Are you ready for some discounts? They aren’t just limited to the Black Friday and Cyber Monday holiday sales – you can find great deals in the stock markets, too. Investors are pounding the Wall Street pavement, hunting for the names with price tags that represent attractive entry points.
Having said that, given the market’s bang-up performance in 2019, tracking down these highly sought-after stocks isn’t always a jolly task. So how are investors supposed to zero in on the stock market deals of the holiday season? We suggest turning to TipRanks. Using the TipRanks' Stock Screener, we’ve searched the markets for Buy-rated stocks at discounted prices. These are companies with underlying strength that have nevertheless seen sharp drops in share price in the second half of this year. Wall Street’s top analysts still have faith in them, however, and these stocks combine bargain prices with strong upside potential.
AMC Entertainment (AMC)
We’ll start with something big, the world’s largest movie theater company. AMC has over 8,000 screens in the US, spread across 661 theaters, and another 2,200 screens in 244 theaters in Europe. Ticket sales are a big draw, and AMC saw nearly $5.5 billion in revenue in the last fiscal year. In an effort to keep up attendance, the company is exploring several unusual ideas, branching into the home theater on-demand streaming segment and using its big screens for public live showing of NFL broadcasts.
AMC is pursuing more traditional routes of expansion, too, and acquiring several smaller movie theater companies over the past half-decade. All of this expansion comes with a price, however. Acquisitions have cost upwards of $3.4 billion, and in the first half of this year, AMC’s net cash position fell by 48%, leaving the company with just $154 million on hand. Management can’t look for rescue from the free cash flow, either, as that key metric has fallen in the past year from $187 million to $50 million.
With all of that in the fiscal background, it wouldn’t look like a good time for turnover in management. But the company is facing churn there, too, as CFO Craig Ramsey will be retiring early next year. His replacement, Asbury Automotive’s Sean Goodman, was announced in October.
In the past year, AMC has been alternating profitable and net-loss quarters, and this time around was due for a loss. The showed net EPS of minus 53 cents, even though the $1.32 billion revenue figure beat the year-over-year number by 8%. The company’s high rate of capital expenditure has impacted the bottom line.
Year-to-date, AMC shares are down about 30%, bringing the share price to just $8.18. Wall Street’s analysts see this as low, and for the most part believe that this stock will return to gains in the coming year.
Barrington’s James Goss, a 5-star analyst, writes, “We are continuing a 2019‐based price target of $16… The acquisitions of Carmike, Odeon and Nordic transformed AMC into the world’s largest theatrical exhibitor with a broad domestic mix of properties and a restored international presence. AMC maintains a leadership position in its industry. AMC management continues its plans to create returns on its expanded footprint...”
Goss’s $16 price target puts an impressive 95% upside behind his Buy rating. (To watch Goss’s track record, click here)
Writing from Benchmark, analyst Mike Hickey sees potential short-term gains in store for the company, “AMC delivered better than consensus F3Q19 sales and adjusted EBITDA performance, and we expect continued F4Q19 growth from a compelling film slate. We believe continued execution should unwind the material relative valuation destruction we have witness over the last 2-years.”
Hickey puts a Buy rating on AMC, and backs it with a $17 price target and a 108% upside potential. (To watch Hickey’s track record, click here.)
AMC’s most recent reviews are all Buys, and the company has a Strong Buy consensus rating based on 7 Buys and just 2 Holds. Shares are priced at $8.18, and the $14.56 average price target implies an upside of 78%. For now, it would seem that AMC offers plenty of room for growth. (See AMC stock analysis on TipRanks)
There’s been a lot of talk in the last decade about the ‘gig economy,’ the availability of short-term and project-based digital work, making it possible for freelancers to shop online for jobs and negotiate prices. Upwork is one of the many companies that has emerged to offer web-based networks for freelancers and businesses to connect. The company has over 12 million freelancers registered, along with 5 million business clients. It went public in October, 2018.
Upwork’s business model is based on connecting freelance professionals with businesses in need of their skills. Businesses are charged a fee, while the freelancers are not. The site allows business clients to conduct video interviews with freelancers, for betting purposes, and both businesses and freelancers can search the database to find appropriate connections. Upwork filters its system for US or UK based jobs.
Like many tech-based companies, Upwork is currently operating at a net loss – although that loss is modest, and slowly decreasing. In Q3, the EPS loss came in at 3 cents per share, compared to the year-ago quarter’s 4 cents. Company revenues of $78.8 million clobbered the year-ago figure of $64.1 million, growing by 23% over the period. Still, there is a limit to investor patience with net-loss companies, and UPWK stock is down nearly 35% in 2019.
Brent Thill, 5-star analyst from Jefferies, and ranked #25 overall by TipRanks, sees UPWK as a stock with plenty of potential and competitive advantages. He wrote, “Upwork is disrupting the staffing industry with an AI/ML-enhanced B2B marketplace that significantly speeds up the hiring process and automates the entire lifecycle of a freelancer project. Upwork enjoys a tailwind from secular trends toward remote work enabled by the internet. We believe Upwork has built a comprehensive platform in the last 20 years with deep functionality that solves many of the issues encountered by clients and freelancers. This has created a competitive moat that is hard to cross.”
Thill’s $20 price target implies a strong 70% upside to Upwork, which confirms his bullish Buy rating. (To watch Thill’s track record, click here)
It looks like other analysts aren’t ready to tap out either. Out of 5 ratings published in the last three months, four are bullish and one is neutral. On top of this, UPWK's $19.60 average price target lends itself to 68% upside from the current share price. (See Upwork stock analysis on TipRanks)
US Cellular Corporation (USM)
US Cellular is a regional mobile carrier, with more than 5 million customers across 23 states. It’s headquartered in Chicago, the third-largest city in the nation and the largest in the Midwest region. The company brings in over $4 billion in annual revenues.
Like the other stocks on this list, USM is down in 2019, showing a loss of 35% for the calendar year. This comes after strong gains in 2018, when the share price appreciated 36%. In the recent Q3 2019 report, USM showed a year-over-year top line gain to $1.031 billion, beating Q3 2018 by almost $20 million. Earnings were down, however, the company posted a net loss of 27 cents per share.
US Cellular puts the losses partly on declines in subscribed customers, but also on uncertainty regarding the upcoming T-Mobile/Spring merger. That event will combine the third and fourth largest US mobile carriers – and note that US Cellular is currently in fifth place. A merged T-Mobile and Sprint will increase the size of the competition, and investors are showing caution towards USM stock in the runup.
That caution, however, has resulted in a stock priced at hefty discount. 5-star analyst Philip Cusick, of JPMorgan, wrote recently, “We find USM shares undervalued at the current level and believe that further downside risk from this point is limited and is offset by potential upside from its valuable assets, which include 5% of Verizon’s L.A. business, spectrum and tower holdings… We upgrade USM to Overweight…”
To back up his upgraded rating on the stock, Cusick puts a $45 price target, suggesting a 32% upside potential. (To watch Cusick’s track record, click here)
USM has only three recent analyst reviews, but all are on the Buy-side, making this stock’s Strong Buy consensus rating unanimous. With Shares trading for $33.91, the average stock-price forecast of $52.33 implies room on the upside for 54% growth. (See US Cellular stock analysis on TipRanks)