Evil is good and good is bad. No, it’s not an excerpt from Orwell’s 1984, but rather the stock market’s view on the job market at the end of 2022.
Friday’s better-than-expected jobs numbers threw a wrench in jobs for investors hoping the Fed will ease its aggressive monetary policy when it meets mid-month to decide its course. A strong job market is the opposite of what the Fed is looking for as it continues its efforts to curb inflation. Thus, the numbers have sowed renewed fear among investors, worn out by the 2022 bear, that another 75bp rate hike – rather than a more moderate 50bp hike – is on the horizon. It remains to be seen what the Fed’s decision will be, but either way, negative market moves in 2022 have already seen many stocks fall to very attractive levels. In fact, some Street analysts think some stocks have fallen to levels that make them just too cheap to ignore right now. We ran these Buy-rated tickers through the TipRanks database to get a more complete view of their leads. Let’s check the details.
Opera, Ltd. (OPRA)
Let’s start with a small-cap software company that has built a reputation for quality. Opera was born over 25 years ago, bringing the best of developers, programmers, researchers and marketers to the early stages of the online world. Today the company is known for its range of high-quality online products, including game creation software, a wide range of mobile social apps from chat to news feeds, VPN technology, online entertainment streaming and web browsers. innovative for both desktop and mobile devices.
All of this has brought Opera to more than 321 million monthly active users, in a customer base that spans the globe. Always looking for ways to add value to its products, Opera announced last month that its browser was the first to have TikTok as a built-in sidebar feature. Opera’s most recent third-quarter financial results report showed a sharp year-over-year increase in revenue from $66.6 million to $85.3 million, an increase by 28%. However, net profit fell from $23.5 million to $9.4 million. After EPS, the decline in adjusted earnings was 26 cents to 10 cents per diluted share. While net profit declined in the quarter, Opera felt comfortable enough to raise its full-year 2022 revenue forecast to $324.5 million mid-term from $316 million; Achieving this goal will result in a 29% increase in revenue year over year.
Despite generally strong third-quarter results, Opera shares are down 28% so far this year, and Lake Street Capital’s Mark Argento sees an opportunity. In short, the analyst thinks OPRA’s stock is crazy, and he’s not afraid to say so: “While many stocks are cheap, this one takes the cake. To say stocks are cheap is an understatement…. Given the company’s unique nature, geographic location and operations, investors have overlooked a company that is organically growing revenues and has significant market penetration opportunities in developed countries. Even with an ultra-conservative approach to calculating enterprise value, OPRA is still trading with a double-digit free cash flow yield…. While we understand the stock should trade at a discount to some of its larger internet/media peers, 1x EBITDA is preposterous and unsustainable.
Silver, of course, gives OPRA a buy rating and its price target, set at $11, implies robust upside potential of 117% over the next 12 months. (Click here to see Argento’s track record)
While there are only 3 recent analyst reviews of Opera’s stock, all agree it’s one to buy, giving the stock a Strong Buy unanimous consensus rating. The stock is priced at $5.06 and has an average price target of $10.57, suggesting a one-year gain of 109%. (See OPRA stock forecast on TipRanks.)
Yeti Holdings (YETI)
Next, the Texas-based Yeti. The company began manufacturing, marketing, and distributing a line of high-quality outdoor gear and equipment in 2006, including its lines of cooler bags, coolers, and mugs, as well as winter-weather outdoor apparel and even sturdy bowls. and dog beds on the trail. Yeti has grown from relatively humble beginnings to a large company with a market cap of $3.8 billion and a devoted following among campers, fishermen and hunters. The company’s products are available through its network of physical stores and through its online e-commerce site.
YETI shares are down 43% year-to-date, a significantly larger loss than the 14.5% drop in the S&P 500 over the same period. However, the stock has recently recouped its losses, boosted by a strong third quarter result.
Yeti reported 20% year-over-year revenue growth from $362.6 million to $433.6 million from Q3 21 to Q3 22. The company’s direct-to-consumer (DTC) sales increased by 15% year over year and accounted for 52% of total sales. Yeti’s wholesale sales increased 25% year over year to $206.2 million. In Q3-22, the company recorded strong sales of coolers and accessories, including soft and hard coolers and bags. The Coolers & Equipment segment grew 25% year over year, from $149 million to $185.7 million.
Revenue numbers exceeded Street’s expectations, as did profits; the company provided adj. EPS of $0.63, ahead of the forecast of $0.59.
Brian McNamara comes from Canaccord Genuity and he likes what he sees here; the company’s robust product line and large total market to serve led him to describe this company as “the ‘Nike’ of innovative outdoor products.”
In assessing the company’s prospects, McNamara said, “We believe this is a long-term growth story for a brand that remains underpenetrated in many parts of the United States, while a fledgling global company is expected to make a disproportionate contribution to growth.” future. … we believe that market expectations are too cautious…. We believe last year’s downgrade is overdone and encourage investors to use the underperformance as an opportunity to pick up this iconic global lifestyle brand at a discount.
McNamara’s comments support his Buy rating on the stock, and his price target of $58 suggests 23% upside potential over a one-year period. (To see McNamara’s background, click here)
The Consensus Moderate Buy rating for YETI is based on 12 recent ratings on Wall Street, including 8 Buy and 4 Hold. The stock is trading at $46.99 and its average price target of $54.09 indicates a 15% gain over the next year. (See YTI stock predictions on TipRanks)
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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.