As investing guru Warren Buffett tells his followers 'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'. That's all well and good, but which stocks should you be getting greedy about right now? In the current market climate the key is to be selective about your stock picks. One way to go about this is to follow the advice of the Street. Here we plug into TipRanks to pinpoint three undervalued stocks that all share a 'Strong Buy' Street consensus. This is based on all the ratings received by each stock over the last three months. Let's dive in now and see why analysts are buzzing over the following three stock picks:
Warehouse club Costco has a particularly compelling setup right now.
Shares are down 12% in just one month. That's following the company's fiscal first-quarter financial report. Although revenue and income climbed, concerns are rising about what will happen when COST no longer receives a boost from tax reform measures.
However, Tigress Financial's Ivan Feinseth writes: "We believe the recent pullback on near-term weakness is a major buying opportunity and believe significant upside exists from current levels."
He continues: "We reiterate our Buy rating on COST as its dominant retail position together with its differentiated and high value-added shopping experience continues to drive accelerating Business Performance."
According to Feinseth, (COST) can continue to drive future revenue growth and profitability. Two key growth drivers for the company are likely to be global store expansion and new e-commerce initiatives. Plus its CitiBank co-branded Visa card should start to enjoy increasing uptake.
And don't be deterred by rival Amazon. Argus analyst Chris Graja acknowledges that Amazon poses a competitive threat to all retailers, but concludes: "a lot that Costco does will be difficult for anyone else to match on price and quality."
Notably, 12 out of 15 analysts covering the stock are bullish. They have an average analyst price target on COST of $245- indicating that shares can surge 20% from current levels.
GoDaddy is a leading internet tech provider for small, independent ventures.
Although shares are down from recent highs, B Riley FBR's Sameet Sinha sees 'multiple reasons' to own the stock. Indeed, on a three-month basis shares have sunk 20%, and 5% on a one-month basis.
Meanwhile, Sinha has been on the road with management attending investor meetings in LA. He leaves the trip confident that the company's valuation is 'compelling' in light of four key catalysts:
1) (GDDY) trades at 'an incongruous' 18.5x 2019 FCF (free cash flow) despite double-digit revenue growth and 18%-20% FCF growth;
2) ARPU (average revenue per user) should accelerate due to product improvements, bundling, and penetration, which is the primary focus of the company's conversational marketing initiatives;
3) GDDY has defensive characteristics in a volatile market (with solid market positioning, a budding partnership with Amazon, and relative insulation from macro issues) and
4) The company has the capacity to make another large, accretive acquisition.
"GDDY's brand and mindshare provide it with the lowest customer acquisition cost (CAC) in the industry which is a competitive advantage in lean times and could lead to accelerated market share gains" reveals Sinha.
Bear in mind, this is a stock with 100% Street support right now. In fact, in the last three months, no less than 9 analysts have published buy ratings on GDDY. That's with a price target of $88 (41% upside potential).
"Probably our best idea at current valuation" is how Barrington analyst Michael Petusky sums up this water stock. Primo Water is a provider of multi-gallon purified bottled water, self-service refill water and water dispensers. He has a buy rating on the stock with a $20 price target (37% upside potential).
Petusky continues "general market weakness providing investors excellent opportunity." Right now, on a three-month basis, shares are down 12%. But a rally is already building, with prices improving 4% year-to-date so far in 2019.
However, it's the company's long-term possibilities that are the most exciting. "We think the next three to five years could be a period of material outperformance for (PRMW) shares" Petusky tells investors. He believes that PRMW shares appear poised to potentially increase 2-3x in value over this time period.
While the company has guided to long-term top-line growth of 5-8%, (and he has actually modeled the next couple of years below the midpoint of this guidance), ultimately the analyst thinks Primo could surprise and wind up closer to the upper end of its range. That's in part down a whole range of new marketing initiatives targeting the end-user consumer.
The conclusion: this is a stock that currently boasts a highly favorable risk/reward skew right now.
Overall, all four analysts covering PRMW have a buy rating on the stock. Their average price target on this 'Strong Buy' stock works out at $18.50 (27% upside potential).