There are many fundamentally sound, low-cost stocks that retail investors can consider. The key to success is finding stocks that are at or near the bottom of their cycle.
Investment advisors will always tell you that you can’t “time the market”, and they’re right, but timing is always important for success. Investors need to buy at low prices, and to do that they need to know when prices are low. This does not necessarily mean low in absolute dollars, but low relative to a stock’s recent past performance.
Recognizing this lower price range, investors can turn to the pros on Wall Street for help. Analysts have been busy lately, picking stocks that are in their lower price range and flirting with the bottom.
We used the TipRanks database to look for three such stocks, Strong Buys with strong upside potential for the next few months – and each is trading at or near its one-year low. Let’s take a closer look.
Financial company of Oportun (OPRT)
We will start in the financial services sector. Oportun is a digital banking platform that uses AI to support inclusive and affordable financial services for over 1.5 million members. The company’s customers can access savings, banking and investment services, including short-term loans and credit. The company offers alternatives to high-risk credit services such as payday loans and auto-title loans; Oportun customers can access personal loans between $300 and $10,000 with repayment terms between 1 and 4 years, and can apply for credit cards with limits between $300 and $1,000. Oportun has been in business since 2009 and has provided over $12 billion in affordable credit during that time.
Personal banking and credit services for the low end of the consumer financial market have become big business, and a look at Oportun’s recent performance confirms this. The company reported quarterly revenue of $194 million for 4Q21, and total loans in the quarter increased 93% to $865 million. For the full year of 2021, those numbers hit $627 million and $2.3 billion — both company records. The company reported adjusted earnings of 82 cents per share, up 36% year-over-year, and well above guidance of 72 cents.
Nonetheless, Oportun’s share price has fallen 46% from its peak in November last year.
That doesn’t mean the stock isn’t healthy. 5-star analyst David Scharf of JMP has an optimistic view of Oportun, writing: The company’s significant geographic, product and channel expansion over the past two years has been lost amidst the spotlight. wider investor base on the pandemic and related credit normalization that is underway. Yet OPRT management has quietly and steadily built a diverse and comprehensive subprime platform…”
Supporting his bullish view of the company, Scharf gives the stock an outperform (i.e. buy) rating, and his price target of $26 implies a robust upside of around 72% for the year. future. (To see Scharf’s track record, Click here)
Overall, all 4 recent analyst reviews on the OPRT are positive, giving a unanimous consensus rating of Strong Buy, and the mid-price target of $26.25 indicates upside potential of around 74% from the trading price of $15.11. (See OPRT stock forecast on TipRanks)
Altra industrial movement (AIMC)
We may live in the digital economy, and the sectors of finance and cyberspace may be driving much of what happens around us, but the physical world imposes demands that cannot avoided – and that’s where Altra Industrial Motion comes in. This company manufactures motion controls and power transmission products for a wide range of industries: cranes and hoists, oil and gas industry, robotics and industrial automation, precision motors and medical and surgical tools. Altra produces a full range of equipment to control speed, torque, positioning and braking, on every scale imaginable. The company operates in 17 countries and has more than 48 production sites.
In its most recent quarter, 4Q21, Altra reported $469.8 million in revenue, flat sequentially but up a modest 3.7% year-over-year. While sales were up slightly, EPS was down. Reported non-GAAP earnings of 67 cents per share were down nearly 12% year over year. On a positive note, the company also reported a record backlog, indicating high potential for future business, and is on track for full-year 2022 revenue of between $2.025 billion and $2.065 billion – which would translate to a 7.6% year-over-year gain at the midpoint.
In a few recent organizational moves, Altra has taken steps to highlight its strengths and eliminate some weaknesses. The company has reached an agreement to sell its JVS (Jacobs Vehicle Systems) business to Cummins for $325 million. That sale price was 40% above JVS’s share of 2021 revenue. And, in January, Altra completed its acquisition, for an undisclosed amount, of Nook Industries, a leader in engineered linear motion. Nook had revenue of around $42 million last year.
Altra shares have fallen steadily over the past 12 months; the stock is down 32% during this period. However, 5-star Oppenheimer analyst Bryan Blair points to the potential for a rebound in the stock, saying: “We believe the valuation is now overly discounting Altra’s trading quality (including fourth margins highest EBITDA across IMFC coverage), favorable positioning of its overall portfolio (with underestimated exposure to factory automation, material handling/e-commerce, infrastructure and technology and full-cycle earning capacity of combined PTT/A&S operations (strongly supporting normalized FCF generation >$250m). We consider the stock’s eye-catching valuation discount (notably >10 points on the P/E) to be out of touch with fundamentals, underscoring AIMC as a compelling value play.”
To that end, Blair gives AIMC an Outperform (i.e. Buy) rating, along with a $67 price target that suggests a 63% upside over the next 12 months. (To see Blair’s track record, Click here)
While only three analysts have weighed in on Altra, their unanimous agreement gives the stock its consensus Strong Buy rating. The shares are priced at $41.23 and have an average target of $65, with upside potential of around 58% over the next 12 months. (See AIMC stock predictions on TipRanks)
Axalta Coating Systems (AXTA)
We’ll end with another industrial stock, this one in a kind of “leisure/luxury” niche. Axalta, headquartered in Philadelphia, has produced and marketed a wide range of color and coating solutions for industrial and consumer use for the past 150 years. The company is best known as a supplier of automotive coatings – paint jobs – but its comprehensive product line also includes liquid and powder coatings for vehicles in the commercial, industrial and agricultural sectors.
Over the past year, Axalta has seen its revenues grow while its profits have been under pressure. The company’s revenue reached $1.14 billion in 4Q21, up 6% year-over-year and the best result in two years. For 2021 as a whole, revenue was reported at $4.42 billion, an 18% gain from the “COVID year” of 2020, and indicative of a strong recovery.
At the same time that revenue numbers are up, profits have fallen in recent quarters. Fourth-quarter adjusted EPS of 30 cents was down nearly half from the EPS of 58 sent in the year-ago quarter. As a result, Axalta shares are down 20% year-to-date.
However, all may not be bleak for this industrial paint company, as BMO analyst John McNulty writes: “Cautious expectations/estimates, price acceleration as raw material levels and continued strength of its end markets have enabled AXTA to deliver in the near future. term. At a low valuation, this execution should generate a solid upside for the stock and help AXTA “break out” of the perpetual upper $20/low $30 range it has held for the past five years. The risk/return ratio remains one of the most compelling in the sector…”
Unsurprisingly, McNulty rates AXTA an outperformer (i.e. a buy), and his $40 price target shows the stock’s upside potential of around 53% in the coming months. (To see McNulty’s track record, Click here)
Axalta is a leading company and has garnered 9 analyst reviews in recent weeks. These break down into 7 buys and 2 holds, for a strong buy analyst consensus. AXTA shares are selling for $26.13 and have an average price target of $35.56, giving the stock about 36% upside potential. (See AXTA stock predictions on TipRanks)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best stocks to buya recently launched tool that brings together all information about TipRanks stocks.
Warning: The views expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.