We’ve wrapped Q2, and we’re moving forward into the second half of 2021. There’s a feeling of optimism in the air; as the corona crisis recedes (albeit in fits and starts, with some worries about new variants) and the economy reopens, consumers are finding themselves with built-up savings and a desire to spend it. The Biden Administration’s COVID-relief largesse is injecting large sums into the economy, and the Administration is negotiating with Congress on further spending.
So far, the chief result has been a surge in the stock markets. The S&P and NASDAQ are both at record high levels, with the Dow Jones not far behind. Combined with market gains from the past 15 months, it’s fair to say that we are in the midst of sustained growth – and that investors are not worried about inflation. Stocks are the way to go, right now, for solid returns.
How solid are those returns? We’ll, we’ve found three stocks out there, each with a Strong Buy rating and a recent analyst review predicting more than 75% upside in the next 12 months. Let’s take a deep dive in, looking up the details though the TipRanks data tools and fleshing that out with the analysts’ commentary.
PLAYSTUDIOS, Inc. (MYPS)
We’ll start in the gaming industry, where PLAYSTUDIOS is well-known for combining video games with casino gaming, developing a portfolio of slot games, role-playing games, and other online entertainments for players willing to gamble. The company is closely tied to the Las Vegas casino industry, and has recently partnered with MGM Resorts, Peppermill Resorts, and other Vegas stalwarts.
The casino industry drips money, and so it’s no surprise that there was a move to take the private PLAYSTUDIOS company into the public markets. That was achieved last month, through a SPAC merger that completed on June 22.
SPACs, or special purpose acquisition companies, exist to bring smaller private entities to the stock market without an IPO. The SPAC is formed as a public company, targets a private firm, and makes a merger – usually taking a ticker based on the target company’s name. In this case Acies Acquisition merged with PLAYSTUDIOS in a transaction that brought $220 million in new capital to the gaming company. MYPS shares began trading on the NASDAQ on June 22.
In an announcement shortly after the stock debuted, PLAYSTUDIOS entered a $75 million, five-year secured ‘New Credit Facility,’ an arrangement that brings additional liquidity to the company for further operations. The new facility replaced the existing credit arrangement, and matures in June of 2026.
Northland analyst Greg Gibas, rated 5-stars at TipRanks, set an Outperform (Buy) rating on MYPS shares, along with a $15 price target that suggests a strong upside of 99% for the coming year.
Backing his stance, Gibas writes, “We continue to like PlayStudios for its proprietary playAWARDS loyalty program, growing portfolio of franchise games, large market opportunity, global network of awards partners, quality industry talent, and attractive financial profile and valuation. We believe that PlayStudios’ more attractive / higher revenue and profitability growth rates and one-of-a-kind loyalty program are deserving of a premium valuation multiple relative to the greater game developer peer group.” (To watch Gibas’ track record, click here.)
The Strong Buy consensus rating on MYPS shares is based on 3 reviews since the stock’s SPAC merger completed – and they are unanimous, to Buy. The shares are priced at $7.42 and the average price target matches Gibas’, at $15, for a 102% upside potential. (See PLAYSTUDIOS’ stock analysis at TipRanks.)
Lincoln Educational Services (LINC)
Let’s shift gears, to the for-profit education industry. Post-secondary education, while a small part of the larger – mainly public or nonprofit – college education sector, still grosses over $14 billion annually. Lincoln Educational Services lives in this niche, operating 22 campuses and 4 college brands, with activities in 14 states. The company’s programs include health sciences, automotive tech, skilled trades, business and information tech, and hospitality services. In the past year, the company’s stock has jumped over 94%.
Lincoln’s share performance has ridden on the back of sound financial performance. Total revenues last year came in at $293.1 million, up 7% from the year before. The company generally shows the highest quarterly revenue in Q4, so the recent Q1 report showed a sequential drop, but the $78 million top line reported in 1Q21 was up over 11% year-over-year and just ahead of the estimates. Earnings, which were negative in 1Q20, were positive in 1Q21, coming in at 13 cents per share, beating Wall Street’s forecast by 9 cents.
From an investor perspective, the strongest metric is likely to be the increase in new students, as it bodes well for continued future profits. Lincoln reported a 30% yoy increase in new student enrollment in the first quarter.
Canaccord analyst Austin Moldow sees Lincoln has a fundamentally sound for-profit education provider, and he is impressed by the company’s growth from 2020 into 2021. Moldow writes of the Q1 report, “LINC reported a strong start to the year with momentum from 2020 carrying over, leading to in-line and better-than-expected Q1 results. Ending student population, start, and revenue growth were all in the double digits, accelerating from last quarter in each case. LINC remains one of the most structurally sound education companies, but also has several initiatives in place to extend that success even further. In addition to LINC producing solid fundamentals in a still-impacted COVID environment, the company should also be a beneficiary in a post-COVID, post-recessionary world.”
In line with these comments, Moldow rates the stock as a Buy, and his $14 price target suggests room for a 79% 12-month upside. (To watch Moldow’s track record, click here.)
While Moldow sees a 79% upside for this stock, Wall Street generally is a bit more cautious – although still bullish. There are 4 recent reviews on file, and all are positive, making the Strong Buy consensus unanimous – but the average price target is $10.63, implying an upside of 36% for the year ahead. (See Lincoln’s stock analysis at TipRanks.)
Jushi Holdings (JUSHF)
We’ll wrap up this list in the cannabis industry, a rapidly growing segment that is building on the increasing spread of legalization regimes in North America. In 2018, Canada legalized cannabis nationally; in the years since, US states have continued to implement various levels of legalization, and to date, cannabis has some level of legalization – medicinal or recreational – in 36 states, and is decriminalized in two others. As the legalization regimes spread, more companies are stepping up to fill the demand for product.
Jushi has cannabis operations in 7 states, including California and Illinois, two of the largest states with recreational legalization. The company has offices in New York, Florida, and Colorado, and boasts 34 retail locations, 5 cultivation facilities, and a further 5 manufacturing facilities. Jushi’s products include smokable cannabis, medicinal THC and CBD products, and THC edibles.
The company has seen strong sequential gains in revenues in recent quarters. Q4’s top line result, of $32.3 million, was up 29% from the previous quarter, and Q1’s $41.7 million in revenue marked another 29% sequential gain. While the company runs a net loss, it did finish Q1 with $167.9 million in cash and cash equivalents on hand. In Q1, Jushi closed on acquisition of a 50,000 square foot cultivation facility in Massachusetts, as well as a 93,000 square foot/9 acre facility in Virginia.
Robert Burleson, 5-star analyst with Canaccord, believes Jushi has a clear path forward, especially given its moves to expand production. He writes of the company, “JUSHF has improved its operational footprint and competitive position in its core markets of PA and IL, while VA looks poised for dramatic growth on the rollout of flower sales and a potentially compressed timeline to rec. M&A in MA, CA and elsewhere is bolstering the company’s long term growth prospects as well.”
Burleson rates this stock as a Buy, and sets a $10 price target that implies an 80% one-year upside. (To watch Burleson’s track record, click here.)
This is yet another stock with a unanimous Strong Buy consensus rating; all three recent reviews here are positive. JUSHF stock is selling for $5.55, and its $10.32 average share price suggests a bullish upside of 86% for the next 12 months. (See Jushi’s stock analysis at TipRanks.)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
