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TipRanks ‘Perfect 10’ List: Pay Attention to These 2 Stocks
Stock Analysis & Ideas

TipRanks ‘Perfect 10’ List: Pay Attention to These 2 Stocks

The stock markets present us with a veritable ocean of data, with a steady flood of new information washing ashore – and not always replacing the old data, but just setting down a new layer on top. The constant flux of data makes it difficult for investors to find where the patterns are developing, and to use those patterns to see where the markets might be tending.

Making sense of the market patterns requires a tool, a data parser that can cut through the noise and provide a clear note for each stock’s market position. And this is where investors can turn to the TipRanks Smart Score, a tool purpose-designed to bring order out of the market’s data chaos.

The Smart Score uses a set of proprietary algorithms to collect and sort a wide set of data on every stock, and to analyze it according to a set of 8 factors, each of which is known to correlate strongly – and positively – with stock performance. These factors are then distilled together into a single score, a digit on a 1 to 10 scale, letting investors see at a glance how that stock compares, to its peers, and to the market generally, and what direction it is likely to go.

So, let’s take a look at two stocks which have earned the ‘Perfect 10’ from the Smart Score. These are stocks that ‘tick all the boxes,’ and are deserving of investors’ closer attention. Here are the details.

Shutterstock (SSTK)

The first ‘Perfect 10’ we’ll look at is Shutterstock, a well-known name, especially among online marketers and graphic designers. Shutterstock is an online image library, founded nearly 20 years ago, and offering customers access to more than 400 million royalty-free stock images. The sheer size of its library makes Shutterstock an invaluable resource for marketers and designers – and anyone in need of usable online images.

Shutterstock has been under pressure lately, and is down 48% so far this year, badly underperforming when compared to the broader markets. Among the more recent pressures, Shutterstock’s quarterly results from 2Q22 disappointed Wall Street by missing expectations. The top line of $206.9 million came in under the analysts’ expectation of $209.2 million – although it was up 9% y/y. Earnings also missed the forecasts, coming in at 83 cents per share compared to the 94-cent forecast. EPS was also down y/y, falling 19 cents.

While the earnings report spooked investors, and the shares fell more than 6% when the results were publicized, there were some bright spots. The company’s image collection expanded by 9% in the quarter, to more than 415 million images, and revenue per download was up 7%. Total subscribers was up 15%, to 368K, and subscriber revenue was up 8% to $84.7 million.

The perfect Smart Score here is based on some strong trends. For example, Shutterstock saw insiders buy up more than $564,000 worth of shares in the last three months, while retail investors have been buying shares, too, increasing holdings by 2.6% in the last week and 2.5% in the last 30 days. And finally, the news sentiment on Shutterstock, always a fickle metric, is 100% positive recently.

5-star analyst Youssef Squali has been covering this stock, and sees it in a sound position to weather current headwinds, writing, “The top line miss was driven by a weaker Europe due to the Ukraine war and FX headwinds, while the soft bottom line was due to one-time deal costs. The reiterated 2022 guidance reflects sustained M-to-H single digit top line growth with improving profitability in 2H22. Longer-term, SSTK continues to transform itself from a marketplace for stock imagery to a content and workflow platform, aspiring to sustain DD organic growth with improving margins.”

Squali backs up his comments with a Buy rating and price target of $100, implying a robust 73% one-year upside for the stock. (To watch Squali’s track record, click here)

In recent weeks, 6 of Wall Street’s analysts have posted reviews of Shutterstock shares, and those reviews break down 5 to 1 favoring the Buys over Holds for a Strong Buy consensus rating. The average price target is $76.60, suggesting a 32% upside potential from the current trading price of $57.82. (See Shutterstock stock forecast on TipRanks)

MGP Ingredients (MGPI)

The next stock lives in the world of beverages, food products, and food ingredients, where MGP Ingredients has held a position as a producer of distilled spirits since its start in 1941. The company, based in Kansas and operating also in Indiana, got its start as a grain belt distillery, turning wheat and other cereals into whiskey; today, MGP produces a wide range of premium branded distilled spirits and alcoholic beverages, as well as specialty wheat proteins and starches for use as nutritional additives in food. The company also produces high-quality industrial alcohol, which finds uses in both food and non-food businesses.

MGP’s primary focus is on distilled spirits, and the company’s chief products are several lines of non-branded whiskeys, bourbons, gins, and vodkas, as well as a range of premium branded spirits.

While 2022 has been a difficult year, economically, with stocks falling into a bear market and both the first and second quarters registering GDP contractions, MGP has benefited from its leading position making booze. Alcohol, and alcoholic beverages, are sometimes seen as ‘recession proof’ stocks, MGP’s performance in 2Q22 illustrates why. The company saw an 11% y/y gain in sales, to a total of $195 million, with gross profit growing a more modest 4%, to reach $59.2 million, or more than 30% of the total sale figure. On earnings, net income grew by 26% y/y, hitting $25.4 million. Diluted EPS grew from 91 cents in the year-ago quarter to $1.15 per share in the current report.

Looking ahead, MGP revised its fiscal 2022 outlook upwards, expecting sales between $745 million and $765 million, and EPS to hit between $4.41 and $4.65 per share.

On the Smart Score, MGP sees particular support for its ‘Perfect 10’ from strength in the hedge fund holdings, insider transactions, and retail investor interest. Among the hedges tracked by TipRanks, holdings of MGPI increased by 201,000 shares in the last quarter. During the last three months, corporate insiders bought shares worth more than $2 million, and retail investors have increased their purchases by 3.1% in the last 30 days.

This stock has piqued the interest of Wells Fargo analyst Marc Torrente, who writes of the stock and company, “In our view, MGPI’s premiumization strategy, on top of sustained category momentum, positions the company well to deliver upside to guidance this year, with a strong earnings algorithm ahead…. MGPI is positioned to benefit from the secular growth in its focus categories, with a premiumization overlay that should drive relative outperformance and margin expansion. While we are mindful of a potential recession, with real implications to consumer discretionary categories, the demand for spirits remains resilient, and we have yet to see any evidence of trade-down occurring.”

In addition to his upbeat outlook on MGP’s near-term, Torrente gives this stock an Overweight (i.e. Buy) rating, along with a $126 price target that implies a 10% upside for the stock in the next year.

This niche stock has picked up just 3 analyst reviews recently – but they are unanimously positive, for a Strong Buy consensus rating. Shares in MGPI are trading for $114.17 and their $123.67 average price target indicates room for ~9% upside growth over the coming 12 months. (See MGPI stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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.

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