Nearly 10,000 stocks are traded in the public markets every day, and that's just on Wall Street. Together they generate a huge amount of raw data – price movements, earnings results, analyst ratings, company announcements. All of this will influence investor decisions, which in turn add to the list of data to consider. It's enough to make your head spin.
What is needed here is a tool to collect, analyze and distill the data, by category or even down to a single score. Fortunately for investors, that's exactly what Investing.com has done with the Smart Score, a data tool that uses machine learning algorithms to read the data flow from the markets and rate each stock accordingly.
The Smart Score rates stocks based on their performance in 6 separate data categories, each of which has been shown to correlate with the performance of future stocks. The collected scores are then combined into one rating, on a scale of 1 to 10. The result is a miniature sketch, a way to quickly search through the forest.
The 'Perfect 10' stocks, those stocks that have achieved the highest ranking of the Smart Score, are rare birds. The highest score has done for less than 300 stocks in the Investing Insights platform – but they deserve a closer look. Let's look at three: they are small to mid-cap stocks, with a Strong Buy consensus rating and significant upside potential.
Levi Strauss & Company (LEVI)
The first "perfect 10" stock we look at is a clothing industry icon, Levi Strauss (NYSE:). This name has long been synonymous with blue jeans – in fact, the company founder of the same name invented that garment in 1873 and patented the unique riveted jeans. They were originally sold as tough workwear for miners in the West; they have since become ubiquitous, in work and fashion, and Levi Strauss' company now has a market cap of ~$11 billion.
Even with the recession we had last year, Levi Strauss had annual sales of more than $4.44 billion. That revenue generates the sale of four separate brands, including Levi's and Dockers, which are sold in more than 110 countries worldwide through chain stores, online merchants and more than 3,000 branded stores.
This year, the company had first-half revenue of $2.58 billion. Sales in the first quarter decreased year on year, but the result in the second quarter showed a sharp increase of 156% compared to the 'corona quarter'. Earnings per share came in at 16 cents, much higher than the quarterly loss of 92 cents recorded during the crisis last year.
Levi Strauss benefits from the return of economic activity. When the consumer steps out and starts replenishing personal items, clothing is at the top of the list. The result: strong sales, with US and Chinese results in the second quarter ahead of last year's quarter. The company has revised its full-year 2021 outlook for revenue and earnings per share, both up. Management now forecasts revenue growth of 28% to 29% for the full year and EPS for 2021 in the range of $1.29 to $1.33.
On the analyst side, Evercore ISI's Omar Saad has weighed in with an outperform rating (i.e., buy) and a price target of $40, indicating a robust upside potential of 50% for the next 12 months.
Supporting his stance, Saad writes: "Levi's delivered another solid quarter with a nice sales battle and a record gross margin for the 3rd consecutive printing…. given strong pent-up demand, could it end of the social recession, the return of fashion, the emerging and potentially sizable new trend in denim silhouettes, the continued casualization of fashion, and the global embrace of the jeans and sneaker phenomenon are so surprising when sales accelerate (not slow down) over the rest of the year?…we think Levi's with its newfound pricing power and profitability could generate substantial upward revenue in the coming quarters and beyond if sales continue or accelerate from June."
In addition to the perfect Smart Score, Levi Strauss also has a unanimous consensus of analysts. The Strong Buy rating is backed by 8 positive reviews posted over the past few weeks. Shares are priced at $26.89 and their average price target of $35.38 implies upside potential of about 32% over a year. (See LEVI stock analysis)
Thryv Holdings (THRY)
Next up, Thryv Holdings (NASDAQ:), is a company you probably don't know the name of, but almost certainly used the first product. The company started out as a combination of companies that owned and published the Gouden Gids telephone directories. From that beginning, Thryv has moved to software-as-a-service. The company provides a service platform to small businesses, merging a range of services including – but not limited to – marketing automation, document storage and sharing, sales and payments, customer service management. These are accessible through a single login, so users don't have to navigate through multiple applications.
Thryv is a reputable company and last fall chose to enter the public markets in an unorthodox way. The company held a direct listing of its shares, rather than an IPO. That is, Thryv did not create new shares, but simply put his existing shares – previously all privately owned – on the public exchanges. There are no insurers with a direct offer. Thryv's shares began trading on the NASDAQ on October 1, closing at $11.08 that day. Since then, the value of the share has almost tripled.
Last June, Thryv announced it was joining the index. The index is a high-profile benchmark of small-cap stocks and is used by the smaller companies in the same way as the S&P 500 to track market giants. Thryv has a market cap of $1.1 billion, so it fits right into the Russell 2000 cohort.
5-star analyst Rob Oliver, of Baird, was impressed enough with Thryv's product and niche potential to kick off his coverage of the stock with an Outperform (i.e. Buy) rating, along with a $43 price target. suggesting a one-year upside potential of ~30%.
“We believe that we are in a 'golden age' for SMB software, where small businesses are increasingly realizing the power of software to generate revenue and efficiency. The COVID-19 pandemic underlined and accelerated digital engagement for SMEs. With a best-in-class SMB SaaS offering, legacy companies providing fertile ground for low-cost conversion, and a management team with a proven track record in SMBs, we consider THRY to be a beneficiary of the SMB digital transformation trend .” Oliver thought.
Oliver is not an outlier on Thryv. He is one of 5 analysts to have published recent reviews of this stock – and they are unanimously bullish, making the consensus a strong buy. THRY has an average price target of $43, which matches Oliver's. (See THRY stock analysis)
SentinelOne (S)
California-based SentinelOne (NYSE:) is a cybersecurity company, a growing field that is in high demand by the digital economy. SentinelOne uses a proprietary behavioral AI platform to monitor a range of digital security needs: cloud workspaces, IoT devices, personal computers, all on one security platform.
This company recently held one of the major IPO events of the year, entering the NASDAQ on June 30 at a share price of $46. This was significantly higher than its initial price of $35, and while its share closing its first day of trading at $42.50, the company raised more than $1.2 billion in its IPO. Since then, the shares have risen more than 12% and are now trading higher than the opening price. SentinelOne now has a market cap of $12.2 billion.
By entering the public markets, SentinelOne is raising capital as well as its profile, both necessary for the company's expansion. Gray Powell, 5-star analyst at BTIG, notes both factors.
"While S is admittedly an expensive stock compared to its security sector competitors, we believe the company will be able to sustain hypergrowth for at least the next five years and probably longer. In our view, the S's main target market for enterprise endpoint security unique in that it simultaneously experiences increased demand trends and diverges from legacy solutions, we think this creates a very high opportunity for equity gains for S, as the company often gets high marks in our independent fieldwork, becomes consistent recognized as a top 2-3 player in the space (sometimes 1st) in terms of product capabilities, and is building brand awareness," Powell explained.
Powell begins his coverage of S with a buy recommendation. Its price target of $61 suggests an increase of about 25% for the coming year.
Once again, we look at a stock with a Strong Buy consensus rating from the Wall Street analyst corps. However, they are not unanimous; the 13 recent reviews include 11 Buys and 2 Holds. Shares are trading at $48.95 and the average target of $57.62 implies an increase of about 18% from that level. (See SentinelOne stock analysis)
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