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3 ‘Perfect 10’ Stocks With Double-Digit Upside Potential

3 ‘Perfect 10’ Stocks With Double-Digit Upside Potential

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4 years ago

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You are an astute investor, you do your homework, and you identify a company whose product will be in demand. You are so confident about it that you take the money you are saving for a new set of golf clubs, and use it to buy the company’s stock. You are now eagerly awaiting the results.

The company reports earnings and you are right – demand for its product is skyrocketing. However, unbelievably, the stock is down and you actually lost money. There is nothing more frustrating than being right and losing money. What happened?

In today’s market, there are many factors that can influence the price of a stock besides fundamental analysis. In times like these, an investor needs a more comprehensive way to analyze investment opportunities.

TipRanks has a tool that does exactly that. Building on eight important factors such as analyst ratings, hedge fund activity, news sentiment, as well as fundamentals and technicals, the Smart Score collates all of the data and assigns each stock a score ranging from 1 to 10, indicating the direction a stock could be heading in.

Bearing this in mind, we used TipRanks’ database to lock in on three stocks with a “perfect 10” Smart Score. Not to mention these Buy-rated tickers offer double-digit upside potential.

Rent-A-Center Inc. (RCII)

First on our list is Rent-A-Center, which operates approximately 2,100 rent-to-own stores, leasing products such as electronics, appliances, computers, and furniture.

Total revenues increased marginally by 0.8% to $701.9 million in the first quarter of 2020, compared to the same period in 2019. The gain was partially driven by a 1.7% rise in same store sales.

Weighing in on the company’s earnings, Stephens analyst Vincent Caintic commented, “This first quarter 2020 earnings season and in subsequent calls, most of our coverage still appeared to be adjusting to the post-COVID and calling for near-term pain…Rent-A-Center, in contrast, is the only company that is guiding to flat year over year EPS in second quarter 2020 and appears to have maneuvered to neutralize the impact of COVID-19.”

Caintic believes Rent-A-Center’s shares will rally going forward even though the stock is down 8% year-to-date. Caintic explained, “We have had the view that companies catering to the subprime consumer should fare better during our recession than our broader coverage. Moreover our takeaways from management calls today is that upside opportunities exist for second half 2020… We have adjusted as a result.”

If that is not enough, the analyst is enthusiastic about management’s ability. He noted, “…we have been impressed with the management team since CEO Mitch Fadel took the helm in January 2018. What we once thought was a company heading for bankruptcy…has emerged as one of the strongest and best operated in our coverage. …we consider the team to be one of the best in our consumer coverage.”

To this end, Caintic rates Rent-A-Center shares an Overweight (i.e. Buy), and places a $33 price target on the stock, which suggests 27% upside potential. (To watch Caintic’s track record, click here)

Wall Street mostly agrees with Caintic’s view. The analyst consensus on RCII is a Strong Buy, based on 4 Buys and 1 Hold. The average price target is $30.20, which indicates 16% upside potential. (See Rent-A-Center stock analysis on TipRanks)

Turtle Beach (HEAR)

Next up is Turtle Beach, which sells headsets for various gaming platforms as well as keyboards, mice, and other personal computer accessories under the ROCCAT brand.

The company experienced strong demand for its headsets in the first quarter of 2020, as people stayed home due to COVID-19. Besides gaming, Turtle Beach’s headsets are well-suited for working remotely and distance learning, which further boosted demand.

The positive trend continued. On June 16, management increased the sales outlook for the second quarter of 2020 by a hefty 70%, citing continued strong demand and significant increases in product supply.

Writing for Maxim, analyst Jack Vander Aarde weighed in on the announcement, “We raise our estimates across the board, as we expect demand for gaming headsets and accessories to remain at elevated levels. Based on NPD Group’s published industry data, broad-based gaming industry sales trends continue to grow at a robust pace.”

