Are you looking for a bargain? Even in the stock market, buyers are looking for a good deal. However, defining a bargain might be difficult. Low stock prices have a stigma linked to them, despite the fact that most stocks don’t decline for no cause. And those causes are almost always linked to some aspect of bad business performance.
But this isn’t always the case, which is why discovering stock deals can be difficult. There are lots of low-cost securities on the market with strong fundamentals and promising future prospects, allowing investors to ‘buy low and sell high.’ When Warren Buffett said, “Whether we’re talking about socks or equities, I appreciate buying great product when it’s on sale,” he was referring to these stocks.
We found three stocks using TipRanks’ database that have both low current pricing and strong upside potential for the following year. Not to mention that the analyst community has given each one a “Strong Buy” recommendation. Let’s take a look at what’s motivating that prospect.
MYT Netherlands (MYTE)
Let’s begin with MYT Netherlands, a European holding company whose subsidiary Mytheresa is a leading e-commerce shop situated in Germany. The online store has a large selection of ready-to-wear clothing for women, men, and children, as well as shoes and accessories. Mytheresa focuses on luxury items, with high-end labels like Gucci, Veneta, Burberry, Dolce & Gabbana, and a lengthy list of others. MYTE went public in New York in January of last year, with total net revenues of more than €612 million (US$694 million) in its first fiscal year as a public company, 2021.
Mytheresa’s revenues stayed in a narrow range between $186 million and $198 million in its first four publicly reported quarters. Earnings have ranged from 6 cents to 24 cents per share, which has been more erratic. The most current bottom line figure, 11 cents per share in the first quarter of fiscal year 2022, was up 10% sequentially and a significant improvement over the year-ago quarter’s net loss of 10 cents.
Despite these improvements, MYTE stock has dropped 54% in the last year. Analyst Abhinav Sinha of Societe Generale explains why he sees this downturn as a chance for investors: “Given Mytheresa’s maintained fundamental strengths: excellent growth prospects, consistent profitability, and a strong balance sheet, we believe the recent share price decline is unwarranted. We believe that the present stock price is attractive in this context.”
“We expect a consistent medium-term EBITDA margin at c.9% (2022-24e) supported by the following:” writes the analyst, “We expect a stable medium-term EBITDA margin at c.9% (2022-24e) supported by the following: 1) Mytheresa’s curation-driven proposition, with its strong track record on pricing discipline reducing downside risks on gross margin (the key indicator to judge a 1P business); 2) Mytheresa’s relative immunity to current supply chain disruptions, as stand-alone shipping/freight costs account for only 5-6 percent of sales, thus protecting the EBIT margin from current freight cost escalation, and the majority of MYT’s supply is sourced from Europe (near its logistics hub);
Sinha rates MYTE shares as a Buy, with a price objective of $15, implying a 75 percent upside potential for the coming year, in line with his upbeat outlook.
As evidenced by the Strong Buy consensus rating, which is based on a three-to-one advantage of Buys over Holds. The company is currently trading at $14.26, and the average target price of $32.25 represents a 126 percent gain over the next 12 months.
Black Knight (BKI)
The next company on the list is Black Knight, a technology firm. For the real estate and mortgage financing industries, this company provides data and analytics solutions as well as software. Black Knight is based in Jacksonville, Florida, a fast-growing city in one of the fastest-growing states in the US. The company’s software and data solutions automate the mortgage life cycle activities, such as loan origination, continuous servicing, and, if necessary, default. Black Knight enables its clients to effectively manage risk and boost their financial performance.
It’s been beneficial for business as housing prices have risen. The size of the gain was recently revealed by Black Knight, who stated that the growth in real estate values over the course of 2021 offered homeowners a 35 percent boost in ‘tappable equity,’ or the amount available for usage as liquid assets. This amounts to a $2.6 trillion gain in total real estate values, with residential sales driving the increase.
The impact of increased property values on mortgage servicers and facilitators may be seen in Black Knight’s own revenues over the last two years. The company has posted sequential top-line increases for six quarters in a row, with the most recent quarter, 3Q21, showing $378 million in revenue, up 21% year over year. EPS came in at 60 cents, up 15% year over year.
Despite these improvements, BKI shares have lost 20% of their value from their December high. The stock’s heightened volatility, according to Oppenheimer analyst Dominick Gabriele, is symptomatic of an impending slowdown in the real estate market, but not necessarily a reason to sell.
“We believe BKI’s relative stock selloff versus the NASDAQ is more than a headwind to current Fannie, Freddie, and MBA origination projections… BKI’s ability to sell new platforms, cross-sell, and harness/maintain their dominant market share of accounts on file while pursuing M&A provides investors with a more steady and innovative approach to play the mortgage business through less cyclical technology revenue subscriptions. We believe today represents a unique buying opportunity for investors, given increasing revenue growth, LT margin accretion, and market positioning, as well as a value discount compared to historical norms,” Gabriele stated.
Gabriele rates BKI as Outperform (Buy) and sets a price target of $93 for the stock, implying a 40% one-year upside potential.
This stock has gotten four recent share reviews, ranging from three Buys to one Hold, resulting in a Strong Buy consensus rating. The average price objective of $82 means that the present trading price of $66.60 has opportunity for a 23 percent increase.
Cue Biopharma (CUE)
Cue Biopharma, last but not least, is a clinical-stage startup developing new immunotherapy medicines, specifically a new class of injectable biologic pharmaceuticals that will directly engage and modify chosen T-cells. This method could be used to treat cancer, infectious diseases, and autoimmune disorders, among other things. Cue’s pipeline therapeutic candidates are being developed using two patented biologics platforms, Immuno-STAT and Neo-STAT. CUE stock peaked in November and has dropped by 65 percent since then.
Despite the stock’s decline, the corporation has made strides in its research program. The majority of the company’s pipeline is still in the preclinical phases of development, but there are two medication candidates in the cancer treatment research track that are ready to break out. The first, CUE-101, is currently conducting a Phase 1 clinical trial for the treatment of head and neck squamous cell carcinomas, while the second, CUE-102, has recently passed key development milestones.
Cue reported in a press release on January 5 that CUE-102 has shown promise in preclinical testing against Wilms’ Tumor 1 (WT1)-specific cytotoxic CD8+ T cells. As a result, it’s a promising candidate for clinical trials in WT1-expressing malignancies. Cue is working on this candidate with LG Chem Life Sciences, and under the terms of their agreement, Cue will earn a $3 million milestone payment. In 1Q22, an investigational new drug application will be filed.
Cue stated at the end of January that the medicine, in combination with Keytruda, had shown success with four patients in dose escalation in the company’s human clinical development of CUE-101. Two of the patients had partial objective responses, while the other two had significant decreases in the target lesions.
CUE-101’s early clinical findings and potential impress Craig-Hallum analyst Robin Garner, who covers Cue. “Based on CUE-101’s monotherapy and doubling of SOC efficacy in tough to treat HNSCC, we believe CUE is cheap at the current pricing,” he adds. All four patients treated first line in the dose escalation of the combo study showed indications of tumour decrease in the target lesions… CUE-101 is a promising new way to improve the therapeutic efficacy of checkpoint inhibitors while also improving patient access.”
In line with these remarks, Garner rates CUE stock as a Buy with a $28 price target, implying a 345 percent one-year upside potential.
Overall, the Street has given this stock a unanimous Strong Buy rating, based on 6 positive share ratings. The company is presently trading at $6.29, and the average target price of $27.67 means that it has a 340 percent upside potential for 2022.