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3 trading stocks at rock bottom; Analysts say “buy”
Investing is all about profits, and part of generating profit is knowing when to start the game. The old saying goes that one should buy cheap and sell high, and while it is tempting to simply devalue such clichés, they have passed into the common currency because they embody a fundamental truth. Buying low is always a good place to start when building a portfolio. The trick, however, is to identify the right stocks to buy cheap. Prices fall for a reason, and sometimes that reason is a fundamental obscurity. Fortunately, Wall Streets analysts are busy separating the chaff among the market’s cheap stocks, and some top stock pundits have flagged multiple stocks for big gains. We used the TipRanks database to pull up the data and ratings for three stocks that are currently cheap but may be geared towards profit. They have received positive reviews and, despite their stock devaluation, hold buy ratings and have an upside potential of over 80%. Vapotherm, Inc. (VAPO) First off, Vapotherm is a medical device manufacturer specializing in high flow, heated, humidified nasal cannulas. These are therapeutic breathing aids with which oxygen-containing air can be delivered directly to the patient’s nose. By heating and humidifying the air, the unpleasant release of dry oxygen is reduced. As expected, Vapotherm has seen heavy sales during a respiratory disease pandemic in recent months – but its share price has been pulling back since early February. Paradoxically, the two events are related. First, Vapotherm’s financial results for the first quarter of 21 were positive. The company’s revenue increased 69% year over year to $ 32.3 million, and Precision Flow base unit installations worldwide increased 73% over the same period. The company’s net loss for the quarter of $ 5.2 million was an improvement on a loss of $ 10.2 million for the year-ago quarter. On the negative side, VAPO shares have fallen from their high in early February. The decline is substantial; The stock has fallen 50% since its peak and is down 34% since the start of the year. The decline in the stock’s value reflects concerns that the company’s flagship is oversold and that customers have bought more equipment than would be needed in normal times for fear of COVID-related respiratory distress. Such is the case of Piper Sandler analyst Jason Bednar. “Stocks have fared significantly worse since early February as many investors questioned the bolus usage dynamics from Precision Flow systems sold to hospitals last year. We understand the logic here, especially for investors with a shorter time horizon, but with a lot of that concern is apparently already being reflected in the stock at current levels. We believe the upside opportunity far outweighs the risk of further downtrend, ”commented Bednar. The analyst added, “We also believe that investors waiting for occupancy trends to bottom out will ultimately miss an initial surge that could occur if HVT 2.0 makes a contribution with a rollout later this year and the market for HVT 2.0 expands to take a clearer shape in 2022 (especially EMS and home care). “To that end, Bednar rates VAPO as overweight (i.e. buy) and its target price of $ 32 implies a robust uptrend of 81% im next year. (To see Bednar’s track record, click here.) Overall, Strong Buy’s unanimous consensus rating for this stock, backed by 4 recent analyst reviews, makes it clear that Bednar is not alone in its bullish view. The average price target here, USD 39, is even more optimistic and indicates an upward movement of ~ 122% from the current trading price of USD 17.65. (See VAPO stock analysis on TipRanks) Emergent Biosolutions (EBS) The next stock we look at, Emergent, is a biopharmaceutical company. The company has several products on the market, including a NARCAN nasal spray for use in patients with opioid overdose and vaccines for smallpox, anthrax and other diseases. Emergent’s development pipeline includes the pediatric cholera vaccine Vaxchora, which is currently in a Phase III study. Several programs, including an anthrax vaccine candidate, a chikungunya vaccine, and a seasonal flu shot, have completed Phase II and are preparing for Phase III. One of Emergent’s key programs is the contract development and manufacturing service, which is being extended to other pharmaceutical companies to manufacture vaccines they have developed. Emergent is part of Johnson & Johnson’s production chain for a COVID-19 vaccine as part of a CDMO plan. The latter is an important point. The J&J vaccine has been linked, at least in some reports, to serious adverse events, particularly blood clots in otherwise healthy recipients. This has resulted in a delay in the manufacture of the vaccine and, consequently, a delay in receiving payments from J&J. This in turn impacted the company’s financials in Q1 21, resulting in lower than expected sales and earnings. Investors are concerned, and the stock is down 33% since the start of the year. Despite the setback, benchmark analyst Robert Wasserman retains a buy rating for EBS shares and a price target of $ 120. If this is correct, the analyst’s target could be an annual return of 101%. (To see Wasserman’s track record, click here.) “EBS remains solidly profitable and, despite lowered expectations for J&N and AZ vaccine deals, expect solid sales growth this year. These stocks remain a bargain on our CDMO / Bioprocessing and could offer value investors a significant upward trend if circumstances change or new business can be made at short notice, “said Wasserman. Overall, the street currently has a cautiously bullish outlook for the stock. The analyst consensus rates EBS as a moderate buy based on 3 buys and 2 holds. The stock is priced at $ 59.59, and the average target price of $ 89.67 suggests upside potential of ~ 50% over the next 12 months. (See EBS stock analysis at TipRanks) Haemonetics Corporation (HAE) For the last stock on our list, we stick with the medical industry. Haemonetics manufactures a range of blood and plasma collection and separation products, software for machine operation and service contracts for maintenance. In short, Haemonetics is a single point of contact for blood donation centers and hospital blood banks. Blood products are a $ 10.5 billion market in the US alone, accounting for 80% of plasma, and Haemonetics has become an integral part of that business. Haemonetics steadily recovered from a decline in sales at the height of the corona crisis, and third quarter fiscal 2021 earnings showed solid results: sales of $ 240 million and earnings per share of 62 cents. While sales fell 7.3% year over year, earnings per share rose 6.8%. Even so, the stock fell sharply between April 15 and April 20, losing 42% of its value in that short time. The reason was simple. One of Haemonetics’ largest customers, CSL Pharma, announced that it has no plans to renew its contract with HAE. This contract for the supply, use and maintenance of Haemonetics’ PCS2 plasma collection system was valued at US $ 117 million and represented approximately 12% of the company’s sales. The cancellation comes with a one-time charge of $ 32 million for other related losses. Fortunately for HAE, the CSL contract doesn’t expire until June 2022, so the company has time to plan and prepare. Analyst David Turkaly reported on JMP Securities: “The announcement gives HAE some time (~ 15 months) to prepare for the expiry and we find that management is consistently strengthening its financial position through levers such as complexity reduction and product has optimization to make significant cost savings, and more of these will likely be used up-front to make up for customer loss. The analyst continued, “While this disappointing decision could affect HAE’s plasma positioning with other fractionators, we continue to believe that giving customers the ability to collect more plasma in less time – and having HAE is a very compelling value proposition.” still contracts and maintains a significant market. Share with many of the major plasma players. ”Accordingly, Turkaly rates HAE as outperforming (ie buying) with a target price of $ 110. This number implies an upward movement of 86% from the current level. (To see Turkaly’s track record, click here.) Overall, HAE has a consensus rating for moderate buying, based on 7 ratings breaking down 5 to 2 in favor of buying across the holds. The stock trades for $ 59.02 and has an average target price of $ 108.67, which is an uptrend of ~ 84% for a year. (See HAE stock analysis at TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.