Adding to the good news, Turtle Beach was able to dominate the market. Expounding on this, Vander Aarde stated, “…as of April, all 7 top-selling headsets and 8 of the top-10 best-selling headsets were attributed to Turtle Beach.”

Looking to the future, the analyst believes Turtle Beach will continue to outperform. This is because of the upcoming launches of new consoles in the holiday season.

Based on all of the above, Vander Aarde reiterated his Buy rating on the stock and raised his price target to $20, which translates to potential upside of 21%. (To watch Vander Aarde’s track record, click here)

All in all, other analysts are on the same page. 4 Buys and 1 Hold add up to a Strong Buy consensus rating. Given the $19.20 average price target, shares could rise 23% over the next year. (See Turtle Beach stock analysis on TipRanks)

CVS Health Corporation (CVS)

Our third ‘Perfect 10’ stock is drugstore chain giant CVS Health, with $260 billion in revenue.

Despite the impact of COVID-19, first-quarter results were positive. Revenues increased 8.3% from the prior year, while EPS was $1.91, almost 18% higher than the year before.

The company is in the midst of transforming itself into an integrated healthcare company from a retail pharmacy. In regard to this, Deutsche Bank analyst George Hill noted, “CVS is in the early innings on delivering against its vision of a vertically integrated healthcare services company with outsized consumer engagement.”

Hill is very bullish on CVS, calling it "one of his favorite investment ideas." The Deutsche Bank analyst added, “Our price target reflects 14x our 2021 EPS estimate of $7.82. The 14x multiple we use still positions CVS at a substantial discount to healthcare conglomerate bellwethers like UnitedHealth Group, given CVS’s larger relative exposure to the less-attractive retail segment.”

To this end, Hill has a $109 price target on CVS to support his Buy rating. His target indicates upside potential of 77% for the coming 12 months. (To watch Hill’s track record, click here)

In general, other analysts echo Hill’s positive sentiment. 8 Buys and 4 Holds mean that CVS gets a Moderate Buy consensus rating. At $77.44, the average price target indicates 26% upside potential. (See CVS Health stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

The post 3 ‘Perfect 10’ Stocks With Double-Digit Upside Potential appeared first on TipRanks Financial Blog.

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NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

One month after the inflation outlook tracked…

Published

20 mins ago

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March 11, 2024

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NY Fed Finds Medium, Long-Term Inflation Expectations Jump Amid Surge In Stock Market Optimism

One month after the inflation outlook tracked by the NY Fed Consumer Survey extended their late 2023 slide, with 3Y inflation expectations in January sliding to a record low 2.4% (from 2.6% in December), even as 1 and 5Y inflation forecasts remained flat, moments ago the NY Fed reported that in February there was a sharp rebound in longer-term inflation expectations, rising to 2.7% from 2.4% at the three-year ahead horizon, and jumping to 2.9% from 2.5% at the five-year ahead horizon, while the 1Y inflation outlook was flat for the 3rd month in a row, stuck at 3.0%. 

The increases in both the three-year ahead and five-year ahead measures were most pronounced for respondents with at most high school degrees (in other words, the "really smart folks" are expecting deflation soon). The survey’s measure of disagreement across respondents (the difference between the 75th and 25th percentile of inflation expectations) decreased at all horizons, while the median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—declined at the one- and three-year ahead horizons and remained unchanged at the five-year ahead horizon.

Going down the survey, we find that the median year-ahead expected price changes increased by 0.1 percentage point to 4.3% for gas; decreased by 1.8 percentage points to 6.8% for the cost of medical care (its lowest reading since September 2020); decreased by 0.1 percentage point to 5.8% for the cost of a college education; and surprisingly decreased by 0.3 percentage point for rent to 6.1% (its lowest reading since December 2020), and remained flat for food at 4.9%.

We find the rent expectations surprising because it is happening just asking rents are rising across the country.

At the same time as consumers erroneously saw sharply lower rents, median home price growth expectations remained unchanged for the fifth consecutive month at 3.0%.

