3 “Strong Buy” Stocks for Bottom-Fishing Investors

The oldest advice in the markets is, buy low and sell high. The hardest trick in the markets is knowing how to recognize a low-cost stock that is poised to bring strong gains. It’s a trick because, in truth, low cost is a relative description. A stock can have a triple-digit price tag, and still be selling for a discount if it’s off a recent high point.

The upshot is, investors looking to buy low can use sharp declines in fundamentally sound stocks as a deciding factor. Wall Street’s analysts aren’t shy about pointing out deals in the market, and a review of their notes will point investors toward stocks that have hit a hurdle, lost share price, but retained the strengths that got them that peak in the first place.

We’ve used the TipRanks platform to pull up details on three stocks that meet this profile. These are an interesting lot, coming from several market niches, but all are Strong Buys with plenty of upside potential and they are all down at least 30% from peak values reached earlier this year. Let’s take a deeper dive in, and check them out.

Open Lending Corporation (LPRO)

First up is Open Lending, a loan financing company in the automotive sector. Financing has been the engine of car sales – for new and used – in recent years, and it will likely be more important going forward as inflation pushes up prices in the car markets. Open Lending, a Texas-based company, makes the decision process easy, with loan analytics, risk modeling and risk-based pricing, and automated decision making. The company went public last year through a SPAC transaction.

Open Lending works with automotive lending companies, offering a platform to streamline their lending process. The company’s services allow lenders to make the best use of their assets and to maximize the repayment rates. The result is lower risk and higher yields, a win for everyone, including the end customer who drives off in a newly purchased car.

Despite some volatility through 2021, the company’s stock generally stayed elevated – until September of this year, when it started falling form its peak. From that peak, the stock is down 43%.

Even though the stock is down, company management described the recent 3Q21 report as a ‘record.’ Revenue came in at $58.9 million, down slightly from the $61.1 million in 2Q21, but up an impressive 97% year-over-year. The company facilitated over 49,000 certified loans during the quarter, up 138% yoy. EPS was positive, at 23 cents per share, compared to the 62-cent EPS loss in the year-ago quarter.

Writing on this stock for Canaccord Genuity, 5-star analyst Joseph Vafi sees the company in a sound position despite inflationary headwinds.

“Another all-time record quarter, bucking Covid, global chip shortages and rising car prices and underscoring how resilient the Open Lending platform is against such macro headwinds…. the LPRO business model is still expanding, with solid execution in credit union refi, potentially launching new products in the short term, and importantly moving forward with auto OEM relationships in addition to the two already in hand. Even during a tough quarter in auto transactions, the company signed 16 new customers, four of which had assets of $1B or greater,” Vafi noted.

To this end, Vafi gives LPRO shares a Buy rating, with a $55 price target that implies a 12-month upside potential of a huge 130%. (To watch Vafi’s track record, click here)

Overall, it’s clear that Wall Street likes the prospects on this stock. Of the 8 recent reviews, 7 are to Buy against 1 Hold, for a Strong Buy consensus rating. The shares are priced at $23.90, and the average price target of $38.57 suggests a gain of 61% in the year ahead. (See LPRO stock analysis at TipRanks)

Five9 (FIVN)

Next up is Five9, an AI cloud company offering a scalable contact center platform. Five9 has a smart product in a crowded industry, but online contact is a growth industry. The company’s software uses AI to allow faster data analysis with greater accuracy and efficiency. Contact center customers can use the AI to track and route calls, direct callers and service agents, and process information.

The big news recently on Five9 was the collapse of the company’s talks with Zoom. The two companies had been in negotiations over a Zoom offer to acquire Five9. The offer, for an all-stock deal, was worth…

 

Continue reading at YAHOO! FINANCE

 

Leave a Reply

Your email address will not be published. Required fields are marked *


Newsletter

 Sign up now to receive our Daily Newsletters, straight to your inbox.