We all want to make the best decisions in our investing, but how do we know where and how to allocate our funds? That’s the big question, and it’s not always easy to answer. With many thousands of stocks available to choose from, we need help.
So, we turn to the experts, the Wall Street professionals who make a living by analyzing the market. Stock analysts watch the market for us, tracking the ups and downs of equities but more importantly, the reasons behind stock movements. Some of them are better than others, and they all come the patina of authority; their long experience in the field and institutional backing can make it hard to ignore their word.
But there are well over 5,000 professional analysts on the rolls of Wall Street’s banks and investment firms, and it’s difficult for an outsider to decide who to follow. That’s where TipRanks steps in. Using sophisticated natural language algorithms, TipRanks tracks the performance of both the analysts and the stock markets, correlates the two, and makes the data available for investors. Stock and market data are presented as background, while analysts are rated and ranked based on their success and returns possible from following their recommendations. In short, TipRanks makes it possible to know who to trust.
Foresi’s proven track record has brought him to the #1 spot in the TipRanks database. He has the expertise we all want to follow – and when points out stocks with high return potential, investors listen. We’ve pulled up three of his recent reviews and examined them closely through the lens of TipRanks’ Stock Screener, to learn just why Foresi sees them as such compelling buys.
International Money Express (IMXI)
In today’s international economy, moving funds across borders is more important than ever. That can be as true for individuals as it is for large companies and governments. International Money Express (also called Intermex) fills this roll in North America’s personal market, offering fast and reliable money transfer services to customers sending funds outside the United States, primarily to Latin American and the Caribbean, but also to several African nations. The service is aimed at the expat labor force, immigrants to the US who remit their income to family abroad.
IMXI is licensed to operate in all 50 states, plus D.C. and Puerto Rico. The service is available online, in person through agents or branches, or via money wires. Customers can also pay recurring bills or process third-party checks with IMXI. These are urgent services, much in demand by a customer population that has less access to traditional banking services. Assistance is available in person, and also online or by telephone.
The money transfer industry is cash-rich by definition, and IMXI has shown strong performance in recent months. The company reported impressive 17.7% year-over-year quarterly revenue growth, with a top line of $85.3 million and net income of $4 million. More importantly, Intermex continues to improve market share and saw 19% growth in transactions completed and 21% growth in dollar volume.
Foresi was impressed enough by Intermex’s performance to raise his price target on the stock to $17, while reiterating a Buy rating. If everything goes well for IMXI, the stock could soar about 30% from current levels, according to the top analyst.
Foresi wrote, after the quarterly release, “We believe the company’s targeted business model, which we view as a competitive advantage, will help it continue to gain market share in Latin America, the fastest-growing US remittance region. We think Intermex can produce high-teens growth with steady margins with an upward bias, resulting in significant annual earnings growth and an improving balance sheet.”
Overall, IMXI has five recent analyst reviews, including Foresi’s. Of these, 4 are Buys and 1 is a Hold, giving this stock a Strong Buy consensus rating – a view that solidified after the Q3 report. Shares are priced at $13.00, and the $17.50 average price target indicates confidence in a 35% upside potential. (See IMXI stock analysis on TipRanks)
PagSeguro Digital (PAGS)
Sticking to Latin America, Foresi reviewed PagSeguro. This online e-commerce payment service has become a big name in Brazil’s banking sector. Pag offers service to commercial clients, internationally as well as in Brazil. It is also moving into the digital banking sector for individual accounts.
As a region, Latin America has growing importance in the world economic system, and Brazil is considered an important figure among emerging economies. PAGS has built its niche on this regional situation, and while the stock has slipped since September, it is still up 69% this year.
PAGS reported clear gains in revenue and income for Q3. Total revenues, at $346.4 million, were up 30% year-over-year, and income, at $92.4, showed an even stronger gain of 34%. In the earnings call, CEO Ricardo Dutra said of his company’s strategy, “…we continue to focus on the long-term market, take advantage of being the first mover, having a complete digital banking ecosystem, the most recognized brand and UOL online distribution, which in our view are unique and unreplicable strengths to operate in long-term markets.”
Foresi, covering the stock after the quarterly results went public, maintained his Buy rating – but he was cautious due to economic volatility in Brazil generally and lowered his price target to $46, which still implies plenty of room for growth – 50 % on the upside.
Foresi noted, “Numbers came in below expectations, but in line with the recent pre-announcement.” After noting that PAGS’ core online payment services to merchants are slowing down, he also notes the accelerating shift to digital banking as a positive move: “Management notes strong adoption in PagBank, with 1.9mn active users and +53% y/ y growth in Prepaid Card TPV. Brazil currently has 68mn unbanked citizens, with 57% of the population interested in digital banks.”
Wall Street generally agrees with Foresi on this call. PAGS has four recent ratings, of which 3 are Buys and 1 a Hold. Overall, the consensus rating is a Strong Buy, while the $43 average price target suggests a 35% upside from the $31.75 current share price. (See PagSeguro stock analysis on TipRanks)
Foresi’s third recent Strong Buy rating is probably familiar to you. Square has emerged as a powerful competitor in the digital payment sphere. It offers an arrange of financial services, including mobile payment, on the merchant end, and the Cash App for peer-to-peer transaction on the customer end.
Where Square differentiates itself from the competition is in gadgets. The company doesn’t just offer online payment capability – it also offers hardware to make it possible. The original Square Reader allows smartphones to scan credit cards, and took payment mobile, while the Square Stand turns Apple iPads into cash registers. Money-saving devices and convenient services have made Square popular with small and/or traveling merchants.
Square has shown solid growth, with gross payment volume increasing by 25% in both Q2 and Q3 of this year. The recent Q3 showed top and bottom line gains – revenues were up 43% year-over-year, at $1.27 billion, while the EPS almost doubled from 13 cents a year ago to 25 cents in Q3 2019. The EPS also beat the forecast by 25%.
It is hard to argue with performance like that. Foresi, writing just after the Q3 release, reiterated both his Buy rating and his $91 price target for Square. He said, to justify his stance, “Square reported results above expectations, updated 2019 guidance, and provided a positive initial outlook on 2020, including clarity on margin expectations. Gross Payment Volumes growth exceeded expectations, while the Cash App continued to perform well… We are attracted to the company’s increasing market penetration in its Seller and Cash Apps business…” Foresi’s price target shows his confidence in a 36% growth potential for SQ shares, well above the consensus.
Overall, SQ has a Moderate Buy rating from the analyst consensus. The reflects some caution on the stock, which has been underperforming the S&P 500 average, but also includes no less than 13 recent Buy ratings. Shares are trading at $67.84, and the $73.05 average price target implies a profitable, if unspectacular, upside of nearly 8%. (See Square stock analysis on TipRanks)