This year’s strong rally has faltered over the past few weeks. August generally witnessed an increase in volatility and declines in the major market indices. But this did not affect the basic fact of financial markets: stocks are individuals, and they rise and fall for private reasons. Investors should always check the cap to see if the transaction price is a good buy.
However, this scan can be difficult, since there are large amounts of data that need to be sorted. Fortunately, investors can always turn to smart scoreAn AI-powered data collection and comparison tool, based on the TipRanks database, that ranks each stock according to a combination of historically proven factors to match future outperformance. Look for stocks that combine the highest Smart Score, “Perfect 10”, with a dip in the share price – this is where the real deals might be hiding.
We can start by looking at a couple of Strong Buy stocks that feature discount share prices and a “perfect 10” from Smart Score. These are the stocks that have caught the attention of analysts. Are they right for you?
Shift4 payments (four)
The first of the top 10 stocks on our list is Shift4 Payments, a technology company that is in the payment processing business. The Allentown, Pennsylvania-based company provides services across a broad range of industries, and includes some big names among its client base: Best Western Hotels, Applebee’s, Utah Jazz, and Gold’s Gym. All in all, the company has more than 200,000 customers and more than 7,000 sales partners, processing more than 3.5 billion transactions worth more than $200 billion annually.
And in an important announcement, Shift4 indicated earlier this month that it is close to closing the Finaro acquisition. The $525 million move will give Shift4 access to Finaro’s European processing network. The deal was expected to close in March this year, but was delayed due to “regulatory requirements”. It is now expected to close in the third quarter / early fourth quarter.
The company reported its second-quarter 23 results early this month, and it showed a series of gains, including year-on-year revenue and profit growth, which exceeded expectations. On the bottom line, the company reported revenue of $637 million, up 26% year-over-year and about $4 million better than expected. The core number, non-GAAP-adjusted earnings per share of 74 cents a share, was 22 cents ahead of estimates, more than three times last year’s result. The company witnessed a 59% year-on-year increase in comprehensive payments volume, and a 61% year-on-year increase in gross profit.
Despite the strong results, the stock has seen some selling recently, falling 19% during the month of August. For Raymond James analyst John Davis, the low share price makes it an attractive buy. He writes in his coverage, “We see an uptick in FY24 estimates, assuming a closing of Fenaro in fact, given that the Street implies organic revenue growth of just 22% (down ~800 bps) and about 80 bps of pre-earnings margin expansion EBITDA…the stock is now trading near valuation lows at 10x EBITDA for fiscal 2024 and a ~20% discount to the S&P 500 on EV/EBITDA.As such, we look at the recent weakness As a compelling entry point we recommend investors to start or add to positions.
As such, Davis has recently upgraded his stance on FOUR, upgrading it from neutral to outperforming (Buy). The analyst is completing his new rating with a price target of $74, which indicates a one-year upside potential of 33% from current levels. (To watch Davis’ track record, click here.)
Shift4 has 17 recent analyst reviews, including 16 Buy vs just 1 Hold, to support our Strong Buy consensus rating. The shares are trading at $55.76 and the average price target of $83.75 indicates that it will gain 50% in the next year. (be seen Shift4 Payments stock forecast.)
Next up is Crocs, which is a well-known brand name in the field of footwear. The company built its name on its eponymous foam clogs, which became a hit in the early 2000s. Today, the company offers a wide range of footwear lines, from foam clogs to sandals, boots, and comfortable work shoes. The company also markets a line of shoes designed for healthcare professionals who spend long days on their feet.
By the numbers, Crocs has built an empire for itself. The company has sold more than 850 million pairs of shoes since its introduction in 2002. Crocs employs more than 5,900 people, has a presence in 85 countries, and generates more than 2 billion sales annually. All this together puts Crocs in the top ten sneaker brands in the world.
Earlier this summer, Crocs announced its financial numbers for the second quarter of 2023 – and they showed a record $1.072 billion in revenue. This was up 11% year over year, and was $29.2 million ahead of expectations. On the bottom line, Crooks reported earnings of $3.59 per share through non-GAAP measures. This represented an increase of 87 cents per share over the previous year’s second quarter earnings, and was 61 cents per share better than expected.
However, investors did not like the forecast. For the third quarter, the company sees an adjustment. Earnings range between $3.07 and $3.15 per share, at the midpoint, below consensus of $3.12. Moreover, with Q3 revenue expected to grow around 3% to 5% year-on-year, there are concerns about slowing growth. The result is that the stock has been in a downturn since the second quarter was printed, down 21%.
However, Jim Duffy, a 5-star analyst from Stifel, takes an optimistic view of CROX, basing his stance on the net positives of the earnings results and on the strength of the company’s brand, writing: “Fiscal second-quarter results were a mixed bag.” But the positives outweigh the negatives and the (downturn) in stocks presents an opportunity.Disappointment in the market reflects shortfalls in wholesale sales for HEYDUDE (about 15% of global revenue) but outweighs positive developments for the Crocs brand (about 75% of global revenue).Factors include Specifics that show improved balance and increased our confidence in FY24 include: 1) strength of the Crocs N. America brand and product diversification, 2) strength of Crocs International led by +40% DTCs and Asia/China, and 3) deleveraging resulting in net leverage financial < 1.7X.”
Duffy continues to point out that Crox has a solid foundation for future earnings: “Diversification of the earnings group, improved balance sheet options, and highly permissive valuation increase our confidence in the risk-adjusted return prospects for CROX shares.”
At the bottom, all of this supports Duffy’s Buy rating, while his $130 price target yields a 36% gain over one year. (To view Daffy’s track record, click here.)
Of the 9 recent analyst reviews on CROX, 7 are Buy and 2 are Hold, which is enough for a Strong Buy consensus rating. The share price of $95.56 and average price target of $152.75 suggest a solid 60% upside over the next 12 months. (be seen Crocs stock forecast.)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.