3 Monster Growth Stocks That Are Still Undervalued
A lackluster job report last week didn’t derail the markets. The number of new jobs in April was just 266,000, well below the 978,000 expected, and the official unemployment rate, which had been forecast at 5.8%, actually rose slightly to 6.1%. Nonetheless, the technically weighted NASDAQ gained 0.88% in Friday’s session, while the broader S&P 500 gained 0.75% at the end of the day. These increases brought the S & P to a new record level with a growth of 13% since the beginning of the year. The market’s growth so far this year has been broad-based as it is a general economic reopening as the corona panic in the rearview mirror is shrinking. Broad-based market gains create a positive environment for growth stocks. Using the TipRanks database, we identified three stocks that fit a profile: a buy rating from Wall Street, a recent stock appreciation that outperformed the overall markets, and significant upside, suggesting they may still be are undervalued. Here are the details. Crocs (CROX) We’re starting with the shoes that Crocs took the world by storm almost 20 years ago when they first sold their signature brand of foam clogs. The shoes were big, light-colored, and even sticky – but they caught on and were successful, and the company has since specialized in more traditional footwear, including sandals, sneakers, and even dress shoes. The brand has become popular with teenagers who consider them “ugly chic” and retro – but have seen sales grow. And increased sales is what the game is all about. The company’s quarterly sales hit their most recent low point in the fourth quarter of 2019 and have since posted 5 consecutive sales increases from the previous quarter, with the last three also showing year-over-year increases. The most recent quarterly reports released last month for the first quarter of 21 showed a profit of $ 460.1 million, a company record, and a 63% year-over-year profit. Earnings per share were $ 1.47, down from $ 2.69 a year ago, but up more than 800% from 16 cents in the year-ago quarter. That gain helped cap a year in which CROX stock appreciated an impressive 374% and is still on the uptrend. Crocs’ outperformance caught the eye of Piper Sandler analyst Erinn Murphy, who is in the top 10% of Wall Street stock professionals. “We applaud the Crocs team for the continued execution, disciplined inventory and account management, and underlying brand health reinvestments. Given the high visibility of the second quarter (sales forecast + 60% to 70%) and the estimates for the second half of the year, which are slightly on the rise with solid order book plans, we believe that bears, worried about the sustainability of the brand momentum, have to remain in hibernation for another 12 months. Murphy noticed. To do this, Murphy is overweight (i.e. buy) CROX and its target price of $ 140 suggests it will see an uptrend of ~ 29% over the next 12 months. (To view Murphy’s track record, click here.) It’s clear that Wall Street generally approves of Piper Sandler’s stance against Crocs. The stock has 8 recent ratings, including 6 to buy and 2 to hold, giving the stock its strong buy consensus rating. The share price is $ 108.92, and the average target of $ 123.75 indicates growth of ~ 14% over the coming year. (See CROX stock analysis on TipRanks) Cleveland-Cliffs, Inc. (CLF) We’ll continue our look at growth stocks with Cleveland-Cliffs. The Ohio-based mining and steel company has four active iron mines in northern Minnesota and Michigan. The company started out as a miner and acquired two steel manufacturers, AK Steel and ArcelorMittal USA, in 2020. Both were self-sufficient in the steel industry from the ground up to the foundry and were the largest North American producer of flat steel. The company has seen its shares rise dramatically over the past few quarters on the back of soaring sales. CLF has risen 393% since that time a year ago, galloping past the S&P’s 44% annual gain of 44%. The rise of Cleveland-Cliffs has come as the company achieved over $ 1 billion in revenue for four consecutive quarters. The last quarter, the first quarter of 21, showed a profit of 4.02 billion US dollars. While that total was slightly below analysts’ expectations, it was up 84% from the fourth quarter and nearly ten times higher than the $ 385.9 million for the year-ago quarter. In terms of earnings, CLF posted modest net income of $ 41 million, or 7 cents per share, for the quarter. This is a solid turnaround from a net loss for the year-ago quarter of $ 52 million, or 18 cents per share. The growth in sales and earnings is considered a milestone for the company, which is starting its first full year as an independent iron mine and steel manufacturer. Not only did the company start the new year off positively, it also had $ 1.8 billion in liquidity. Lucas Pipes, 5-star analyst at B. Riley, writes of Cleveland-Cliffs: “With cash flows robust in the near term ($ 2.3 billion expected in 2021), the company expects to use excess cash flow to aggressively reduce debt. We currently see low leverage as a strategic priority for the company as it demonstrates the benefits of its fully integrated model. Cleveland Cliffs is the most attractive value in the room in our opinion. “These comments support Pipes’ buy recommendation and he sets a price target of $ 24, implying an upside potential of 56% for a year. (To see Pipes’ track record, click here.) Overall, the road’s attitude to CLF is currently split evenly down the middle. 3 buys and 3 holds gives a consensus rating for a moderate buy. The average target price is $ 25.40, which implies that analysts expect the stock to rise ~ 20% from current levels. (See CLF stock analysis on TipRanks.) Atlas Air (AAWW) Lastly, Atlas Air is a $ 2 billion player in the aviation industry. Atlas acts as a cargo airline and passenger charter service, as well as an aircraft rental company for other airlines, leasing aircraft and air and ground crew services. The company controls a fleet of Boeing airliners, including the 747, 777, 767 and 737 configured for various roles. As you can imagine, Atlas saw a decline in business during the corona pandemic – but managed to weather the crisis due to the long-term nature of most of its leases. Return on sales for the first quarter of 21 increased 33% year over year to $ 861.3 million. Earnings of $ 3.05 per share are positive, and while they’re down from $ 6.20 in the fourth quarter, they’re up 238% from the year-ago quarter. The company anticipates business will continue to be strong this year as demand for air cargo outpaces supply given the fast pace of economic reopening. Atlas Air has seen strong stock growth over the past 12 months, with the stock rising 108%. However, Truist 5-star analyst Stephanie Benjamin believes the stock has more room for growth. “We believe AAWW’s diversified fleet and international reach position the company positively to capitalize on increased air freight demand due to global growth in e-commerce and ongoing supply chain disruptions. While AAWW was a clear “COVID beneficiary”, we believe that its increased focus on long-term contracts in the last year has fundamentally strengthened its business model and should offer better visibility of sales and earnings in the future, “said Benjamin Die Aktien one buy with one Target price of $ 95 implying an upward movement of 28% this year. (To see Benjamin’s track record, click here.) Overall, Wall Street endorses Benjamin’s appeal. The stock has 3 current ratings. With an average target price of $ 86.67 and a current trading price of $ 74.03, this stock shows an upward trend of 17% for one year (see AAWW stock analysis on TipRanks). To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of the insights into TipRanks’ stocks. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.