We’ve talked a lot about the economic downturn of this past spring and summer, and that’s a real story. The sequel, of course, is the remarkably fast recovery we’ve been experiencing, as first the stock market and then the general economy began bouncing back.
The addendum to all of this, of course, is that there are stocks flashing ‘buy’ signs for investors. The reasons can vary, but at bottom, it’s fair to say that not every company suffered from coronavirus. For some, the new market conditions presented opportunities.
Wall Street’s stock analysts make their reputations by spotting those opportunities – and letting the investing public know. We’ve opened the TipRanks database and pulled up three under-the-radar stocks that just received a thumbs-up from the analysts. There is upside here, along with some risk – but for investors willing to shoulder that, here are some unexpected picks from the Street.
O’Reilly Automotive, Inc. (ORLY)
One of the sectors that has seen positive growth in the ‘corona era’ is ‘do it yourself.’ DIY companies have found an expanding customer base as the social and economic isolation policies put in place to combat the virus closed businesses and forced people to stay home – but basic maintenance is still a requirement. O’Reilly is one such company. It sells aftermarket auto parts and supplies, including tools and accessories, to the DIY and professional market. The company boasts over 5,400 stores across the US and Mexico.
American love their cars, and always have; home auto repair isn’t just a less expensive alternative to the shop, but also a popular hobby. O’Reilly has driven that basic fact to growing profits. The company saw $9.5 billion in total revenue in 2018, which grew to $10.2 billion 2019. So far, 2020 has seen $5.6 billion in revenue for the first half – and that number is trending up. Q1 saw $2.5 billion at the top line, while Q2 saw $3.1. Second quarter EPS was up 78% sequentially, to $7.10 per share.
Indeed, the company credited an increased interest in DIY car repair for the strong quarter. Along with revenues and earnings, total sales were up 19%, comp store sales were up 16%, and net cash from operations grew by a whopping 84%, or $712 million.
Matthew McClintock, writing from Raymond James, is unabashedly positive here. He says, “…we now believe that sizable independent market share is up for grabs now more than ever, and therefore we are incrementally positive on the company's ability to deliver comps towards the higher end of its annual 3%-5% algorithm. This company remains and likely will remain the single best supply chain in this industry for the foreseeable future…”
Along with this upbeat outlook, McClintock upgrades his rating on ORLY stock from Market Perform to Outperform (i.e. Buy), and his $550 target price represents an upside of 17%. (To watch McClintock’s track record, click here)
Overall, ORLY has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 14 analysts polled in the last 3 months, 9 are bullish on ORLY stock, while 5 remain sidelined. With a 10% upside potential, the stock's consensus target price stands at $517.31. (See ORLY stock analysis on TipRanks)
Laird Superfood (LSF)
The next stock on our list held its IPO just last month. Laird Superfood produces and markets a range of plant-based, nutrient-dense snacks and food additives. The company’s main line of products is specialized coffee creamers, designed to add both energy and nutrition to the morning staple.
While LSF is too new to the public markets to have a significant chart history, and has not yet released quarterly results as a publicly traded company, it’s notable that the IPO was remarkably successful. The stock was offered for trading at $22 per share – but it opened at more than $33. The IPO sold more than 3 million common shares, and the company now boasts a market cap of $513 million.
Canaccord analyst Robert Burleson is impressed with Laird, and initiates his firm’s coverage with a Buy rating and a $70 price target indicating room for 21% growth in the coming year. (To watch Burleson’s track record, click here)
Supporting this view, Burleson writes, “LSF’s long-term prospects appear particularly attractive. The company is positioned to leverage its brand across an expansive range of plant-based foods. Backed by the wellness credibility of co-founders Laird Hamilton, an international fitness icon and nutrition expert, and his wife, Chief Brand Ambassador Gabrielle Reese, a professional volleyball player and model, LSF has already gained considerable traction within the plant-based, functional foods market.”
In its short time on the public markets, LSF has garnered 3 Buy ratings, making the analyst consensus view a unanimous Strong Buy. Shares are selling for $53.58, and the average price target of $62.33 suggests a one-year upside of 8%. (See LSF stock analysis on TipRanks)
Last on our list is CuriosityStream, an educational online video streaming channel devoted to ‘factual’ content. The site offers streaming services to subscribers, and boasts an audience of 13 million worldwide. It was first launched in 2015 by John Hendricks, who is best known for creating the Discovery Channel, the popular science-oriented cable channel, back in 1985.
CuriosityStream went public at the end of the summer, through a merger deal with the ‘blank check’ special purpose acquisition company Software Acquisition. When the CURI ticker started trading earlier this month, on the NASDAQ exchange, it saw an almost immediate 10% price spike.
The surge in interest in CURI was due in part to its public debut, but also to the company’s reputation and track record. CuriosityStream has received positive news coverage over the years from the New York Times, the LA Times, and the Wall Street Journal. It has also been nominated for 15 awards since 2016, for its science content and production quality, and has won 5 of those.
Writing the first review on file for CURI shares is Zack Silver of B. Riley securities. He writes, “Our constructive view on CURI starts with a belief that consumers will continue to adopt SVOD as both a replacement and a complement to traditional linear TV… CURI launched its SVOD offering worldwide in 2015 and began to significantly ramp investments in marketing and content in 2018. Mr. Hendricks believes 40% of global viewers are interested in consuming factual programming; our recent survey work suggests that this number is closer to 80% in the U.S.”
Silver initiates coverage of the stock with a Buy rating and a $16 price target that implies an impressive 45% one-year upside potential form the current share price of $11.02. (To watch Silver’s track record, click here)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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.