It might be obvious to point out that an important part of the investing game is to find the stocks that are undervalued — that is, the companies with sound fundamentals that the market is presently not fully appreciating. Luckily for investors, after 2022’s widespread carnage, there are still plenty of names out there still at relatively depressed levels.
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In fact, even after the strong rallies seen in the year’s opening stretch, such was 2022’s merciless bear, there are scores of stocks out there that have put in a recent strong showing but are still down significantly over the past year, for whom the Street’s analysts see more upside in store.
Delving into the TipRanks database, we’ve pulled up the details on two tickers which offer just that; excellent recent performance but still looking rather cheap once you zoom out a bit more. And even better, Wall Street’s experts consider both as Strong Buys with plenty of upside ahead. Let’s see why.
RumbleON, Inc. (RMBL)
The first cheap looking stock we’ll look at is RumbleOn, the U.S.’s biggest retailer of powersports vehicles. The company utilizes cutting-edge technology to aggregate and distribute used vehicles and offers dealers technological solutions including virtual inventory and a 24/7 distribution platform. The business is split into three separate units; Powersports (motorcycles included), Automotive (cars and trucks), and Vehicle Logistics and Transportation (automotive transportation services).
RumbleON is expected to release its 4Q22 numbers next month, but a look back at the third quarter results may be informative. Specifically, revenue climbed by an impressive 112.6% year-over-year to $470.3 million, just edging ahead of the Street’s call by $3.93 million.
However, the company missed badly on the bottom-line, with adj. EPS of $0.27 falling well short of the $0.83 anticipated by the analysts. The company blamed the lackluster showing on margin compression affecting activities. As for the outlook, for the full year, RumbleOn sees revenue hitting the range between $1.85 to $1.90 billion. Consensus had $1.96 billion.
Investors were not impressed with the performance and sent shares tumbling following the print. And while the shares are up by 41% year-to-date, they are still down by 75% over the trailing 12 months.
Covering this stock for B. Riley, analyst Eric Wold, thinks many have yet to clock the opportunity at play here. He writes, “With our belief that RMBL exited 2022 with a healthier powersports inventory balance and management affirming that underlying powersports vehicle demand has remained resilient, we remain confident in the company’s ability to drive market share gains in 2023 and more efficient operations as the new fulfillment centers come online in 1H23. We also expect a better understanding of RMBL’s strong liquidity position and cash flow outlook to help propel shares higher in the coming quarters.”
Evidently, he also thinks the shares still look cheap. His comments underpin a Buy rating while Wold’s $26 price target suggests the shares will deliver returns of 185% over the coming year. (To watch Wold’s track record, click here)
Two other analysts have been tracking RMBL’s performance over the past 3 months, and both are also positive, providing the stock with a Strong Buy consensus rating. At $16.33, the average price target suggests the shares will climb ~79% higher in the year ahead. (See RumbleOn stock forecast)
ACM Research, Inc. (ACMR)
Our next cheap-looking stock comes from the chip sector although not directly so. ACM Research is a provider of high-end equipment to global semiconductor manufacturers. The company has a strong focus on cleaning equipment, although it has been transitioning to more diversified solutions. Established in California back in 1998, most of the company’s business, however, is done in China, where ACM’s research and development as well as production, takes place.
In 3Q22, the last reported quarter, revenue almost doubled year-over-year to $133.71 million, trumping Street expectations by $20.4 million. Likewise, at $0.42, adj. EPS came in some distance above the $0.23 anticipated by the analysts.
In early January, ACM reaffirmed its full year 2022 revenue outlook of $365 million to $385 million and said that for 2023, revenue is anticipated to be in the range between $515 million to $585 million. That is significantly higher than the $425.52 million consensus estimate.
Investors liked the January update and that has helped the shares push ahead this year to the tune of 56%. However, considering the high exposure to China and the associated overhangs (U.S. curtailing the sale of semiconductor equipment and the Covid situation in China), the shares are still down by 55% over the past 12 months.
Benchmark analyst Mark Miller thinks these events have ‘depressed’ the shares, but he sees plenty to be upbeat about.
“With 47% y/y top line growth expected for FY23 which follows 40% y/y top line growth in 2022, ACM is the top growth story among semi equipment firms,” the 5-star analyst explained. “This growth is being driven by ACM’s SAPS and TEBO cleaning tools that offer superior yields as well as incremental contributions from new customers and newer products, including ACM’s Ultra C wb, ECP map, ECP ap, and Ultra Furnace products. The firm has recently announced entry into the Chemical Vapor Deposition market, significantly expanding its served markets.”
Based on the above, Miller keeps a Buy rating and $32 price target on ACMR shares. Should his thesis play out, a potential twelve-month gain of ~166% could be in the cards. (To watch Miller’s track record, click here)
Looking at the consensus breakdown, based on 4 Buys vs. 1 Hold, the analysts view this stock as a Strong Buy. The forecast calls for one-year gains of 57.5%, considering the average target clocks in at $18.98. (See ACMR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
