The fundamentals appear to provide a bullish setup for the rest of 2021. First, the Fed once again committed to doing all it can to boost the economy and the market. Meanwhile, prospects of increased government spending under the Biden administration seem likely. The coronavirus vaccine rollout could also help the hardest-hit areas of the economy rebound by the end of the summer.
Plus, the fourth quarter earnings results and positive guidance help cement the case and justify why the market has climbed to new highs in February. Overall S&P 500 earnings have turned positive for the fourth quarter, driven by the giants such as Apple AAPL, Microsoft MSFT, and Amazon AMZN, as well as strong showings throughout the index. And the outlook for the first quarter and 2021 continues to improve (also read: A Very Strong Earnings Picture).
Investors might want to add to their portfolios even with the market right near all-time highs, especially because timing the market is difficult and somewhat unnecessary for those with long-term horizons—and trying to do so can mean missing out on big gains.
Today, we look at three highly-ranked Zacks stocks trading for under $30 per share, which might not fit in that traditional “cheap” range, but are low-cost nonetheless. More importantly, the stocks are on strong runs and boast solid fundamentals…
Green Brick Partners (NASDAQ:GRBK), Inc. GRBK
Prior Close: $21.39 USD (close of regular trading on Thursday, Feb. 11)
Green Brick is a diversified homebuilding and land development firm that operates in growth markets such as Texas, Georgia, Florida, and Colorado. The company is on an impressive run and the continued momentum in the housing market could help GRBK continue to grow. Home sales soared last year to their highest level since 2006, driven by the pandemic, and a shortage of inventory in the existing home market has pushed up prices and helped homebuilders.
Green Brick released strong preliminary Q4 and full-year 2020 results in January. Zacks estimates now call for its FY20 revenue to jump by over 21% to reach $960 million to help lift its adjusted EPS figure by 92% to $2.23 share. More importantly, it ended the quarter with its highest backlog in history, up 98%. “Put simply, short-term demand exceeded our supply, and we have rapidly expanded our capacity,” CEO Jim Brickman said in prepared remarks.
Peeking ahead to 2021, GRBK’s revenue is projected to surge another 35% higher to reach $1.3 billion, with its earnings expected to climb 28% above its FY20 estimate. The company has consistently topped our bottom-line estimate, including a 32% average beat over the last four quarters. And its positive earnings revisions activity helps it grab a Zacks Rank #2 (Buy) at the moment. GRBK also sports a “B” grade for Value and an “A” for Growth in our Style Scores system.
Green Brick shares have surged over 80% in the last year to destroy its highly-ranked Real Estate – Development industry’s 10% average. GRBK has cooled off recently, with its shares roughly flat over the past three months.
In fact, the stock sits about 15% off its late November 2020 highs. Luckily, its shares have already started to bounce back up to its 50-day moving average and it could be ready to go on a run if it is able to provide solid guidance when it officially reports on March 8.
Amkor (NASDAQ:AMKR) Technology, Inc. AMKR
Prior Close: $22.95 USD (close of regular trading on Thursday, Feb. 11)
Amkor provides outsourced semiconductor packaging and test services and it is a strategic manufacturing partner for some leading chip firms, foundries, and electronics OEMs. The company trounced our earnings estimates in 2020, including a 40% bottom-line beat in the fourth quarter that saw Amkor wow Wall Street on February 8. AMKR’s Q4 sales jumped over 16%, with FY20 up 25% to a company record of $5.05 billion.
Analysts have raced to update their earnings outlooks since its stellar report. The company’s first quarter EPS consensus is up 90% since its release, with both fiscal 2021 and 2022’s figures up 33%.
Zacks estimates currently call for the company’s 2021 revenue to climb another 12% to help lift its adjusted earnings by nearly 30%. Investors should note that Amkor also reduced its debt load to help improve its balance sheet in 2020, even amid the broader global economic uncertainty.
AMKR shares soared to new highs of roughly $23 per share on Thursday on the back of the post-release positivity. This is part of a much larger run that’s seen the stock climb over 60% in the past six months.
Despite its climb, it has still underperformed its Semiconductor industry over the last three years, up 130% vs. 150%. And the stock could continue to climb given that it trades at a massive discount compared to its highly-ranked industry at 0.90X forward sales vs. 8.6X.
Amkor lands a Zacks Rank #1 (Strong Buy) at the moment, alongside “A” grades for Value and Momentum. Plus, the company pays a dividend that currently yields about 0.80%. The company stands to benefit within a world where semiconductors are vital cogs in the background of the digital world.
SelectQuote, Inc. SLQT
Prior Close: $26.67 USD (close of regular trading on Thursday, Feb. 11)
SelectQuote is a tech-focused insurance company that went public last May. The firm uses a direct-to-consumer comparison model to help people find the right auto and home insurance, as well as life insurance and senior health insurance.
SLQT boasts that its proprietary technology allows it to “find people the right coverage with the right carrier at the right price in just minutes.” SLQT has topped our quarterly earnings estimates in all three periods since its IPO, including a solid 15% beat when it reported Q2 fiscal 2021 results on Feb. 8.
The firm’s second quarter revenue surged by 103% to top Q1’s 91% sales expansion. SLQT’s top-line was driven by 127% growth in its senior unit. This space allows people to select from a range of Medicare Advantage and Medicare Supplement plans from “leading, nationally-recognized carriers, as well as prescription drug plan, dental, vision and hearing plans.”
Investors should know that SLQT stands to benefit from an aging U.S. population. “The first Baby Boomers reached 65 years old in 2011,” Dr. Luke Rogers (NYSE:ROG) of the U.S. Census Bureau said in prepared remarks in June 2020. “Since then, there’s been a rapid increase in the size of the 65-and-older population, which grew by over a third since 2010. No other age group saw such a fast increase.”
The company also raised its full-year guidance earlier in the week and Zacks estimates now project that its revenue will surge 78% to $939 million, with FY22 projected to come in another 33% higher to reach $1.3 billion. And its bottom-line outlook appears even more impressive, with SelectQuote expected to swing from an adjusted loss of -$0.16 a share to +$0.88 this year, before popping another 41%.
SelectQuote’s post-release EPS revisions help it land Zacks Rank #2 (Buy), next to an “A” grade for Momentum. And four of the eight brokerage recommendations Zacks has for SLQT come in at “Strong Buy” with two more at a “Buy” and none below a “Hold.”
Despite its 40% jump in the last three months to crush its industry and the market, it trades at an 8% discount to the $29 it hit after its post-IPO climb last June. Plus, it trades at 4.2X forward 12-month sales to mark solid value compared to the Zacks Finance Econ Sector’s 7.2X average.
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Microsoft Corporation (NASDAQ:MSFT): Free Stock Analysis Report
Amazon.com, Inc. (NASDAQ:AMZN): Free Stock Analysis Report
Apple Inc. (NASDAQ:AAPL): Free Stock Analysis Report
Amkor Technology, Inc. (AMKR): Free Stock Analysis Report
Green Brick Partners, Inc. (GRBK): Free Stock Analysis Report
SelectQuote, Inc. (SLQT): Free Stock Analysis Report
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