How do you make sense of what’s going on in the market right now? A bull year for stocks ended with the worst January in a long time. But the month came to an end, and February began with the best two-day action since April 2000. Small-cap stocks, on the other hand, show strong signs of being oversold. This is something investors should keep an eye on.
As JPMorgan’s Chief Global Markets Strategist Marko Kolanovic says, small-cap stocks took a bigger hit in January than the big companies. Investors should buy the dip, he says.
“Investors aren’t very optimistic about small-cap stocks, and the value of small-cap stocks is at a 20-year low. We don’t think there will be a recession, but many market metrics like the performance of high and low beta stocks and the value of small caps already account for it “Kolanovic said that.
We used TipRanks’ database to find some small-cap stocks that have been oversold and have been backed by enough analysts to get a “Strong Buy” consensus rating. The upside here isn’t too bad, either, either.
ACV Auctions (ACVA)
When we meet, we’ll start with ACV auctions and work our way up from there. Wholesale auto dealer auction sales are taken online by this company, which makes the process faster and more transparent. It also brings a winning combination of transparency, speed, and candour to the auto wholesale market. ACV is a holding company that owns a lot of different businesses that do all kinds of things for the wholesaling of cars, like managing auctions, financing buyers, transporting cars, and giving third-party car inspections.
This is the first time that the company has been on the market. It went public on March 24, 2013. After the first sale, the company raised $414 million. ACV put more than 19 million shares up for sale at $25 each. Since the IPO, however, the price of ACV stock has dropped by 63%.
Share prices have dropped, but ACV has been reporting strong year-over-year revenue growth. In the last report, 3Q21, the company made $91.8 million at the top line, up 36% from last year. Market and Service sales grew 41%, which accounted for $78.3 million of the total.
As we look ahead, ACV has already announced some of its 4Q21 results. Company: Revenue should come in above the company’s forecast of $83 million to $86 million. This will be about 60% yoy growth, even though the company’s revenue was down from last quarter. The company also thinks that the EBITDA loss will be less in Q4. Results will be released on February 16, and the company will hold a day for analysts on March 1 to talk about them.
“We believe ACV’s nearly 100% exposure to dealer consignment positions it more favourably from a volume perspective, especially into 2H22 and 2023 as new vehicle SAAR starts to gradually rebound.” This puts the company in a better position to deal with this tight supply situation “There was a big drop.
“We think ACVA will meet the consensus estimates for 2022. We also think the March 1 analyst day is a good time for the company to update its long-term goals, Faghri said.
For ACVA, Faghri thinks it’s a good idea to buy. His $35 price target implies that the stock could rise by 202 percent in the next year.
That’s what the Wall Street consensus thinks about this stock, and there are 5 positive reviews on file. In the next year, the shares could rise by 159 percent. They’re currently selling for $11.58 each. Check out the ACVA stock forecast on TipRanks to see what people think about the stock.
In this case, the company is called Arbe Robotic (ARBE)
Next up on our list is a company that makes autonomous cars, so we’ll keep going. Arbe Robotics was started in 2015, and since then, the company has been working on the radar systems that self-driving cars need to be able to see their surroundings. An ultra-high resolution system with the best performance on the roads is made by combining sensitive radar technology, robust processing technology, and cutting-edge algorithms from Arbe. Radar systems from the company say that they are up to 100 times more sensitive than the ones that are already used in self-driving cars. An Arbe system called Phoenix can see 300 metres away, and it can tell the difference between false alarms and threats that are real. It also has a range of 100 degrees, 30 degrees of elevation, and can tell the difference between false alarms and real threats.
In October of last year, the company went public. It completed a SPAC deal with Industrial Tech Acquisitions at that time. ARBE stock began trading on the NASDAQ on October 8, and the company made $118 million in gross proceeds from the deal. When the stock hit $14 in November, it quickly rose to a high point. Since then, it has dropped 48%.
