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3 Underfollowed Stocks with Solid Potential

James Giaquinto

What can be more lucrative than buying a quality stock during a pullback? Buying a stock that the market doesn’t know is quality yet. That’s the idea behind our “Underfollowed Gems” premium screen.

On average, an S&P stock is covered by 14 analysts. So if a name is only being followed by six or fewer, it hasn’t attracted the full attention of the market. In fact, it hasn’t even captured half the interest of the market yet. And if that stock is a Zacks Rank #1 (Strong Buy) or #2 (Buy), it means the market is missing out on a company with rising earnings estimates. But it won’t miss out for long, and the share price will appreciate as more and more analysts realize what they’ve been missing.

Below, you’ll find three highly-ranked stocks that met the criteria of this screen. The analysts that are watching these companies have raised their earnings estimates after solid quarterly reports. For the full list and the screen’s parameters, make sure to click the link above.

Huntsman Corporation (HUN)

Huntsman’s proposed merger with Clariant was called off late last month...but luckily this specialty chemicals company has been doing just fine by itself. In fact, it is doing better than just “fine”, having gained more than 63% year to date. It has more than doubled the Chemical-Diversified industry, which is in the top 27% of the Zacks Industry Rank but has only gained about 27% this year.

In the last five years, Huntsman has only missed the Zacks Consensus Estimate twice, and it is currently on an 11-quarter winning streak. In the third quarter report, earnings of 67 cents per share beat the our expectation by 34% while also more than doubling last year’s 31 cents. The four-quarter average beat is now approximately 33%.

Revenues improved to $2.17 billion from $1.83 billion a year earlier.

Despite its strong quarter and history, there are only four covering analysts in Zacks research for HUN...and they have all raised their estimates over the past 30 days. Right now, the Zacks Consensus Estimate for this year is $2.61 per share, which has gained 15.5% from a month ago.

The Zacks Consensus Estimate for next year is only at $2.15, so we’ll see if that takes off after the fourth-quarter report and into 2018. Nevertheless, the estimate has jumped 13.2% in 30 days.

 

Huntsman Corporation Price, Consensus and EPS Surprise

Huntsman Corporation Price, Consensus and EPS Surprise | Huntsman Corporation Quote


Weibo Corporation (WB)

Weibo (WB) is sometimes considered to be “China’s Twitter”...but maybe we should start talking about Twitter being “America’s Weibo”. It was recently reported that WB has nearly 400 million active viewers around the globe per month, which is about 50 million more than Twitter. Plus, shares of Weibo have soared 197% so far this year, while its big rival has only gained about 23%.

Weibo has never missed quarterly earnings estimates since going public. It has beaten in 9 consecutive quarters. Most recently in the third quarter report, earnings per share of 51 cents topped the Zacks Consensus Estimate of 46 cents by 10.9%. The past four quarters have contributed to an average beat of 13.4%.

Revenues of $320 million jumped 81% from the year-ago total of $176.9 million. Monthly active users jumped 79 million to 376 million in September 2017, with mobile monthly active users representing 92% of that.

There are only 2 covering analysts of WB in Zacks research right now, which makes this the most underrepresented of today’s three highlighted stocks. These analysts haven’t moved their earnings estimates very much in the past 30 days. The Zacks Consensus Estimate for this year has gained only 2.4% in that time to $1.71 per share and next year’s forecast has advanced even less.

But the big potential growth can be seen next year, where the Zacks Consensus Estimate currently sits at $2.99 per share. That suggests year-over-year growth of 75%.

 

Weibo Corporation Price, Consensus and EPS Surprise

Weibo Corporation Price, Consensus and EPS Surprise | Weibo Corporation Quote


STMicroelectronics (STM)

Given how strong semiconductors have been in 2017, can there really be a stock from this space that’s under-represented? Of course, there can. Take STMicroelectronics (STM) as an example, which only has four covering analysts composing its Zacks Consensus Estimate. Yet, this company is up 115% year-to-date. It's part of the Semiconductor – General industry, which is highly ranked with a Zacks Industry Rank in the top 2% (sixth spot out of 256). Yet the space has only gained 48.1% this year, or less than half that of STM.

The company reported third-quarter earnings of 28 cents per share, which was 16.7% better than the Zacks Consensus Estimate. STM actually missed estimates in the previous two quarters, which may be one of the reasons why analysts have not been very excited about the company. However, that is likely to change moving forward as STM is enjoying solid demand across its product groups and geographies.

Revenues jumped 18.9% year over year to $2.14 billion in the quarter. All product groups recorded double-digit growth over the previous year due to solid demand in areas like smartphones, industrial, smart driving and, perhaps most importantly, Internet of Things.

STM does not expect a decline in demand for the fourth quarter...quite the opposite in fact. It expects revenues in this quarter to increase sequentially by about 10% at the mid-point, due to strong bookings and acceleration in its new program for wireless applications. For this year, revenues are expected to growth about 18% from the previous year.

There may only be four analysts covering this stock, but three of them have raised their estimates in the past 30 days. The Zacks Consensus Estimate for this year is up 8.4% in that time to 90 cents per share. Currently, we expect next year’s result to climb 33% to $1.20 per share, which marks an advance of 9% in the past 30 days.

 

STMicroelectronics N.V. Price, Consensus and EPS Surprise

STMicroelectronics N.V. Price, Consensus and EPS Surprise | STMicroelectronics N.V. Quote


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Weibo Corporation (WB) : Free Stock Analysis Report
 
STMicroelectronics N.V. (STM) : Free Stock Analysis Report
 
Huntsman Corporation (HUN) : Free Stock Analysis Report
 
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