With the worst of the coronavirus attack hopefully behind us, the government is focused on getting the economy back on track. Investors that have been burned by the pandemic are also looking to make good some of their losses. So while I think some income generating investments should always be in your portfolio, it’s probably time now to also start investing in stocks that appear undervalued, especially given signs of their improving prospects.
But paying due respect to the current uncertainties, I’m going by the philosophy that you can’t be too safe. So in order to make it to this list, companies had to satisfy all of the following criteria-
First of course is the Zacks Rank #1 (this is proprietary tech that gives you an idea of stocks with a strong possibility of appreciating in the next month or so.
To that, I’m adding another piece of proprietary tech in the VGM (value, growth, momentum) Score. So, as you know, most of us have a risk appetite, we either like to be cautious or take big risks. Or, we like to play the momentum. Whatever our investment style, with a VGM Score of A, there’s a good chance you won’t be disappointed.
Next on the list is the industry. It has been proven time and again that companies belonging to any particular industry have certain commonalities. So in a given situation, while they may have individual differences, those commonalities tend to impact the member companies in the same way. The Zacks Industry Rank or position is a pointer on this. Moreover, it has been proven that the top 50% of industries outperform the bottom 50% by a factor of more than 2 to 1. So picking stocks in the top 50% further narrows things down.
Then I’ve moved on to company specific things like expected revenue and earnings growth in 2020 and 2021, positive estimate revisions in the last 30 days on top of positive earnings surprises in the March quarter. I’ve added the current valuation to round things off.
So take a look here-
Equinox Gold (NYSE:EQX) Corp. EQX
Headquartered in Vancouver, Canada, Equinox Gold carries out exploration activity at its mining sites, chief of which are the Aurizona gold mine in Brazil’s Maranhão state and the Mesquite gold mine in California. It also mines copper and silver deposits.
Zacks Rank #1
VGM Score A
Industry: Mining – Gold: Top 4%
Revenue expected to grow 214.52% in 2020 and 61.29% in 2021
EPS expected to grow 231.03% in 2020 and 25.52% in 2021
2020 EPS estimate up from $0.52 to $0.96 in last 30 days, EPS 2021 estimate up from $1.05 to $1.20
Topped March quarter EPS estimate by 9.09%
Valuation: The shares are cheap, trading at 8.09X forward earnings, which is below the median level of 16.87X over the past year. The S&P 500 is trading at 20.83X, close to the high end (20.87X) of its range during the same time period.
Career Education Corporation PRDO
Schaumburg, Illinois-based Perdoceo Education (NASDAQ:PRDO) Corporation provides bachelor's, associate and non-degree programs in information technologies, visual communication and design technologies, business studies and culinary arts.
Zacks Rank #1
VGM Score A
Industry: Schools: Top 7%
Revenue expected to grow 11.57% in 2020 and 5.66% in 2021
EPS expected to grow 10.22% in 2020 and 13.91% in 2021
2020 EPS estimate up from $1.45 to $1.51 in last 30 days, 2021 EPS estimate up from $1.60 to $1.72
Topped March quarter estimate by 13.51%
Valuation: The shares are cheap, trading at 10.13X forward earnings, which is below the median level of 12.43X over the past year.
Medifast is a wellness company that helps people incorporate clinically proven healthy living tips through products, programs and franchised weight loss clinics to lose weight and maintain their bodies. It works with doctors and a community of independent coaches through the Optavia brand.
Zacks Rank #1
VGM Score A
Industry: Food - Miscellaneous: Top 12%
Revenue expected to grow 5.86% in 2020 and 12.38% in 2021
EPS expected to grow 13.93% in 2020 and 10.46% in 2021
2020 EPS estimate up from $5.40 to $6.79 in last 30 days, 2021 EPS estimate up from $6.53 to $7.50
Topped March quarter estimate by 46.21%
Valuation: The shares are cheap, trading at 13.15X forward earnings, which is below the median level of 13.48X over the past year.
NeoPhotonics (NYSE:NPTN) Corporation NPTN
NeoPhotonics Corporation designs and manufactures photonic integrated circuit (PIC)-based modules and subsystems for bandwidth-intensive, high-speed communications network that enable data transmission at speeds of 10Gbps, 40Gbps and 100Gbps; agility products that dynamically allocate bandwidth to adjust for volatile traffic patterns; and access products that provide high-bandwidth connections facilitating increase in the number of devices and people over fixed and wireless networks.
Zacks Rank #1
VGM Score A
Industry: Semiconductor - Communications: Top 16%
Revenue expected to grow 11.52% in 2020 and 11.73% in 2021
EPS expected to grow 5400% in 2020 and 14.98% in 2021
2020 EPS estimate up from $0.34 to $0.55 in last 30 days, 2021 EPS estimate up from $0.44 to $0.64
Topped March quarter estimate by 240%
Valuation: The shares are reasonably valued, trading at 0.91X forward sales, which is close to the median level of 0.89X over the past year. The S&P (NYSE:SPY) 500 is trading at 3.36X, between its median value of 3.24X and 3.52X during the same time period.
Veritiv (NYSE:VRTV) Corporation VRTV
Headquartered in Atlanta, Georgia, Veritiv Corporation facilitates North American business-to-business distribution with its packaging, print and print management, publishing, supply chain, facility and logistics solutions spanning the entire lifecycle of core business operations. Its served industries include manufacturing, healthcare and retail.
Zacks Rank #1
VGM Score A
Industry: Paper and Related Products: Top 32%
Revenue growth expectations not available
EPS expected to grow 124.46% in 2020 and 155.56% in 2021
2020 EPS estimate up from -$1.35 to $0.45 in last 30 days, 2021 EPS estimate up from -$0.15 to $1.15
Topped March quarter estimate by 98.36%
Valuation: The shares are cheap, trading at 0.40X price-to-book value compared to the median value of 0.73X over the past year. The S&P 500 is trading at 11.30X, below its median value of 11.36X during the same time period.
Tutor Perini (NYSE:TPC) Corporation TPC
Tutor Perini Corporation provides diversified construction and other services to a broad section of public and private agencies worldwide. Its Civil segment engages in public works construction activities and the repair, replacement, and reconstruction of infrastructure. Its Building segment offers services in specialized building markets, including hospitality and gaming, transportation, healthcare, municipal offices, sports and entertainment, education, correctional facilities, biotech, pharmaceutical, industrial, and high technology.
The Specialty Contractors segment provides plumbing, HVAC, electrical, mechanical, and concrete services for the industrial, commercial, hospitality and gaming, and transportation markets. The Management Services segment offers construction and design-build services to the U.S. military and government agencies, as well as multi-national corporations.
Zacks Rank #1
VGM Score A
Industry: Building Products - Heavy Construction: Top 32%
Revenue expected to grow 15.22% in 2020 and 7.85% in 2021
EPS expected to grow 200.0% in 2020 and 9.52% in 2021
2020 EPS estimate up from $1.80 to $2.10 in last 30 days, 2021 EPS estimate up from $2.25 to $2.30
Topped March quarter estimate by 1033.33%
Valuation: The shares are cheap, trading at 3.57X forward earnings, which is below the median level of 5.34X over the past year.
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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Veritiv Corporation (VRTV): Free Stock Analysis Report
MEDIFAST INC (MED): Free Stock Analysis Report
Tutor Perini Corporation (TPC): Free Stock Analysis Report
NeoPhotonics Corporation (NPTN): Free Stock Analysis Report
Career Education Corporation (PRDO): Free Stock Analysis Report
Equinox Gold Corp. (EQX): Free Stock Analysis Report
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