This past Friday we got our first hint of the route our economic recovery from coronavirus may take – and the news was unequivocally good. Despite an uneven reopening, with some states all in and others continuing their lockdowns, the May jobs report showed the largest surge in employment in the survey’s history.
As the recovery proceeds, investors have to find the right stocks to take advantage of the jump in the market. TipRanks has the data tools to bring clarity from the market conditions – especially the Smart Score tool. Building on eight separate factors, the Smart Score collates all the available data on a stock and distills it down to a single number. Some stocks – the best options out there – get the coveted ‘perfect 10.’
Using the Smart Score tool, we managed to pinpoint 3 stocks that currently present perfect investing opportunities — all receive a score of a “perfect 10.”
Universal Technical Institute (UTI)
The first “perfect 10” name on today’s list is Universal Technical Institute, a network of technical post-secondary schools and colleges throughout the US. Courses are offered in automotive repair, diesel/industrial technology, and collision repair. The school offers manufacturer specific training in marine and motorcycle mechanics, and partners with NASCAR.
Earnings turned negative in Q1, even though revenues grew year-over-year. In Q2, reported last month, EPS came in at a 4-cent loss, again, while revenues grew. The Q2 top line, $82.7 million, beat the forecast and was up modestly from the year before.
B. Riley FBR analyst Rajiv Sharma believes that UTI will see a fast turnaround once COVID-19 restrictions are eased. He writes, “the bevy of lower income jobs (retail, restaurants etc) that typically compete with a student’s stint at UTI, are now more likely to take longer to come back if not impacted severely. Soaring unemployment rates too, as shown from recessions in the past, are also expected to start causing a rise in student enrollments soon. Ongoing enrollments, seasonally slow during this period anyway, have not been out of the ordinary. UTI, for the first time, had several hundred enroll into their recently-launched online+workshop curriculum.”
Sharma’s $11 price target on UTI implies a robust upside of 46%, and backs up his Buy rating. (To watch Sharma’s track record, click here)
Overall, we’re looking at a stock with a unanimous Strong Buy analyst consensus rating. Wall Street has given UTI 4 thumbs up in recent weeks. The $9.50 average price target suggests room for 26% growth from the $7.51 share price. (See UTI stock analysis on TipRanks)
Next up is InterDigital, a technology R&D firm that specializes in wireless and video tech for mobile devices and networks. The company’s technologies are integral in streaming media, 5G, and virtual reality. As can be imagined, the current corona crisis – with its sudden surge in remote connection use and telecommuting work – has been an opportunity for InterDigital.
IDCC’s first quarter earnings broke even, doing better than the Street had anticipated. On the top line, revenues of $76.2 million also beat the forecast and were substantially higher year-over-year.
Roth Capital analyst Scott Searle sees a clear path forward for IDCC. He writes of the company, “With an attractive long-term model, strong balance sheet (~$13+ net cash/share) and defensible IP position, IDCC currently trades at 13x 2021 pro forma EPS (net of cash). We believe that the company has competently managed implementation and communication of accounting confusion around ASC 606 and expect the major contributor to the disparity (Huawei) to be rectified in 2019.”
Searle’s rates IDCC a Buy and his $104 price target suggests an impressive upside of 76% for the coming year. (To watch Searle’s track record, click here)
Overall, Wall Street agrees with Searle. IDCC has a unanimous Strong Buy analyst consensus rating, based on 3 recent reviews. Shares are priced at $58.51, and the $93.67 average price target implies a one-year upside of 60%. (See InterDigital stock analysis on TipRanks)
Cirrus Logic (CRUS)
Last on our list is a mid-cap player in the semiconductor chip industry. Cirrus is a fabless chipmaker; that is, the company designs and markets its chips, while outsourcing the manufacturing process. Cirrus’ chips are widely used in audio and voice reproduction systems. The company reported $1.28 billion in revenue for FY20, ending last month, and a solid financial position. Cirrus claims some $600 million in available cash and do outstanding debt – an enviable position for any company, but especially so during these difficult times.
Still, despite the company’s strong performance, it has been impacted by the coronavirus and the economic shutdowns. Travel and trade restrictions have disrupted supply and distribution chains, as they have across the board. CRUS shares are down 11.3% from its pre-bear market levels.
Ruben Roy, 5-star analyst with Benchmark, is optimistic about this stock, writing, “We continue to believe that as audio and voice technologies continue to proliferate, CRUS will remain amongst the biggest beneficiaries… with a growing portfolio of technologies and continued strength of customer relationships, we continue to expect CRUS to be well positioned as market trends improve.”
Roy’s Buy rating is backed by a $95 price target that indicates his confidence in 39% upside growth for the coming year. (To watch Roy’s track record, click here)
The analyst consensus rating on CRUS is a Moderate Buy, based on 3 Buys and 2 Holds set in the last couple of months. The shares have an $86 average price target, which suggests a 20% growth potential from the current $71.60 trading price. (See Cirrus Logic stock analysis on TipRanks)
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