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2 stocks flirting with a floor; Analysts say “buy”
Investing is all about profits, and part of generating profit is knowing when to start the game. The old saying goes that one should buy cheap and sell high, and while it is tempting to simply devalue such clichés, they have migrated into the common currency because they embody a fundamental truth. Buying low is always a good place to start when building a portfolio. The trick, however, is to spot the right stocks to buy low. Prices fall for a reason, and sometimes that reason is a fundamental obscurity. Fortunately, Wall Streets analysts are busy sorting the chaff among the market’s cheap stocks, and some top stock pundits have flagged multiple stocks for big gains. Those stocks are trading low now – but the reasons aren’t necessarily bad for investors. We used the TipRanks database to pull up the dates and ratings for two stocks that are now low priced but may be looking to profit. They have received positive reviews and, despite their stock depreciation, hold buy ratings and have an upside potential of over 60%. Digital Media Solutions (DMS) We’re starting with Digital Media Solutions, an adtech company that connects online advertisers with customers through performance-based branding and marketplace solutions. DMS has a powerful consumer intelligence database that can be used to refine customer acquisition campaigns. At the same time, the advertisers are given responsibility for the project budget. DMS was floated on the stock exchange in July of this year through a merger with a special acquisition company, Leo Holdings. The combination took the DMS name for the ticker and started trading at $ 10 per share. The stock has been volatile since then, down 27% since it started trading. Digital advertising is a huge and growing sector, valued at $ 100 billion in 2019 and expected to be worth $ 130 billion by the end of next year. DMS has a solid piece of that cash cow, and the Q3 numbers show it. Quarterly revenue hit a company record of $ 82.8 million, up 10% sequentially and 44% year over year. From these total sales, the company generated gross income of $ 25.1 million with a gross margin of 30%. Overall, the first quarter of DMS as a listed company showed strong results. Canaccord’s stock is backed by analyst Maria Ripps, who is rated 5 stars by TipRanks and is in the top 1% of more than 7,100 stock analysts. “The company saw significant volume growth in both new and existing customers, with auto insurance and the e-commerce, education and non-profit industries being particularly strong. We continue to believe that investors will gradually appreciate DMS’s similarities to other digital marketing leaders, trading at higher premium ratings and expecting multiple expansion over time as the story is better understood, ”noted Ripps . To this end, Ripps is pricing DMS shares as a buy, and their target price of $ 15 indicates an upward movement of 106% from the current share price of $ 7.20. (To see Ripps’ track record, click here.) Overall, DMS’s consensus rating for moderate purchase is based on two recent reviews that are both positive. The stock has an average target price of $ 14, indicating an upside of 92%. (See DMS stock analysis on TipRanks.) ViaSat, Inc. (VSAT) We’re moving from digital advertising to digital networking. ViaSat offers customers high-speed broadband access over a secure satellite network system. The company serves both the military and commercial markets and meets the growing need for secure communications links. The coronavirus shutdown guidelines have particular implications for ViaSat. This may sound counterintuitive as online networking has never been busier but a large part of ViaSat’s business comes from the airlines. With air traffic lying on the ground initially and still facing low travel volume, ViaSat’s shares have yet to rebound from their February / March on a positive note – and this is an indication of the essential nature of secure satellite communications in today’s world networked economy – ViaSat recorded $ 577 million in contract awards in the third quarter, up 29% year over year. For the year to date, the company has received awards totaling $ 1.9 billion, an increase of 5% over the same period last year. Revenue and earnings for the third quarter (the company’s second quarter) were somewhat inconsistent, reflecting both the increase in contract awards and the decline in the aviation business. Revenue was $ 554 million, a 6% decrease from last year but an increase of nearly 4% sequentially. Earnings per share were 3 cents per share and far exceeded the forecast loss of 5 cents. JPMorgan analyst Philip Cusick writes about ViaSat: “[We] believe long-term growth levers will remain intact, highlighted by record holdings of $ 1.1 billion. We see ViaSat as a leader in satellite innovation and believe that the company’s future ViaSat 3 fleet will accelerate the growth of satellite services in the years to come. At the same time, we are seeing a long-term tailwind for government systems, driven by the company’s wireless portfolio, mobile broadband and SATCOM. “Consistent with his bullish comments, Cusick values VSAT shares overweight (ie buy) and priced at $ 60. The target implies an uptrend of ~ 72% over a one year time horizon. (To see Cusick’s track record, click here.) In total, the stock has 5 recent ratings, including 3 buys and 2 holds. The price of the shares is $ 34.14, and the average price target of $ 55 suggests upside potential of 61% at those levels. (See VSAT 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 TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. 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.