We've heard a lot in the news about the resurgence of inflation concerns, but investors seem to have taken a collective decision not to fear. They send the markets higher, apparently in the unconscious belief that equity gains can outpace inflation.
The NASDAQ and S&P both started rising this week, and both indices have shown solid gains so far – ~11% on the NASDAQ and 13% on the S&P. This clearly outperforms the inflationary trend of about 6% year-on-year.
Capturing Credit Suisse's situation, chief US equity strategist Jonathan Golub lists several reasons for taking an optimistic stance on stocks. Chief among his list are the steady increase in economic activity and the high levels of both stock price growth and reported earnings per share.
"While the pace of improvement will certainly moderate, growth is expected to remain well above trend through the end of 2022," noted Golub.
With this in mind, according to the analyst community, we used the Investing Insights platform in our search for interesting growth names. By sticking to three stocks that fit the bill, each analyst-backed ticker stands for more gains on top of their impressive climbs so far. In fact, these tickers score a 'Perfect 10' smart score.
Everi Holdings (EVRI )
We start in the niche of casino games, an industry that usually has no trouble generating revenue. Nevada-based Everi Holdings (NYSE:) is a major developer and manufacturer of games and other equipment for land-based casinos. The company is known for its slot machines and also produces a variety of fintech solutions for the casino, including software and devices for money management, surveillance and ATMs and payment kiosks.
The economic reopening has been good for Everi, which has seen a 79% rise in share price so far this year. Earnings started in the second half of last year; after revenues bottomed in 2Q20, Everi posted consecutive gains for three consecutive quarters.
The most recent quarterly report, for 1Q21, showed revenue of $139.1 million, the best since 4Q19 and the second highest result in the past two years. Its quarterly net income of $20.5 million was a record, yielding earnings per share of 21 cents, far exceeding estimates of 4 cents.
In recent months, Everi has announced several major installations, giving investors reason to believe that the company will continue to generate growing revenues and revenues. The announcements include an agreement to install casino games and fintech systems at the Caesar's Palace casino in Las Vegas, and a gaming installation, made public earlier this month, at the San Manuel Casino in South (NYSE:) California.
The company's solid performance has caught the attention of B. Riley analyst David Bain. The 5-star analyst rates EVRI as a buy, along with a price target of $15. This figure implies a 54% increase in one year from current levels.
“EVRI's fintech creates unique, significant upside potential for equities. EVRI is the leader in casino fintech with ~60% market share. Casino supplier peers lack fintech, which we believe has the potential to expand multiple times through a shift to cashless casinos with casino brand digital wallets enabling migration from the casino floor – and even beyond the four walls,' Bain thought.
The analyst added: "EVRI's announcement of the May 20 installation of its jackpot management system at Caesar's Palace not only confirms EVRI's lead in casino fintech technology, but would in our view, could foreshadow a greater fintech relationship in the medium term."
Consistent with his optimistic statement, Bain rates EVRI as a buy, along with a price target of $38. This figure indicates that stocks could rise by about 54% in the next 12 months.
Everi has a unanimous analyst consensus rating for Strong Buy, showing that Bain's opinion is not an outlier. That consensus is based on 7 recent stock reviews. The stock is currently priced at $24.69 and recent gains have pushed the stock's value towards its average price target of $26.38. (See EVRI stock analysis)
J2 Global Communications (JCOM)
And now we switch to the communications industry. LA-based J2 Global (NASDAQ:) is an internet company that offers content, messaging and storage services via the cloud and on various internet sites. The company's brands include BabyCenter, Everyday Health, What to Expect and Mashable. J2's services are offered through two business divisions, the Business Cloud and Digital Media. According to the numbers, J2 has more than 1,100 advertisers across its 40+ brands and has 50 offices around the world. The company's services claim more than 4.4 million subscribers and more than $1.6 billion in annual revenue. In short, internet communication is big business.
That scale has helped J2's stock price rise over the past 12 months. Since last year around this time, the share has increased by as much as 87%.
J2's first quarter results, released last month, show earnings are in good shape. Quarterly revenue increased 19.8% year over year to $398.2 million. It was the fifth quarter in a row with a yoy profit. Earnings showed an even more impressive increase. In 1Q20, earnings per share came in at a loss of 13 cents; for 1Q21, earnings per share reached $1.67, the second-highest in the past two years.
Numbers like these will always impress Wall Street analysts, and Shyam Patil of Susquehanna has pointed them out well in his coverage of the stock.
“JCOM reported another monster quarter, raising its outlook for 2021. We see a relatively easy path for the stock to [rise] from here on its way to our $250 price target. we don't think there is much downside risk. Simply put, we see continued mergers and acquisitions execution and core businesses as catalysts for stocks to rise,” noted Patil.
Patil's price target of $250, which suggests a year-on-year gain of ~83%, comes along with a buy recommendation for the stock.
Overall, JCOM's eight recent ratings include 6 to buy and 2 to hold, for a strong buy consensus rating. The stock's average price target is $162.88, which represents an increase of ~19% from its current trading price of $136.42. (See JCOM stock analysis)
Anterix, Inc. (ATEX)
We keep it for the last stock with the digital communication world, but give it a different view. Anterix (NASDAQ:) is a broadband provider specializing in the commercialization of broadband assets and the provision of 900MHz private broadband to utilities. Anterix is ??the largest holder of 900 MHz band licenses and has coverage throughout the US, including Alaska, Hawaii and Puerto Rico. The company uses its strong position in broadband access to make secure, private LTE networks available to its customers.
Secure network access is always desirable and Anterix has announced a series of business deals in recent weeks. In two separate announcements, released on May 27, Anterix has made public agreements with both Nokia (NYSE:) and Motorola (NYSE:) to facilitate the implementation of Private LTE networks for utility companies, as part of the energy industry's efforts to modernize and secure. the electricity grid.
In addition, on June 15, Anterix announced an agreement with Ericsson (BS:), a partnership to deploy private network models that will expand 4G and 5G access in North America using FCC-certified mobile radio technology. Again, this initiative is aimed at electricity companies as end users.
A fast-growing company is always good for the share price, and Anterix has seen its shares rise 67% so far this year.
With this in the background, Craig-Hallum's five-star analyst George Sutton's comments make a lot of sense. Sutton points to the urgency of network security in the utility sector, especially in light of recent much-discussed cyberattacks.
“We believe the current environment is likely to lead to more utilities prioritizing their spectrum/network decisions as the industry seeks to guard against potential threats, a reversal from last year when utilities were busy with pandemic-related challenges. Along with utilities acting independently to support the service in their respective service areas, we also see growing potential for a 'network of networks' that would allow for greater interoperability so that utilities can also rely on neighbors," Sutton wrote.
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Specifically about Anterix, Sutton added: "We believe that Anterix would have used approximately half of its current spectrum inventory in FY24 and that the remaining spectrum assets should be sufficient to double its revenues again in the next five years , creating material value beyond our goal valuation.”
This all amounts to a buy recommendation for the stock, and Sutton's target price of $100 implies a 59% increase over the next 12 months.
When it comes to other analyst activity, it has been relatively quiet on Wall Street. There are only three ratings, and they include both a Hold and 2 Buys, giving a consensus view for a mediocre buy. The stock is priced at $62.79 and the average price target of $70.33 suggests a 12% increase from that level. (See ATEX stock analysis)
For more stock trading ideas at attractive valuations, visit Investing Insights.
