2020 has only just begun, but it already has some big events set in the calendar. The Olympic games will take place in the summer, with the U.S. presidential election to follow. Bearing this in mind, investors are on the hunt for the stocks with the potential to soar skywards in the coming year.
No one can tell what the new year has in store, but one simple fact will always remain; investors are after plentiful returns. So, how can we narrow the search down as much as possible to ensure investing success?
Using TipRanks’ Stock Screener, we were able to zero in on three tickers flagged by the analysts as ready for takeoff. Additionally, all three currently have a Strong Buy consensus rating from the Street. Here’s the lowdown.
Zix Corporation (ZIXI)
Let’s kick things off with a look at Zix. The SaaS small-cap provides email encryption and cloud-based security solutions to clients mostly in compliance related fields, such as government, healthcare insurance, and financial regulation.
Early last year, Zix made a significant acquisition with the purchase of AppRiver, a provider of cloud-based cybersecurity and productivity services, for $275 million. AppRiver’s focus on the SMB market compliments Zix’s focus on enterprise, and the purchase provides an opportunity for cross and up-selling. It also increases Zix’s TAM (total addressable market), which is estimated to reach $8 billion over the next five years. AppRiver is expected to be a key contributor to revenue growth, and had over 8,000 trials in the last quarter, bringing the year’s total to 27,000. The figure represents a 36% year-over-year increase and comes with an impressive 90% conversion rate.
Dougherty’s Catharine Trebnick argues that Zix trades at “a discount to security peers.” The 4-star analyst believes the recent dip presents an opportunity, noting, “We are aggressive buyers of Zix following the pullback, which we believe does not reflect the company’s fundamentals or opportunity… We view the shares are undervalued given AppRiver contribution is still in early days, and we are expecting better attach rates with core Zix products.”
Accordingly, then, Trebnick reiterated a Buy rating on Zix, along with a price target of $14. This implies upside potential of a handsome 105%. (To watch Trebnick’s track record, click here)
A fellow fan of Zix is Wedbush’s Daniel Ives, who noted, “We loudly applaud Zix’s aggressive move to beef up its position in the cloud-based email security market further around encryption as it is clear enterprises across the board are making the shift to a cloud based environment.”
Ives initiated coverage of Zix with an Outperform rating and a price target of $10. (To watch Ives’ track record, click here)
Zix has two other analysts currently keeping an eye on its prospects and both rate the stock a Buy. As a result, the cyber security expert has a Strong Buy consensus rating. The average price target is $10.33 and provides a possible 51% gain over the coming months. (See Zix price targets and analyst ratings on TipRanks)
Upwork Inc (UPWK)
One of the trends of the outgoing decade was the rise of the gig economy; the ability to hire anyone, anywhere for short-term projects, providing both employers and freelancers a new way of outsourcing and finding work.
Upwork is essentially an online job marketplace and lets businesses in need of a service search Upwork’s database of freelancers, and vice versa, helps freelancers such as graphic designers, writers, and video editors find suitable projects. The company went public in October 2018 and like some other recent disruptor IPO’s had a difficult 2019, losing more than 40% of its share price over the year. Upwork, though, is the biggest company of its kind, and with less long-term job certainty and the continued growth of the global gig economy, it is set to benefit from the new paradigm.
The well positioned company has BTIG’s Marvin Fong taking note. The analyst said, “We believe Upwork's potential is underappreciated as it is poised to reap future benefits from strategies being implemented today. Specifically, we believe direct sales force investment, new membership plans, hyperlocal marketplaces, specialized profiles and other initiatives will yield GSV growth and/or higher monetization. While the product suite likely needs refinement, we believe the large TAM and secular tailwinds will enable Upwork to grow revenue in excess of 15% over the next 5 years.”
Fong, therefore, reiterated his Buy rating on Upwork. The analyst’s price target is $20 and indicates upside potential of 98%. (To watch Fong’s track record, click here)
What does the Street think is in store for the gig economy leader in 2020? 3 Buys and 3 Holds coalesce to a Moderate Buy consensus rating. The average price target comes in at $17 and implies potential gains of 68%. (See Upwork stock analysis on TipRanks)
Rubicon Project (RUBI)
Online advertising tech company Rubicon Project was one of 2019’s star performers. The Los Angeles based firm starts 2020 following a 119% addition to its share price over the previous year.
So, what’s all the noise about, then? Rubicon’s goal is to be the “NASDAQ of Digital Advertising.” The company’s automated advertising platform is used by online publishers to facilitate the automated buying and selling of advertising.
Rubicon made headlines recently after it teamed up with fellow digital-advertising industry leader, Telaria, to form the world's largest independent sell-side advertising platform. The merger will significantly strengthen the new company’s financial profile on all fronts and leaves it debt free with $150 million of cash in the coffers. Rubicon shareholders stand to own 52.9% of the combined company’s fully diluted shares.
Stephen’s Kyle Evans’ advice to investors is to snap up shares. The analyst expounded, “RUBI took low-value ad units out of its system in 3Q19, improving the platform and revenue quality, and we believe the two smaller headwinds the Company alluded to in the quarter (app-ads.tx and sellers.json) are temporary in nature. In short, we didn’t hear anything from RUBI that changes our view that it will continue to benefit from supply path optimization as the largest, independent SSP in the digital ad ecosystem. We believe RUBI’s multiple is likely to benefit from gravitational pull from more expensive CTV and ad tech names, and that its Demand Manager product is a likely catalyst in 2020.”
The good news has Evans reiterating an Overweight rating on Rubicon and $12 price target. Should the target be met, investors could be lining their pockets with a 28% gain over the coming 12 months. (To watch Evans’ track record, click here)
There is not much action from the Street regarding the digital ad leader right now. What action there is, though, is positive. 2 fellow analysts rate RUBI a Buy and, therefore, it has Strong Buy status. The average price target matches that of the Stephens’ analyst and comes in at $12. (See RUBI stock analysis on TipRanks)