A key point to success in the stock market – one that frequently gets overlooked – is knowing when to buy in. There’s an old saw that the way to win is to buy low and sell high; the trick to that is recognizing when a stock is low, but ready to pick up.
We can check with Wall Street’s stock analysts to find which bargain-priced stocks are primed for gains. Once we know which stocks the experts recommend, we can start digging into their details. The data tools at TipRanks are ideal for this, letting us sort out stocks by a wide range of factors. The stock data plus the analyst commentary will together paint a comprehensive picture of any stock – a vital step before investing.
So let’s put that into practice. We’ve looked up the details on three stocks whose price is close to a one-year low – but which all have a ‘Strong Buy’ rating from the analyst community, and a one-year upside potential starting at 60% or better. Let’s take a closer look.
Gaia, Inc. (GAIA)
The last couple of years have seen a sea-change in the way we live. The corona pandemic, and the policies put in place to combat it, impacted every facet of our lives and lifestyles – from work and school to entertainment and leisure. In at least one area, however, corona really did nothing more than speed up a change that was already in progress. That was the advent of streaming TV services.
Streaming, which was already growing, boomed during the anti-corona lockdowns. While the industry is dominated by the giant players – think Netflix, Disney+, and Peacock – smaller companies are finding niches, as well. Gaia is one of these. The company offers more than 8,000 original programs, with a focus on yoga and meditation, self-help documentaries, and fringe science programming.
In November, the company announced a partnership with singer, actor, and social media star Demi Lovato. Lovato, as celebrity Ambassador for the company, brings one of the world’s largest social media followings.
A look at Gaia’s quarterly financial reports from the last few years will show the strength of the streaming sector. This small-cap ($155 million) company has seen a sequential revenue gain in every quarter for the last two years, and earnings, which ran steeply negative in 2019 and early 2020, turned positive in 3Q20 and have remained so ever since. In the most recent report, for 3Q21, the top line came in at $20.41 million, up 17% from the year-ago quarter.
The company also features sound liquidity, with $5.1 million in cash from operations generated in the quarter, up 55% yoy. On the balance sheet, Gaia reported having $14.4 million in available cash, compared to $12.6 million at the end of 2020.
Despite these solid results, Gaia’s stock is down 20% so far this year. Yet, at least one analyst sees the current low share price as a chance to buy in.
B. Riley analyst Eric Wold gives GAIA a Buy rating, and sets a $17 price target that indicates room for an impressive ~115% upside potential. (To watch Wold’s track record, click here)
Backing his bullish stance, Wold writes: “We continue to believe the company is not getting any credit for driving continued growth and moving into a state of positive cash flow and profitability. And with our calculations that the company’s exclusive content library is currently valued at an ~80% discount to replacement value, we could see this become a strategic asset to unlock value for investors.”
Overall, there are three analyst reviews for this stock, they are unanimous that this is one to buy, giving GAIA shares their Strong Buy consensus rating. The stock is selling for $8.07 and its $17.33 average price target is even more bullish than Wolds, indicating room for 122% growth in the year ahead. (See GAIA stock analysis on TipRanks)
Turning Point Brands (TPB)
The second beaten-down stock we’re looking at, Turning Point Brands, is a holding company owning several brand-name products in the niche of ‘consumer products with active ingredients.’ This is a polite corporate way to describe tobacco, snuffs, and vapes, as well as cannabis products. Turning Point’s most recognizable brand name is Zig Zag, a maker of rolling papers and branded gear that have long been favored by smokers. The Stoker’s chewing tobacco brand has a strong regional appeal.
Pre-pandemic, in 2019, Turning Point brought in some $360 million in total revenues; for fiscal year 2020, that was up to $405.6 million. The company’s most recent quarterly report, however, underwhelmed investors.
Q3 saw the top line shrink sequentially by 10% to $109.9 million, missing the forecast of $112 million. But the main reason investors were disappointed in TPB’s Q3 results was the guidance it gave for the full year. Specifically, the company lowered its expectations for net sales from $447 to $462 million to $433 to $443. These declines sent the stock tumbling, and TPB shares are now down 20% for the year-to-date.
What happened was a divergence in sales results. The Zig Zag brand continued to do well, accounting for 38% of total sales and growing by double-digits, while the Stoker’s brand, with 28% of sales, saw its products take different paths. Moist tobacco snuff (MTS) sales continued to do well, but chewing tobacco dropped sharply. In addition, as the company attempts to navigate the regulatory requirements for the FDA’s marketing approval of New Gen vaping products, that segment’s sales also fell, by 3%.
Craig-Hallum analyst Eric Des Lauriers remains upbeat on this company, writing: “Turning Point Brands has successfully grown the iconic Zig-Zag brand and regional Stoker’s brand into leading national positions in their respective categories, rolling papers and smokeless tobacco. While continuing to gain share in these categories, the company is leveraging its distribution network and expertise to develop brands in adjacent categories like vapes and cannabis. Despite regulatory challenges, these categories represent long-term secular growth opportunities, and we remain confident in management’s ability to create value through this brand building strategy…”
The analyst’s outlook supports his Buy rating, while his $65 price target on the stock indicates his confidence in an 83% upside for the coming year. (To watch Des Lauriers’ track record, click here)
Overall, this ‘alt-tobacco’ company has 4 recent analyst reviews on record, and they are unanimous in their positive stance – setting up the company’s Strong Buy consensus rating. TPB shares are priced at $35.36 and the $57.75 average price target implies an upside of 63% from current trading levels. (See TPB stock analysis on TipRanks)
Last on our list today is AxoGen, a medical tech stock. This Florida-based company specializes in solutions for peripheral nerve repair, an important niche in the surgical world. The company develops graft and connection technology to repair damaged and resected nerves, allowing surgeons more options when working on patients. AxoGen’s products are used by reconstructive plastic surgeons, hand surgeons, and oral and maxillofacial surgeons. The company reports that 87% of patients experience renewal or improvement of sensation and movement after surgical treatment with AxoGen products and techniques.
But not everything in the garden is rosy. Shares of AxoGen plunged 15% in a day after missing earnings last month, and are down 51% year-to-date.
Specifically, AXGN posted 3Q sales of $31.2 million, down 7% year-over-year, missing analyst expectations by $3 million. The shortfall was driven by both COVID-related procedure deferrals and hospital capacity issues brought on by staffing challenges. As a result, management lowered its 2021 sales guidance from $134.5-137.5 million to $127-129 million.
In coverage for Cantor Fitzgerald, analyst Brandon Folkes sees AxoGen’s current difficulties as artifacts of the pandemic, and writes, “Prior to the emergence of the COVID-19 pandemic, AXGN had been an extremely compelling growth story, in our view, and when we emerge into a post-COVID world, we believe AXGN can continue to drive long-term shareholder value through a resumption of that rapid growth. The company reiterated its ability for sustainable growth in the mid-teens to low 20% range. AXGN has the only commercially available nerve allograft to repair peripheral nerves, but we think its addressable markets remain extremely under-penetrated.”
These comments back Folkes’ Overweight (i.e. Buy) rating on the stock, and his $25 price target suggests that AXGN has a strong 182% upside ahead of it next year. (To watch Folkes’ track record, click here)
All in all, AxoGen’s Strong Buy rating is based on a 4 to 1 split of Buys over Holds. The stock has an average price target of $25.75, implying a 190% upside from the current share price of $8.85. (See AXGN stock analysis on TipRanks)
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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.