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It’s hard not to feel optimistic about a market when all things fundamental point to its ascent.
There’s the strong earnings season, the manufacturing expansion, encouraging jobs data and housing boom, all of which increase confidence. The one offsetting factor is the rising yields on 10-year treasuries, which is generally indicative of money pulling out of stocks. And that’s probably why we’ve seen some softness over the past month or so.
So now, we can sit around trying to price a bottom. Or we can look for stocks with strong growth projections that have dropped significantly from their 52-week trading range. These stocks would be most likely to move up in the months ahead as a result of positive earnings reports and upwardly moving estimate revisions.
Here are a few stocks that look good today-
Cirrus Logic, Inc. CRUS
Headquarters in Austin, TX, Cirrus Logic is a fabless semiconductor supplier, which develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs). The company’s chips are used in a wide range of industrial and consumer markets including portable and non-portable media players, smartphones, tablets, home-theater receivers, automotive entertainment systems, televisions, docking stations. They’re also found in wearables such as smart watches, action cameras, smart bands and VR headsets.
The Zacks Rank #2 (Buy) company provides important components used in Apple’s latest 5G smartphones. So it is coming off a strong 2021 (fiscal year ends in March). Fiscal 2022 should also be a good one for the company not only because of uptake of iPhones but also the impending launch of several other products using its boosted amplifiers, truly wireless headset smart codecs and haptic solutions in the first half of the year.
As you can imagine, the Electronics-Semiconductors industry, of which it’s a part, is also pretty hot. It’s currently in the top 25% of Zacks-classified industries, which means that there are positive drivers for stocks in this industry.
The 2021 earnings estimate of $4.61 is more than 40% above the 2020 estimate of $3.27. The current estimate for 2022 represents an 8% increase from the 2021 estimate.
Revenue growth is also expected to remain positive in both years.
Despite these positives, the stock has been battered down to 45.9% of its 52-week range and is currently valued at a forward P/E of 16.0X.
HighPoint Resources Corp. HPR
Denver, Colorado-based HighPoint Resources Corporation is an exploration and production company. It focuses on the development of oil and natural gas assets primarily in the Denver-Julesburg Basin of Colorado.
Zacks #2 ranked Highpoint is on the verge of a merger with Bonanza Creek that will create a company with significant assets (206,000 net acres) and scale (50,000 Boe/d, 53% oil) in the rural DJ basin. Moreover, the complementary assets will result in significant synergies and generate strong cash flow for the combined entity.
The Oil & GAS E&P industry to which the company belongs is in the top 32% of Zacks-classified industries.
Current estimates point to 288.9% EPS growth in 2021 followed by 7.5% growth in 2022 (ending December).
Revenue, which will play a part in this, is currently expected to grow 20.6% this year and 6.6% in the next.
Since the stock is trading at 20.3% of its 52-week range with a P/E of just 0.69X, it makes sense to snap it up.
State Auto Financial Corp. STFC
State Auto Financial Corporation through its subsidiaries engages primarily in the property and casualty insurance business. The company's principal subsidiary, State Auto Property and Casualty Insurance Company (State Auto P&C) is a regional insurer writing personal and commercial automobile, homeowners, commercial multi-peril, workers' compensation and fire insurance.
The shares carry a Zacks Rank #2.
The homeowners segment is very strong at the moment, driving the personal insurance business with an offset in personal auto as new vehicle ownership is soft (the pickup in auto sales in the second half of 2020 was to a great extent driven by resale). Commercial auto, farm and ranch are robust.
The Insurance - Property and Casualty industry is in the top 39% of Zacks-classified industries, so it’s somewhat positive for STFC.
A look at estimates provided by the sole analyst shows earnings growth of 836.8% and 7.1% in 2021 and 2022, respectively.
Revenue growth is also in the cards with the analyst projecting 7.1% for this year and 3.7% in the next.
Trading at 47.8% of its 52-week range, it’s perhaps not surprising that the forward P/E is currently 14.2X, or extremely attractive. Go for it, I’d say.
