Markets

These stocks have analyst recommendations of “strong buy”—and they’re undervalued

By Mary-Lynn Cesar for Kapitall.

Earlier this year, the Farmers' Almanac predicted most of North America would experience an unusually hot summer. And though parts of the New York metropolitan region had pretty pleasant weather last week, California is in fact in the midst of an unseasonably hot stretch .

The Farmers' Almanac also correctly forecasted the cold, snowy winter that plagued a large swath of the US earlier this year.

We decided to run a screen focused on predictions. In the case of stocks, these tend to come in the form of analyst recommendations. Analysts extensively research companies and industries in order to gain a reasonable idea of a company's potential trajectory. This is why many investors value their input in the first place.

To begin, we screened for stocks with an average analyst recommendation of "strong buy." This means that the stocks have been given a rating of 1 or greater but still less than 2. A "buy" means a stock's rating falls within the 2 range, "hold" within the 3 range, "sell" within the 4 range, and "strong sell" within the 5 range.

Since analysts make predictions for a stock's future earnings per share ( EPS ), we decided to screen for that too. Specifically, we screened for stocks with high EPS growth projections of 25% or greater for this year and next year.

Finally, we narrowed down that group to our following list by screening for stocks that are undervalued with a price/earnings to growth ( PEG ) ratio equal to or less than 1 .

We were left with four stocks on our list. Do you agree with the analyst recommendations for these stocks? Use this list as a starting point for your own analysis, and let us know what you think in the comments.

Click on the interactive chart to view data over time.

1. The Dixie Group, Inc. ( DXYN , Earnings , Analysts , Financials ): Makes, markets, and retails carpets and rugs to commercial and residential customers. Market cap at $144.2M, most recent closing price at $9.15.

Analyst recommendation is 1.

EPS is expected to grow by 940.00% this year and 236.73% next year.

PEG at 1.

2. INSYS Therapeutics, Inc. ( INSY , Earnings , Analysts , Financials ): Develops and commercializes supportive care products. Market cap at $967.34M, most recent closing price at $28.26.

Analyst recommendation is 1.3.

EPS is expected to grow by 181.00% this year and 55.02% next year.

PEG at 0.88.

3. Oppenheimer Holdings Inc. ( OPY , Earnings , Analysts , Financials ): Operates as a middle-market investment bank and full service broker-dealer. Market cap at $301.31M, most recent closing price at $22.27.

Analyst recommendation is 1.

EPS is expected to grow by 755.60% this year and 133.33% next year.

PEG at 0.78.

4. G. Willi Food-International Ltd. ( WILC , Earnings , Analysts , Financials ): Engages in the development, manufacture, marketing, import, export, and distribution of various food products worldwide. Market cap at $96.13M, most recent closing price at $7.40.

Analyst recommendation is 1.

EPS is expected to grow by 33.30% this year and 54.10% next year.

PEG at 0.73.

(List compiled by Mary-Lynn Cesar. Monthly return data sourced from Zacks Investment Research. All other data sourced from finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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


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

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