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Three ‘strong buy’ stocks that might have just bottomed out

Three ‘strong buy’ stocks that might have just bottomed out
Jordan Major

Trading in the stock market is a perpetual pursuit of a good bargain by investors and traders alike. Defining what makes a good deal, on the other hand, is challenging. 

Low stock prices have earned a negative reputation, which is based on the fact that most stocks do not decline in value without a compelling cause. Poor market performance is almost always caused by factors that are deeply rooted in some element of the company.

However, this is not always the case, which is why discovering stock deals may be difficult. There are a plethora of low-priced equities available that have strong fundamentals and promising long-term prospects, making it feasible for investors to ‘buy low and sell high.’ 

As mentioned in our 15 Most-Famous Investing Quotes of All-Time legendary investor Warren Buffett famously said, “Be fearful when others are greedy. Be greedy when others are fearful.”

Following Buffett’s advice, we have selected three stocks that offer both attractive current pricing and a significant upside potential over the next year, as highlighted by Tipranks.

1. Bandwidth, Inc. (NASDAQ: BAND)

For more than two decades, bandwidth has been a fixture in the realm of digital communication, where it has been used to provide voice-over-internet protocol services. Recent efforts have concentrated on providing a Communications Platform as a Service (CPaaS) to customers.

The solutions offered by Bandwidth are cloud-based and geared at business customers. Among the services provided by the firm are APIs for voice, messaging, and video, VoIP systems, emergency calling, and other communications-related concerns and applications. The APIs provided by Bandwidth are utilized by major industry players such as Microsoft  (NASDAQ: MSFT) and RingCentral to integrate telephony and messaging functions into their own products and websites. 

Despite the extensive usage and popularity of Bandwidth, the company’s stock has dropped by 77 percent in the last year. Generally speaking, it has been a slow decline, but BAND shares fell by 43 percent in the final week of February after the announcement of 4Q and full-year 2021 earnings figures. 

With sales of $126 million, revenues were up significantly from the prior year’s total of $113 million. BAND recorded a small net profit of 9 cents per share, in contrast to expectations of a 13-cent EPS loss. Likewise, gross margins on the company’s core CPaaS products improved, growing from 51 percent to 53 percent year over year.

The expert opinion on Bandwidth

JPMorgan’s 5-star analyst Mark Murphy is bullish about Bandwidth’s long-term prospects and does not see any cause for concern.

“Even as it navigates through multiple overlapping headwinds, Bandwidth is still expected to grow about 12% at the midpoint of revenue guidance, and generate a modest profit, with potential for growth rates to pick up as the year progresses and into 2023,” Murphy said.

In order to achieve this, Murphy sets a price objective of $81 for BAND shares, implying a gain of 184% in the following 12 months.

Overall twelve Wall Street analysts have set a high price objective of $106 for BAND stock over the next 12 months and a low price goal of $45 for the firm in the same period. On average, analysts estimate Bandwith to trade at is $72, representing a 158% increase in value over the stock’s current trading price of $27.89.

BAND 20-50-200 SMA lines chart. Source. data. See more stocks here.

Notably, ten of the twelve analysts advocate to ‘Buy‘ the stock, with two TipRank experts advising to ‘Hold’ and none to ‘Sell.’ 

2. GooseHead Insurance (NASDAQ: GSHD)

GooseHead is a Texas-based insurance platform that operates as an independent personal lines insurance agency, providing insurance purchasers with an unrivaled selection of firms and products when it comes to purchasing insurance policies.

Over the course of the last year, GooseHead shares have seen dramatic trading on the stock market. GSHD shares began 2021 with a 41 percent loss before soaring to a high of over $177 in October – and since then, the price has dropped by more than half. 

Over the same period, GooseHead’s sales increased year on year from $117 million in 2020 to $151 million in 2021, a rise of 29 percent over the previous year. Revenue increased by 16 percent year on year in the fourth quarter, reaching $40.2 million. On the downside, earnings per share (EPS) came in at 6 cents instead of the expected 8 cents.

Further investigation of GooseHead reveals several numbers that are encouraging for the future. For example, the firm boosted its sales force headcount by 39 percent over the year, bringing it to 506 employees. Written premiums for the full year 2021 increased by 45 percent, to $1.56 billion, while the number of policies now in force increased by 42 percent year on year, to 1,011,000, during the fourth quarter of 2021.

Analysts predict 90% upside for GSHD

While GooseHead stock has had a shaky start to the year, JMP analyst Matthew Carletti is not concerned, believing the firm is well-positioned for the future.

“The personal lines market is massive and roughly 36% of this is in the independent agency channel where Goosehead is focused, with growth in this channel outpacing captive agencies in recent years… Bottom line, we think Goosehead has significant runway for sustained strong growth well ahead of peers,” Carletti declared.

For the next 12 months, 5 Wall Street analysts forecast GSHD stock price based on the company’s recent performance in the last three months. The price objective ranges from $155 to $95, with an average anticipated price increase of 91.96% from $66.16 to $127.

GSHD 20-50-200 SMA lines chart. Source. data. See more stocks here.

Based on the price predictions of the 5 TipRanks experts’ stock recommendations for GooseHead over the past three months, 3 analysts advocate that investors should “Buy,” while none recommend that investors should “Sell” and two advise to “Hold.”

Consequently, the average rating for GSHD stock is “Strong Buy,” with a potential upside of 91.96% over the next 12 months.

3. Burlington Stores (NYSE: BURL)

As one of the leading brands in off-price retail, Burlington Stores operates 832 shops in 45 states and Puerto Rico. The firm provides high-quality branded items in clothes, footwear, accessories, and other things.

Burlington benefited from the economic reopening in 2021, with increasing revenues throughout the year. The company’s revenue increased by $2.3 billion in the most recent reported quarter, 4Q21, marking the highest quarterly revenue in more than two years. 

This result represented a 27 percent increase over the previous quarter’s profit of $1.78 billion, which was the final quarter of regular operations before the pandemic catastrophe.

Nevertheless, adjusted earnings per share came in at $2.53, a decrease from the $3.21 recorded in the previous quarter prior to the COVID. Furthermore, experts had anticipated profits per share of $3.22 for the fourth quarter, making the actual outcome a significant disappointment.

Last but not least, the price plunged 13 percent after the earnings announcement, concluding a six-month period in which the stock has lost 46% from its August high point.

Wall Streets verdict on BURL

Analyst Kimberly Greenberger, who covers BURL for Morgan Stanley, acknowledged the company’s challenges while also seeing significant growth prospects.

“All in, we view [the] pullback as a compelling entry point for a growth retailer with a long-term margin expansion opportunity,” the analyst said.

On the basis of BURL’s performance over the previous three months, 18 Wall Street trade experts produced 12-month price projections for the firm. With a high estimate of $355 and a low estimate of $175, the stock’s average price target is $285, a 50.26% increase over Burlington Sores’ current price of $189.67.

BURL 20-50-200 SMA lines chart. Source. data. See more stocks here.

Based on the price predictions of the 18 TipRanks experts’ stock recommendations for BURL over the past three months, 15 advocate that investors should “Buy,” while two experts recommend that investors should “Hold,” interestingly one; advises to “Sell.” 

Consequently, the average rating for BURL stock is a “Strong Buy,” with a potential upside of 50.26% over the next 12 months.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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