Making the right decision in the investment market is no easy task. Investors must wade into a sea of often contradictory data and locate the kernels of fact that can point toward a stock’s likely future. Finding a semblance of sense and pattern in the jumble of raw information is the necessary prerequisite for success. This is where the TipRanks Smart Score comes in.
Using a set of proprietary algorithms, the Smart Score collects a range of data for every stock – and sorts it according to 8 factors that are known to influence stock price. The result is a single distilled score, on a 1 to 10 scale, that can tell an investor at a glance the general health of a stock. And a look behind the score is easy to do, and add context to a stock’s performance.
So let’s get an early start on this, and look ‘under the hood’ at 2 stocks that are sending bullish signals to investors – with their ‘Perfect 10’ Smart Scores.
Arhaus, Inc. (ARHS)
The first stock we’ll look at is Arhaus, a furniture company based in Ohio and offering its products through 80 showroom stores across the US. The company produces and markets a wide range of furniture for both the home and patio, including full sets for home offices, bedrooms, and living and dining rooms. Arhaus prides itself for working with small artisans around the world on its product sourcing.
While Arhaus maintains a sizable network of brick-and-mortar locations, the company also keeps strong e-commerce segment. Overall, Arhaus works hard at its preferred mode of direct-to-consumer sales. With a long-standing reputation for customer-centered service, innovative product designs, and responsible sourcing, the company has had a high measure of success at this preferred business model.
That success can be seen in latest quarterly financials, for 2Q22. The report showed revenues powering forward by 66% year-over-year to reach $306 million; this made up a significant portion of the year’s six-month gain of 55.5%; from Jan 1 to June 30, Arhaus brought in $553 million at the top line. The company’s net income hit $37 million for the quarter, or 28 cents per share, up 12% y/y.
Peter Keith, 5-star analyst with Piper Sandler, lays out several reasons why Arhaus should continue to bring solid returns for investor, writing: “We think ARHS continues to execute at a high level with (1) New product introductions; (2) Enhanced marketing with improving return on ad spend; & (3) Improved website. Also, we believe ARHS’s value proposition has never been stronger given 50% of its sales are sourced in the US allowing for fewer price increases vis-a-vis the competition.”
Alongside these comments, Keith gives this stock an Overweight (i.e. Buy) rating. His price target, of $12, suggests that ARHS has a one-year upside of 34%. (To watch Keith’s track record, click here)
Wall Street finds itself in broad agreement with the bullish view here – of the 6 recent analyst reviews on record, 5 are to Buy against just 1 Hold, for a Strong Buy consensus rating. The stock is selling for $8.92 and its average price target of $11 implies a 23% one-year gain. (See ARHS stock analysis on TipRanks)
The Chef’s Warehouse (CHEF)
Next up is a company that lives in the world of specialty food distribution. The Chef’s Warehouse has operations and locations in major metro areas of the US and Canada; the company got started 30 years ago as a source and distributor of food products for high-end chefs, and today serves top restaurants, hotels, caterers, and gourmet retailers across North America.
This service-oriented company has benefited greatly from the end of COVID restriction and the return to a more normal business climate. The result can be seen in the pattern of quarterly revenue results: steady year-over-year gains for the past two years.
In 2Q22, the most recent quarter, CHEF’s top and bottom line results both beat the industry forecasting. Revenues hit $648.1 million, up 53% year-over-year and some 8% percent above the estimates. At the bottom line, earnings of 51 cents per share clobbered the 35-cent forecast – and came in almost 13x higher than the year-ago quarter’s 4-cent result.
Even better, the company has raised its full year financial guidance, predicting between $2.375 billion and $2.475 billion in total sales for 2022 (up from $2.13 billion to $2.23 billion), and a gross profit between $553 million and $576 million (up from $500 million and $524 million).
BTIG’s 5-star analyst Peter Saleh notes all of this, and does not hold back from rating this company as a Buy. The $46 price target he assigns implies room for ~37% growth in the coming year. (To watch Saleh’s track record, click here)
Backing his stance, Saleh writes, “We believe the current [share] price doesn’t accurately reflect the sales strength and trajectory of the business… We believe the outlook could still prove somewhat conservative as business events and travel resume as we progress into the fall. Flowing through the upside from this quarter places us at the high-end of the new guidance range, so while we have been impressed by the pace of sales growth and margin progression, we are not convinced this is the last of it.”
Overall, CHEF sock has picked up 4 recent analyst reviews, and they are all positive, giving it a unanimous Strong Buy consensus rating. CHEF shares are currently priced at $33.78 and their $47.75 average price target suggests a 12-month upside potential of 41%. (See CHEF stock analysis 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.
