After a period of cooling in the impact on the markets, fear of the coronavirus again wreaked havoc on Wall Street yesterday. As a result, tech-heavy Nasdaq had its worst day since the beginning of September, dropping nearly 4%.
In times like these, more comprehensive stock analysis can steer investors toward returns. Rather than just looking at more conventional factors such as fundamental or technical analysis, other metrics can play a key role in determining whether or not a particular stock is on a clear path forward.
Investing.com offers a tool that does just that. The Smart Score measures six key measures, including fundamentals, while also taking analyst, blogger and news sentiment into account, as well as hedge fund and business insider activities. After analyzing each statistic, a single numeric score is generated, with 10 being the best possible result.
Using the & # 39; Best Stocks to Buy & # 39; tool we were able to browse the platform's database and filter the results to show only the names that earned a "Perfect 10" Smart Score. We found three that fit the profile. Let's jump right in.
Centrus Energy Corporation ( LEU )
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First on the list is Centrus Energy (NYSE :), a company whose niche is represented by the ticker. Centrus is a supplier of "low enriched uranium" or LEU for the commercial energy market. LEU is the fuel used in nuclear power plants in the civil sector. Centrus has a worldwide customer base and an order book that will be filled until 2030. In addition to producing and supplying LEU for power generation, Centrus offers expertise in uranium handling and nuclear fuel design, and supplies tritium for the US Navy.
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After seeing a sales decline in the first quarter of this year – no surprise as most of the world's economies fell – Centrus reported a sequential profit in Q2 sales. Revenues were $ 75.7 million and net income was $ 33.7 million. Net income was well above the net loss of $ 15.6 million recorded in the same quarter a year ago. In line with the strong results, LEU shares posted a 44% gain this year.
One of LEU's fans is Roth Capital analyst Joe Reagor, who rates the stock on Buy and gives it a target price of $ 18. This figure indicates a robust upward potential of 82% from current levels.
In his comments, Reagor noted that LEU is best suited as a long-term stock game, and wrote, “We believe LEU is poised to show sales and profit growth over the next two years due to strong contract margins. In addition, we see long-term growth opportunities beyond 2022 … We also note that the company expects significant revenue growth over the next two years, which we believe should drive meaningful earnings growth. "
In total, Centrus has 2 recent buy reviews on file, leading analysts to agree on the stock being a moderate buy. The stock is selling for $ 9.90 and their average price target of $ 18 matches that of Reagors above.
LEU's perfect Smart Score is based on three factors: positive analyst sentiment, solid business insider activity and strong fundamentals. (See LEU Stock Analysis)
DLH Holdings ( DLHC )
Our latest Prefect 10 stock, DLH Holdings (NASDAQ :), based in Atlanta, is primarily a government contractor. The company operates technical subsidiaries that provide technical solutions for business process outsourcing and program management. Clients include the United States Departments of Health and Human Services, Defense, and Veterans Affairs, as well as the National Institutes of Health and the Centers for Medicare and Medicaid Services.
Federal government contracts are a good job for the companies that can bring them in, and DLH's stock price and quarterly results reflect that. Its share has more than doubled so far this year, up 116%. The company also appears to have done well despite the corona crisis. Revenues were flat from 2H19 to 1H20, ranging between $ 51 and $ 54 million. Both lowest and highest sales were recorded in 2020. Earnings provided an even clearer indication of strength, rising to 33% to 16 cents a share in Q1, and staying there in Q2.
Earlier this month, DLH announced the acquisition, in a $ 32 million cash deal, of IBA, one of the Department of Defense technology providers in the health sector. DLH financed the acquisition through a draw on its revolving credit facility.
Regarding this share for Canaccord, five-star analyst Ken Herbert notes positive aspects of the IBA move. He writes: “The acquisition strengthens DLHC's position, particularly at the US Department of Defense (DoD). We believe the acquisition should continue the push towards higher margin and higher growth markets and that it should continue to be well received by investors. "
Herbert sets a Buy rating for the stock and adds a price target of $ 12, which means room for 27% growth over the next year. (Click here to view Herbert's record)
Average buy rating on DLHC is based on 2 recent reviews, both buys. This stock is currently priced at $ 9.07 and its average price target of $ 11.50 suggests it will grow 26% from that level in the coming months.
In addition, bloggers are showing a bullish sentiment about DLHC, as are insiders. Everything adds up to a perfect Smart Score. (See DLHC Stock Analysis)
Sapiens International ( SPNS )
Last but not least is Sapiens International (NASDAQ :), which provides software for reinsurance, property and casualty insurance, as well as life and annuity insurance. Based on its solid position in the industry, J.P. Morgan high hopes for this technical name.
Writing for the company, five-star analyst Sterling Auty told clients: “Sapiens has conquered a lucrative segment of the insurance market, providing software and services to carriers ranging from the largest reinsurance companies to level 4-5. P&C carriers worldwide. The work it has done over the past three years to expand its product portfolio is paying off, and we expect a shift in the revenue mix towards more consistent and profitable subscriptions. If this shift occurs, we expect a multiple expansion that will outperform the stock price. "
Unlike some of its competitors, SPNS works with non-life insurance companies, while also targeting life, annuity and reinsurance companies. According to Auty, this increases the total addressable market to about $ 40 billion, compared to about $ 20 billion for P&C software vendors.
“We believe the insurance industry, and in particular non-life insurance, is the most attractive vertical segment for software vendors based on the very high loyalty that creates significant lifetime customer value,” explains Auty.
It should be noted that instead of targeting the largest carriers in each region, the company looks for where the right openings are, by market. In addition, offering software, cloud solutions and "all the services needed to create a turnkey single source vendor has helped Sapiens establish the bridgehead in segments of the total market," Auty said.
When it comes to financial position, revenues from 2015-2019 are up 16%, and also in 2019 and 1H20. “We believe the intelligent segmentation of the market will enable Sapiens to increase the percentage of subscription software revenues, making growth more sustainable and profitable in the future,” said Auty.
In line with his optimistic approach, Auty began reporting by awarding an Overweight rating and a target price of $ 40. This target brings the upside potential to 47%.
As for the rest of the street: 2 Buys and 1 Hold have been published for the past three months. So SPNS is a moderate buy. The $ 37 average price target sets the upside potential at 28%.
Analysts are not alone in their optimistic view of the potential of SPNS. The company's perfect Smart Score indicates positive news sentiment and even positive opinions from the financial blogging community. (See SPNS Stock Analysis)
For more ideas for stocks that trade at attractive valuations, visit Investing Insights.
