Finding the right stock is the essence of investing. While that skill has a reputation for being more art than science, a savvy investor knows otherwise. Follow the data, read the trends, and understand the fundamentals; these are the tried and true methods for investing success.
The Smart Score data tool makes the science – and its results – available to all investors. Using the full range of stock information from the TipRanks database, the Smart Score collates everything and distills the mass of raw material into a single number, a score that’s easy to read and indicates how a stock is likely to move in the near future. It’s a valuable aid in finding investing opportunities.
We’ve used the Smart Score filter to pick out three stocks with a perfect 10 score – indicating likely overperformance in the coming year – for your perusal. These aren’t the usual big-name investment choices; these are mid-sized companies, boasting market caps between $1 billion and $3 billion, and each shows a considerable upside potential.
Synaptics, Inc. (SYNA)
We’ll start with a tech stock, Synaptics. This company develops user interface systems for a range of computing and communications devices. Synaptics is a leader in touch-screen development, as well as VR systems, video interface, flexible screens, and vision perceptive systems for IoT. Some of these systems are on the market; others are on the drawing board.
A leading position in a growth industry is a recipe for success in any business, and Synaptics has not seen an earnings decline during the coronavirus pandemic. Rather, the company has seen year-over-year earnings growth, with the series of recent quarterly results conforming to the historical pattern of EPS rising form Q2 through Q4, and falling off in Q1 and Q2. Q4 EPS was $1.60; the most recent report, for calendar Q1 (the company’s fiscal Q3), showed 98 cents EPS, a 108% gain year-over-year.
The stock got a boost in the last week, when it acquired assets and manufacturing rights in semiconductor maker Broadcom’s wireless IoT business for $250 million. The move was an all-cash transaction, and promises to bring a surge in business for Synaptics, as it puts the company in position to realize a $65 million per year in sales.
Needham analyst Rajvindra Gill is bullish on Synaptics, especially after the Broadcom announcement. He writes, “We believe Broadcom’s connectivity assets complement and strengthen SYNA’s IoT portfolio and positioning across various end markets, including consumer, industrial, and security surveillance. For instance, these assets provide SYNA with key technologies like Wi-Fi 6 and 6E, Bluetooth 5.2 and GPS L5/GNSS, which many leading IoT devices require.”
In line with his outlook, Gill rates SYNA a Buy, and puts a $100 price target on the stock, implying a robust 50% growth potential. (To watch Gill’s track record, click here)
SYNA shares have a Moderate Buy rating from the analyst consensus, with 3 Buy and 2 Holds. The stock’s average price target of $79.50 suggests it has room to grow 23% from the current share price of $64.61 during the next 12 months. (See Synaptics stock analysis on TipRanks)
Crocs (CROX)
Next on our list of Perfect 10s is Crocs, the foam-clog footwear company that has since branched out into a more diverse lines of shoes, apparel, and accessories. The company has seen a decline in sales due to the coronavirus, but that has been partly mitigated by a rise in online sales. The flagship product’s reputation as a ‘comfy’ shoe has helped in that, as customers are showing a preference for comfortable indoor wear.
The company saw earnings fall – but in Q4. The winter quarter is normally Crocs’ worst, and the historical pattern is for Q1 to be better. That held true this year, as well. The quarter was down year-over-year, saw the EPS of 22 cents miss the forecast, but still grew 83% sequentially. Q1 also included March’s numbers; that month alone saw 14% sales growth yoy. The sales numbers have supported the stock, which has nearly tripled in share price since bottoming out on March 20.
Piper Sandler analyst Erinn Murphy rates CROX a Buy, and sees a clear path forward for the brand. She notes the company’s strong branding, wide range of products – and rising sales.
“We continue to check stores where we believe trends remain ahead of plan since stores reopened. Recall stores started to reopen May 8th. Despite traffic constraints in-store & limited store hours, lines remain at stores during the busier weekend days. As summer has continued, interest has broadened from just the Classic clogs towards sandals as well. We believe store comps are strongly ahead of LY,” Murphy noted.
In line with her outlook, Murphy rates CROX an Overweight (i.e. Buy) along with a $42 price target. The figure suggests an upside of 13.5% from current levels. (To watch Murphy’s track record, click here)
The Smart Score on Crocs benefits from a “Strong Buy” analyst consensus, as well as increased hedge fund activity and bullish blogger opinions. (See CROX stock analysis on TipRanks)
Ryman Hospitality (RHP)
The last perfect 10 on our list, Ryman Hospitality, is a real estate investment trust with a unique niche. The company owns and operates a wide range of entertainment venues and hotels across the US, with a strong emphasis on Country & Western themes. Ryman is the owner of the Grand Ol’ Opry and the General Jackson Showboat in Nashville, as well as numerous Gaylord Hotel venues across the South.
The economic downturn, and social lockdowns, of 1H20 have hurt the company, as mass entertainment – even when permitted – has been socially disfavored. Earnings and revenues were down sharply in Q1, and are expected to remain low in Q2.
Dori Kesten, writing from Wells Fargo, explains why RHP remains a compelling holding: “We believe the upside in Ryman’s share price should outpace that of the majority of its lodging REIT peers While we do not expect large group attendance to return in the near term, we do expect cancellation/attrition fees to be collected in 2H 2020+, thus offsetting potential softer occupancy…”
In line with this outlook, the analyst rates the stock an Overweight (i.e. Buy), with a price target of $44 implying a healthy upside potential of 30%. (To watch Kesten’s track record, click here)
Overall, RHP has a Strong Buy analyst consensus rating, with 4 recent reviews breaking down 3 to 1 in favor of the Buys. Shares are priced at $33.73, and the average price target is $45.50, a bit more bullish than Kesten’s, suggesting the stock has a 33% upside potential from current levels. (See RHP’s stock analysis on TipRanks)
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