The markets are up, and the bulls are running. According to Mike Wilson, chief US equity strategist for Morgan Stanley, now is the time to buy in. Wilson believes that the market’s recent rise signals “a pretty darn good” economic recovery in store for us next year.
“We think that a return of topline growth and a material reduction in the cost base will lead to operating leverage flow through that such that peak profits will appear again before peak sales… We’ve seen margin upside drive earnings growth coming out of prior recessions and expect the same this time, with potential further upside from massive fiscal stimulus,” Wilson wrote in a recent note.
We’ve taken a page from Wilson’s book, and used the TipRanks database to tag two stocks with a clear appeal to investors in the current climate: they have a low cost of entry (under $3 per share), they have a Strong Buy consensus rating from Wall Street’s analysts, and the upside potential starts at 90% and goes rises from there.
Golden Minerals Company (AUMN)
We’ll start with Golden Minerals, a Colorado-based miner focusing on precious metals exploration and extraction. The company’s ‘portfolio of exploration projects’ includes locations in Nevada, Mexico, and Argentina. Two mines in Mexico are leased to Hecla, and that lease provides a positive cash flow for Golden.
During 1H20, the company announced two points of major interest to investors. First is the commencement of exploration drilling at the Durango mine in Mexico, with early results showing significant deposits of recoverable near-surface gold in high grades. In other words, it’s a gold mine, and potentially a valuable one. The second point of interest to investors concerns the stock. Golden closed out an $8.6 million public offering of common stock, totaling more than 20.5 million shares. The move puts the company on a sounder capital footing heading into 2H20.
Roth Capital analyst Jake Sekelsky sees multiple paths forward for Golden: "AUMN is well positioned to transition from developer to producer over the next year with limited capital requirements. Given this, we believe the stock is poised to undergo a re-rating once the company’s Rodeo Gold Project enters production in 1H21. Our thesis is predicated on our belief of the following: 1) Rodeo Project to drive transition from developer to producer. 2) Optimization work provides path for restart at Velardeña Mine. 3) Longer-term optionality exists at the El Quevar Project."
In line with his optimism, Sekelsky rates AUMN shares a Buy. His $1 price target implies an upside potential of 129% in the next 12 months. (To watch Ihle’s track record, click here)
Overall, AUMN shares get a unanimous thumbs up, with 3 Buys backing the stock’s Strong Buy consensus rating. Shares sell for $0.43, and the average price target of $0.98 suggests an upside potential of 124%. (See AUMN stock analysis on TipRanks)
Greenlane Holdings (GNLN)
Greenlane markets cannabis accessories, CBD, and liquid nicotine products through a network of subsidiaries, along with house brands though direct methods. The company distributes to smoke and vape shops, along with licensed cannabis dispensaries. Greenlane’s network includes more than 11,000 retail locations, as well as its own wholly owned e-commerce platform.
Retail generally was slammed during the first quarter of this year, as the COVID crisis took hold, and Greenlane’s results reflected that. Q1 EPS was sharply negative, at a 61-cent per share loss, after revenues fell 11%. The second quarter, while still negative, showed improvement. The EPS loss was 16 cents, and the collapse in revenues slowed down.
Through the difficult quarter, the company has continued to roll out new products – a line of rolling papers, child-resistant packaging, and pre-rolled cones. This activity has occurred while the company also brought in new leaders in upper management, with new faced taking over the CFO and COO positions.
Taking a broad view of the company and its retail landscape, Northland Capital Markets’ Mike Grondahl writes of Greenlane: “COVID-19 impacted 2Q20 with decreased brick and mortar retail traffic and issues with the supply chains in certain areas. This was somewhat offset by improved e-commerce growth. While stores/cities are starting to open back up, it will take time for the brick and mortar side of the business to normalize… e-commerce revenues were $6.0M, up 18% y/y as Vapor.com reported daily store transaction were up 74% to 16,000 orders in the quarter as COVID-19 pushed people into the online channel from brick and mortar… With $41.8M in cash, GNLN has enough capital to continue the transition into higher margin segments.”
Accordingly, Grondahl rates GNLN an Outperform (i.e. Buy), and his $5 price target suggests it has room for 103% growth this year. (To watch Grondahl’s track record, click here)
Overall, Greenlane has 3 recent analyst reviews, and all are positive, making the Strong Buy consensus rating unanimous. The stock is selling for $2.24 and the average price target of $4.67 makes the one-year upside 90%. (See GNLN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.