Turning to the labor market, the survey found that the average perceived likelihood of voluntary and involuntary job separations increased, while the perceived likelihood of finding a job (in the event of a job loss) declined. "The mean probability of leaving one’s job voluntarily in the next 12 months also increased, by 1.8 percentage points to 19.5%."

Mean unemployment expectations - or the mean probability that the U.S. unemployment rate will be higher one year from now - decreased by 1.1 percentage points to 36.1%, the lowest reading since February 2022. Additionally, the median one-year-ahead expected earnings growth was unchanged at 2.8%, remaining slightly below its 12-month trailing average of 2.9%.

Turning to household finance, we find the following:

  • The median expected growth in household income remained unchanged at 3.1%. The series has been moving within a narrow range of 2.9% to 3.3% since January 2023, and remains above the February 2020 pre-pandemic level of 2.7%.
  • Median household spending growth expectations increased by 0.2 percentage point to 5.2%. The increase was driven by respondents with a high school degree or less.
  • Median year-ahead expected growth in government debt increased to 9.3% from 8.9%.
  • The mean perceived probability that the average interest rate on saving accounts will be higher in 12 months increased by 0.6 percentage point to 26.1%, remaining below its 12-month trailing average of 30%.
  • Perceptions about households’ current financial situations deteriorated somewhat with fewer respondents reporting being better off than a year ago. Year-ahead expectations also deteriorated marginally with a smaller share of respondents expecting to be better off and a slightly larger share of respondents expecting to be worse off a year from now.
  • The mean perceived probability that U.S. stock prices will be higher 12 months from now increased by 1.4 percentage point to 38.9%.
  • At the same time, perceptions and expectations about credit access turned less optimistic: "Perceptions of credit access compared to a year ago deteriorated with a larger share of respondents reporting tighter conditions and a smaller share reporting looser conditions compared to a year ago."

Also, a smaller percentage of consumers, 11.45% vs 12.14% in prior month, expect to not be able to make minimum debt payment over the next three months

Last, and perhaps most humorous, is the now traditional cognitive dissonance one observes with these polls, because at a time when long-term inflation expectations jumped, which clearly suggests that financial conditions will need to be tightened, the number of respondents expecting higher stock prices one year from today jumped to the highest since November 2021... which incidentally is just when the market topped out during the last cycle before suffering a painful bear market.

Tyler Durden Mon, 03/11/2024 - 12:40

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Spread & Containment

A major cruise line is testing a monthly subscription service

The Cruise Scarlet Summer Season Pass was designed with remote workers in mind.

Published

22 mins ago

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March 11, 2024

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While going on a cruise once meant disconnecting from the world when between ports because any WiFi available aboard was glitchy and expensive, advances in technology over the last decade have enabled millions to not only stay in touch with home but even work remotely.

With such remote workers and digital nomads in mind, Virgin Voyages has designed a monthly pass that gives those who want to work from the seas a WFH setup on its Scarlet Lady ship — while the latter acronym usually means "work from home," the cruise line is advertising as "work from the helm.”

Related: Royal Caribbean shares a warning with passengers

"Inspired by Richard Branson's belief and track record that brilliant work is best paired with a hearty dose of fun, we're welcoming Sailors on board Scarlet Lady for a full month to help them achieve that perfect work-life balance," Virgin Voyages said in announcing its new promotion. "Take a vacation away from your monotonous work-from-home set up (sorry, but…not sorry) and start taking calls from your private balcony overlooking the Mediterranean sea."

A man looks through his phone while sitting in a hot tub on a cruise ship.

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This is how much it'll cost you to work from a cruise ship for a month

While the single most important feature for successful work at sea — WiFi — is already available for free on Virgin cruises, the new Scarlet Summer Season Pass includes a faster connection, a $10 daily coffee credit, access to a private rooftop, and other member-only areas as well as wash and fold laundry service that Virgin advertises as a perk that will allow one to concentrate on work

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The pass starts at $9,990 for a two-guest cabin and is available for four monthlong cruises departing in June, July, August, and September — each departs from ports such as Barcelona, Marseille, and Palma de Mallorca and spends four weeks touring around the Mediterranean.

