years. The stock is currently trading 5.03% above the 20-day SMA, 7.29% above the 50-day SMA, and 9.86% above the 200-day SMA. Of the 7 Wall Street analysts that research the stock, the lowest target price stands at 19, which implies an upside of 15.01% from current levels around 16.52.