All three major U.S. indexes tumbled well over 3% Wednesday, as a continued rise in coronavirus cases in Europe and the U.S. spark fears about the possible return of broader lockdown measures. Meanwhile, the election is less than one week away, and Wall Street is worried about a lack of urgency on the stimulus front.
Heightened coronavirus fears have partially negated the fact that third quarter earnings continue to improve and the outlook for Q4 and beyond is even stronger. Investors also showed their concern for some of the biggest names in tech such as Facebook FB and Google parent Alphabet GOOGL, as they face increased pressure in Washington (also read: Will Rising Infections Derail Improving Earnings).
Clearly, the unknowns of the election and the virus are cause for concern, especially in the near-term. But investors with longer-term horizons should try to remember that two key factors that drive stocks, earnings and interest rates, are still showing bullish signs.
This means that longer-term investors might want to consider buying stocks, or at least adding them to their watchlists even as the market falls. And we searched for highly-ranked stocks that are trading for under $20 per share that appear set to grow during these rough economic conditions.
Mattel, Inc. MAT
Prior Close: $14.05 USD
Mattel is a toy a games power, with a portfolio that features Barbie, Hot Wheels, Fisher-Price, and more. MAT topped our Q3 estimates on October 22. The firm’s revenue jumped 10%, with its Barbie category up 29%. This was the largest quarterly expansion by Barbie going back at least 20 years, the company said. Investors should note that MAT has increased its range of dolls to feature more skin tones, hair colors, career paths, and body sizes.
Mattel’s adjusted Q3 earnings soared 265% to $0.95 a share. And its fiscal 2020 and 2021 earnings outlook has surged since its report to help it land a Zacks Rank #1 (Strong Buy) right now. Our estimates call for the firm’s adjusted Q3 earnings to jump 100% on 6.5% higher revenue, with Q4 sales projected to pop over 9%. Shares of MAT have climbed 23% in the past month and are up over 30% in the last year. Despite its recent strength, Mattel was trading above $30 back in 2016, which could give it plenty of room to run heading into the holiday shopping season and beyond.
Management said recently they are seeing higher-than-expected demand. More importantly, there could be an active push from some parents for their kids to spend less time on screens in a world where more people are concerned about addiction to devices like smartphones—not to mention all the Zoom ZM and video-based schooling. And Mattel’s Toys -Games– Hobbies industry, which includes everyone from Hasbro HAS to Activision Blizzard ATVI, rests in the top 28% of our over 250 Zacks industries.
Prior Close: $16.94 USD
Yext and its “Search Experience Cloud” aim to help organizations maintain an accurate digital footprint. The goal is to consistently provide consumers with the most up-to-date and correct information about their business on their own websites, various search engines, virtual assistants like Siri, and elsewhere. Yext’s offerings have attracted some big-name clients like Marriott and Taco Bell, as our digital world becomes ever more crowded. It’s also worth pointing out that Yext announced a partnership with Adobe ADBE at the end of May that will enable “every Adobe rep in the world” to “refer Yext Answers to their customers…”
Yext in early September topped our Q2 FY21 estimates, with sales up 22%. On top of that, its customer count, which doesn't include its “small business and third-party reseller customers,” jumped 27% to roughly 2,200. Peeking ahead, ahead, Zacks estimates call for its fiscal 2021 revenue to climb 19% to $354.4 million, with FY22 projected to come in another 21.5% higher. Meanwhile, its adjusted losses are expected to continue to shrink during this stretch.
Yext’s positive bottom-line revisions help it land a Zacks Rank #2 (Buy) at the moment. The company went public in the spring of 2017 and its stock is up roughly 50% in the last three years. More recently, Yext has jumped 17% in 2020 to easily outpace its Technology Service Market’s 3% average decline. Despite its run, Yext closed regular trading Wednesday around 10% off its 52-week highs and 30% off its 2018 records of roughly $25 per share.
Box, Inc. BOX
Prior Close: $16.07 USD
Box is a cloud content management firm. Its various services help customers integrate multiple applications, store files, and more, as part of a larger set of offerings that support the modern work-from-anywhere world. Box beat our second quarter estimates at the end of August, with revenue up over 11%. “Over 100,000 customers now rely on Box to power secure collaboration and critical processes across their businesses,” CEO Aaron Levie said Box’s Q2 earnings call.
The company also improved its cash flow and continues to try to boost its balance sheet. Our estimates call for Box’s FY21 revenue to jump 10.4%, with FY22 projected to come in 9.6% higher to reach $842.6 million. More impressively, its adjusted earnings are projected to skyrocket from $0.03 in the year-ago period to $0.58 per share, with its FY22 EPS figure set to climb to $0.70.
Box’s improved earnings outlook helps it hold a Zacks Rank #2 (Buy) right now, alongside its “A” grade for Growth in our Style Scores system. Even though it has grown during these tough times, the stock is down 9% in the last three months and 3% in the last year. Luckily, past performance is no indicator of future success for a stock that stands to benefit from the continued expansion of the remote work world.
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Mattel, Inc. (MAT) : Free Stock Analysis Report
Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
Hasbro, Inc. (HAS) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
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Yext Inc. (YEXT) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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