Longer cruises are becoming more common, here's why

The new pass is essentially a version of an upgraded cruise package with additional perks but is specifically tailored to those who plan on working from the ship as an opportunity to market to them.

"Stay connected to your work with the fastest at-sea internet in the biz when you want and log-off to let the exquisite landscape of the Mediterranean inspire you when you need," reads the promotional material for the pass.

Amid the rise of remote work post-pandemic, cruise lines have been seeing growing interest in longer journeys in which many of the passengers not just vacation in the traditional sense but work from a mobile office.

In 2023, Turkish cruise line operator Miray even started selling cabins on a three-year tour around the world but the endeavor hit the rocks after one of the engineers declared the MV Gemini ship the company planned to use for the journey "unseaworthy" and the cruise ship line dealt with a PR scandal that ultimately sank the project before it could take off.

While three years at sea would have set a record as the longest cruise journey on the market, companies such as Royal Caribbean  (RCL) (both with its namesake brand and its Celebrity Cruises line) have been offering increasingly long cruises that serve as many people’s temporary homes and cross through multiple continents.

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International

This is the biggest money mistake you’re making during travel

A retail expert talks of some common money mistakes travelers make on their trips.

Published

22 mins ago

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March 11, 2024

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Travel is expensive. Despite the explosion of travel demand in the two years since the world opened up from the pandemic, survey after survey shows that financial reasons are the biggest factor keeping some from taking their desired trips.

Airfare, accommodation as well as food and entertainment during the trip have all outpaced inflation over the last four years.

Related: This is why we're still spending an insane amount of money on travel

But while there are multiple tricks and “travel hacks” for finding cheaper plane tickets and accommodation, the biggest financial mistake that leads to blown travel budgets is much smaller and more insidious.

A traveler watches a plane takeoff at an airport gate.

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This is what you should (and shouldn’t) spend your money on while abroad

“When it comes to traveling, it's hard to resist buying items so you can have a piece of that memory at home,” Kristen Gall, a retail expert who heads the financial planning section at points-back platform Rakuten, told Travel + Leisure in an interview. “However, it's important to remember that you don't need every souvenir that catches your eye.”

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According to Gall, souvenirs not only have a tendency to add up in price but also weight which can in turn require one to pay for extra weight or even another suitcase at the airport — over the last two months, airlines like Delta  (DAL) , American Airlines  (AAL)  and JetBlue Airways  (JBLU)  have all followed each other in increasing baggage prices to in some cases as much as $60 for a first bag and $100 for a second one.

While such extras may not seem like a lot compared to the thousands one might have spent on the hotel and ticket, they all have what is sometimes known as a “coffee” or “takeout effect” in which small expenses can lead one to overspend by a large amount.

‘Save up for one special thing rather than a bunch of trinkets…’

“When traveling abroad, I recommend only purchasing items that you can't get back at home, or that are small enough to not impact your luggage weight,” Gall said. “If you’re set on bringing home a souvenir, save up for one special thing, rather than wasting your money on a bunch of trinkets you may not think twice about once you return home.”

Along with the immediate costs, there is also the risk of purchasing things that go to waste when returning home from an international vacation. Alcohol is subject to airlines’ liquid rules while certain types of foods, particularly meat and other animal products, can be confiscated by customs. 

While one incident of losing an expensive bottle of liquor or cheese brought back from a country like France will often make travelers forever careful, those who travel internationally less frequently will often be unaware of specific rules and be forced to part with something they spent money on at the airport.

“It's important to keep in mind that you're going to have to travel back with everything you purchased,” Gall continued. “[…] Be careful when buying food or wine, as it may not make it through customs. Foods like chocolate are typically fine, but items like meat and produce are likely prohibited to come back into the country.

Related: Veteran fund manager picks favorite stocks for 2024

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