Immersion Corp. IMMR
Immersion Corp. develops hardware and software technologies under the TouchSense brand. These patented technologies, enable devices such as mice, joysticks knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events. They focus on four application areas: computing and entertainment, medical simulation, professional and industrial, and three-dimensional capture and interaction.
#2 ranked Immersion Corp is a small company with a market cap of around $290 million. But it is seeing some very strong growth because of its innovative technology and new customer wins. That’s what led management to declare that the company would deliver double-digit growth in both revenue and earnings this year.
The company belongs in the Computer - Peripheral Equipment industry, which being in the top 40% of Zacks-classified industries, is not too bad.
There’s just one analyst providing estimates at the moment, but the accuracy seems to be improving. While the company topped these estimates for three straight quarters, the surprise margin shrank in each.
So we may consider the 97.2% EPS growth estimate for 2021 and 28.2% estimate growth for the following year to be reasonably accurate.
Moreover, the stock is trading at 45.4% of its 52-week range, representing a P/E of 13.6X, which looks cheap.
CollPlant Biotechnologies Ltd. Sponsored ADR CLGN
Rehovot, Israel-based CollPlant Biotechnologies Ltd. offers regenerative medical products. It is focused on 3D bioprinting of tissues and organs, medical aesthetics and the development and commercialization of tissue repair products for orthobiologics and advanced wound care markets.
#1 (Strong Buy) ranked CollPlant is seeing strong demand for its bioprinting offering and recently saw the expansion of a collaborative agreement with a key customer. Its medical aesthetics offerings are also gaining traction and the company is expanding this product line. It is also developing antiviral agent for the coronavirus. The preclinical data relating to this formulation is comprised of rhCollagen embedded with silver nanoparticles (AgNP) that reduce viral load in patients. This of course would help the body’s own immune system to fight off the virus more easily and reduce the number of medical emergencies caused by the virus while also reducing transmission rates.
The Medical - Biomedical and Genetics industry, to which the company belongs, is unfortunately in the bottom 24%of Zacks-classified industries, indicating that the operating environment for the kinds of procedures CLGN offers has not yet picked up sufficiently.
CLGN’s numbers are however extremely attractive. It is expected to grow earnings 491.9% in 2021, coming off 51.9% growth in 2020. Revenue growth is expected to be 324.6%, coming off 95.7% growth in 2020.
Trading at 36.5% of its 52-week range, the stock is currently valued at 5.3X forward P/E. Time to buy.
Suburban Propane Partners, L.P. SPH
Suburban Propane Partners, L.P., a publicly traded Delaware limited partnership is engaged, through subsidiaries, in the retail and wholesale marketing of propane and related appliances and services. Suburban Propane Partners serves active residential, commercial, industrial and agricultural customers from customer service centers in over 40 states although its operations are concentrated in the east and west coast regions of the United States.
Because of warmer than usual weather, the #2 ranked company is seeing reduced demand for heating (relative to last year). However, in fiscal 2021 (ending September), demand should pick back up as commercial and industrial consumption increases. SPH is also investing in the renewable uses of propane, including more environmentally friendly auto fuel, which should be longer term drivers of the business.
The industry SPH belongs to is Oil and Gas - Refining and Marketing - Master Limited Partnerships, which is currently in the bottom 4% of Zacks-classified industries, indicative of the still-difficult operating environment.
The single analyst offering estimates appears conservative since SPH has topped expectations by sizeable margins in each of the last three quarters.
These estimates are now calling for revenue and earnings growth of 3.2% and 32.0%, respectively in 2021. This will be followed by 11.2% revenue growth and 3.1% earnings growth in 2022.
The stock is currently trading at 50% of its 52-week range, or 11.6X forward P/E, which makes it look cheap.
One-Month Price Performance
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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State Auto Financial Corporation (STFC) : Free Stock Analysis Report
Suburban Propane Partners, L.P. (SPH) : Free Stock Analysis Report
Immersion Corporation (IMMR) : Free Stock Analysis Report
CollPlant Biotechnologies Ltd. Sponsored ADR (CLGN) : Free Stock Analysis Report
HIGHPOINT RESOURCES CORP (HPR) : Free Stock Analysis Report
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