Even though the stock has gone down, Arbe has had a lot of good things happen in the last few months. In November, BAIC Group, a Chinese auto manufacturer, said that Arbe’s radar systems will be installed on all of BAIC Group’s new cars. That same month, Weifu, a Chinese tier-1 auto parts supplier, started a customer road-test phase of Arbe’s radar systems and chipsets. When this year is over, Weifu thinks the systems will all work.
In January, Arbe showed off its radar-based free space mapping at the CES2022 trade show. The new mapping system is part of the imaging radar perception stack. It has algorithms that let the system build a map of the near environment, with the vehicle in it.
Josh Buchalter, an analyst at Cowen, says that Arbe Robotics is building a strong foundation in the automotive radar market. “Arbe Robotics gives investors the chance to own an ADAS radar pure play with big announced auto wins,” Buchalter says. Most of the investment community has focused on lidar in the field of vehicle autonomy. Arbe’s radar solutions are less competitive and can already be sold for around $200, which is a price that automakers can put on high-volume vehicles.”
“Our checks in the sense space show that Arbe has a big advantage in radar resolution, which is needed to make L2/L2+ autonomous features work. We think that for people who are looking for companies that are going to grow quickly, the unique technology, limited competition, and proven wins are signs that the storey is still going to be interesting.
A Buy rating and a $15 price target from Buchalter show that the stock has an upside of about 96% over the next year.
This stock’s low price hasn’t stopped Wall Street’s analysts from taking a positive stance on it. There were three reviews for the stock, which means it has a “Strong Buy” rating. The average price target is $15.33, which means the stock could be worth more than 100 percent more in a year from now. Check out the ARBE stock forecast on TipRanks to see what people think about it.
ALX Oncology Holdings (ALXO)
ALX is the last company on our list. It is an immune-oncology biopharma that is working on CD47 blockers as a treatment for cancer. No more than six clinical trials are taking place with the company’s top drug candidate called evorpacept (also called ALX148). It’s being used to treat many different types of hematologic and solid tumours. The drug candidate has shown anti-tumor activity in a lot of different ways, and it has a good tolerability profile for patients.
The company has made a lot of changes to its evorpacept programmes recently and announced them in January. A Phase 2/3 clinical trial for the treatment of great gastric/GEJ cancer is expected to start soon. This study will look at how well evorpacept works when used with other drugs, like Herceptin (trastuzumab), Cyramza (ramucirumab), and paclitaxel.
Another thing that happened in January is that the Phase 1b trial of an evorpacept-azacitidine combo for treating MDS, or myelodysplastic syndromes. During this year, the company will be releasing the dose optimization report from this study.
The last January update came from the FDA, which gave evorpaccept its Orphan Drug Designation for the treatment of gastric cancer and the cancer of the esophageal junction. Orphan Drug Designation comes with money-saving benefits for the company, like tax credits and fees that the company doesn’t have to pay.
ALX’s clinical pipeline isn’t the only source of good news. Company: In its January report, the company reported having cash on hand of $385.9 million by the end of the third quarter of 2019. The company should be able to stay in business through the middle of 2024 if they keep spending like they are now.
Despite the good news and upcoming opportunities, ALXO shares have lost 83% in the last year.
Nevertheless, Piper Sandler analyst Christopher Raymond is bullish, saying of ALX: “We continue to like the ongoing progress across the pipeline for evorpacept, with a number of catalysts on tap for 2022 and more clarity around longer-term readouts noted today. As a whole, we think this name is still undervalued, and we’re still interested in buying it.
Raymond is using his comments to support an Overweight (i.e. Buy) stance here, and his $77 price target shows that he thinks there will be a huge 464 percent one-year upside for the stock. To see Raymond’s track record, click this link.
Raymond isn’t the only one who thinks this is a good idea. The 6 recent reviews show that Buys outnumber Holds 5 to 1. This means that the consensus is that this is a good idea, and it’s a strong buy. If the stock rises to $70 by the end of 2022, it will be worth 413 percent more than it is now.