Sentiment is on the rise as the annus horribilis 2020 winds to an end. There’s a feeling, after all we have been through over the past ten months, that things just can not get worse. And so, investors are looking forward to 2021.
Two big factors in market uncertainty are on their way to resolving themselves. First, COVID-19 vaccines are in the works, and two major drug companies have announced that vaccines will be available in a matter of months. And second, Democrat Joe Biden will take office in the White House, with a strengthened GOP opposition in Congress. The prospect of relief from the coronavirus and a divided government unable to enact extreme or controversial measures promises us a degree of stability that will be welcome.
A feeling of optimism and a perception that there are opportunities available, have Wall Street’s analysts tagging stocks for success. We’ve pulled up the TipRanks data on three stocks that high-rated analysts have tagged as potentially strong investments. These are buy-rated equities, with double-digit upside potential for the coming year.
LendingTree, Inc. (TREE)
First up is LendingTree, the online marketplace that connects borrowers and lenders. The company offers borrowers options to shop for competitive rates, loan terms, and various financing products. Among the offerings, from multiple financing sources, are credit cards, deposit accounts, and insurance products. LendingTree is based in North Carolina, with offices in New York, Chicago, and Seattle.
In the third quarter, the company showed mixed fiscal results. Revenues were up sequentially, gaining 19% to reach $220 million – but earnings were down, both sequentially and year-over-year. At minus $1.33, the EPS was net-negative, and far below the year-ago quarter’s $1.70.
Covering this stock for Needham, 5-star analyst Mayank Tandon – rated #66 overall out of more than 7,100 stock pros – is upbeat despite the recent turndown after the Q3 results.
Tandon noted, “[We] remain positive on the shares of TREE LT as we believe that the company is well-positioned to generate strong and consistent revenue… Consumer revenue dropped 68% Y/Y as the pandemic constrained consumer credit originations, but trends improved on a sequential basis due to better personal loan volumes and a seasonal boost from the student loan business…”
“TREE’s diversified portfolio of personal finance products and the strong secular trends driving the shift of personal finance advertising and shopping to digital channels will help the company achieve its LT growth targets,” the analyst concluded.
To this end, Tandon rates TREE a Buy, and sets a $375 price target. At current levels, his target suggests a 44% upside for the stock in 2021. (To watch Tandon’s track record, click here)
LendingTree has a unanimous Strong Buy analyst consensus rating, based on 6 Buy reviews set in recent week. The stock’s average price target, $362, implies it has room for 39% growth from the current share price of $260.09. (See TREE stock analysis on TipRanks)
Allegro MicroSystems (ALGM)
Allegro MicroSystems is a semiconductor company and fabless manufacturer of integrated circuits for sensor systems and analyst power technologies. The company’s products are used in the automotive and industrial sectors, and include solutions for developing electric vehicle control systems. Allegro’s circuit chips can also be found in data centers and green energy applications.
Allegro is new to the stock markets, having held its IPO just this past October. The stock debuted at $14 per share, and the company put 25 million shares up for offer. In its first day of trading, it closed at more than $17 per share, grossing over $440 million for the IPO. Since then, ALGM has gained 35% in less than four weeks of trading.
Vijay Rakesh, 5-star analyst with Mizuho, is clearly bullish on this newly public company.
“We believe Allegro is leading the early stages of a multi-decade transformation in sensing, automotive electrification, and power distribution, with substantial upside from its industry leadership in magnetic sensors, a differentiated Power IC roadmap, and fabless operating model. Allegro’s xMR sensors and power ICs drive technology platform leadership and enable better performance, accuracy, and control for the growing EV market and Industry 4.0 – key for next-generation electrified automotive powertrains, data centers, and factory automation,” Rakesh wrote.
Along with his upbeat comments, Rakesh gives this stock a Buy rating and a $28 price target. His target implies an upside potential of ~17% for the next 12 months. (To watch Rakesh’s track record, click here)
Overall, this chip maker is a Wall Street favorite. Out of 6 analysts polled in the last 3 months, all 6 are bullish on ALGM. With a return potential of ~18%, the stock’s consensus target price stands at $28.29. (See ALGM stock analysis on TipRanks)
American Well (AMWL)
American Well, also called AmWell, connects patients, health care providers, and insurers to promote quality care outcomes in a digital world. The company boasts over 55 major insurers and more than 62,000 providers incorporating its service into their networks, giving access to more than 80 million potential patients.
AmWell is another newcomer to the markets. This past September, the company held its IPO and raised more than $742 million. Over 41.2 million shares were sold, with the initial price of $18. This compared well to the 35 million shares and $14 to $16 price expected prior to the event.
In its first quarter trading as a public company, AmWell reported several gains in key metrics. Revenue was up year-over-year, rising 80% to reach $62.6 million. The active provider total – more than 62,000 – represents a 930% increase in the past year, and shows strong growth for the company. And the company registered over 1.4 million patient visits during the quarter, a 450% increase from the year-ago quarter.
Piper Sandler’s 5-star analyst Sean Wieland notes the importance of network growth for AMWL, writing in his note on the stock: “62K providers are using the AMWL Network, up almost 10x from a year ago. The increase was driven primarily by providers employed by, or affiliated with, AMWL’s health systems and payor clients… As the number of providers on the network grows, so does the value of the network; network expansion makes it easier for patients to find the right provider and for providers to find the right patient.”
Wieland rates AMWL an Overweight (i.e. Buy), and his $44 price target indicates his confidence in an upside of 78% for the next 12 months. (To watch Wieland’s track record, click here)
All in all, AMWL’s Moderate Buy consensus rating is based on 8 reviews, including 5 Buys and 3 Holds. The shares are selling for $24.71 and their average price target, at $35.86, represents a 45% upside potential. (See AMWL stock analysis at 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.