The stock market has fallen to start the year, and some stocks have fallen more than others. For investors, however, that brings up opportunities – just because a stock has fallen quite a bit does not necessarily make it a bad investment.
The trick for investors is to tell the difference between stocks that are cheap at their new low prices and stocks that are truly broken. That’s where the Wall Street pros come in.
These expert stock pickers have identified two compelling tickers whose current share prices land close to their 52-week lows. Noting that each is set to take back off on an upward trajectory, the analysts see an attractive entry point. Using TipRanks’ database, we found out that the analyst consensus has rated both a Strong Buy, with major upside potential also on tap. Let’s take a closer look.
We’ll start with RumbleON, a unique automotive-related company. The company offers an online platform to connect buyers and dealers of recreational sporting vehicles, particularly motorcycles, but also pre-owned powersports vehicles of all sorts. RumbleON’s omnichannel tech-based platform makes it easy for powersports fans to connect, to buy and sell, with the goal of making powersports more accessible to more people.
RumbleON ran net losses through most of 2020 and 2021, but in 4Q21 the company reported an EPS profit of $ 1.35 on net income of $ 20.7 million. This was up dramatically from the $ 1.81 EPS loss in 4Q20. At the top line, the company showed $ 440.9 million in total revenue, up an impressive 47% year-over-year. For the full year 2021, the company had revenues of $ 1.58 billion, with an annual net income of $ 45.5 million – these were record results for a full year.
During the first quarter of this year, RumbleON has been moving to expand its operations and footprint. The company acquired Freedom Powersports, a distributor for 15 manufacturers, selling through 13 retail locations. The acquisition expands RumbleON’s network to 55 brick-and-mortar locations. RumbleON paid $ 130 million for Freedom, in a transaction composed of both cash and stock.
Despite the increasing earnings and expanding footprint, RumbleON shares have tumbled 48% this year.
However, 5-star analyst Eric Wold, of B. Riley Securities, thinks this new, lower stock price could offer new investors an opportunity to get into RMBL on the cheap.
“We feel that RMBL shares have been overly punished and provide an increasingly attractive opportunity trading at 3.4x our 2023 AEBITDA estimate — or a ~ 38% discount to the median of the vehicle dealer peer group,” Wold opined.
Wold goes on to explain why, in the event of increased recessionary pressures, RumbleON will find itself in a relatively strong position: “We believe the low inventory levels throughout the segment provide a hedge against that risk for RMBL. In typical recession scenarios, the industry would be facing too much inventory for the reduced demand and this would drive aggressive moves to sell inventory, including heavy promotional activities. However, that should not be the case now with the powersports industry and the RMBL dealer network were a recession to occur as the manufacturers would still need to fill a depleted dealer channel. ”
Based on all of the above, Wold rates RMBL a Buy, with a $ 70 price target to suggest an upside of 221% for the next year. (To watch Wold’s track record, click here)
Wold may be exceptionally bullish, but the Street also is sanguine about RMBL. The stock’s 4 recent analyst reviews are all positive, giving it a unanimous Strong Buy consensus rating. With an average price target of $ 49, and a current trading price of $ 21.78, this stock has a one-year upside of 125%. (See RMBL stock forecast on TipRanks)
Olo Inc. (OLO)
The second beaten-down stock we’re looking at is Olo, whose name is an abbreviation of ‘online ordering.’ This New York-based cloud software company offers a B2B SaaS product, directed to restaurants; the platform allows business customers to place orders and direct deliveries, even from multiple suppliers and origination points.
Olo has been in business since 2005, but only entered the public trading markets in March of 2021. Since that IPO, however, OLO shares have fallen drastically. In 2022, the stock is down 46%, and overall, it is down 68% from its first day’s closing price.
The fall in share price came even as the company has shown solid earnings and profitable EPS in each of the four quarterly reports it has released since going public. At the top line, revenues have grown from $ 36.1 million in 1Q21 to $ 39.9 million in 4Q21; the last two quarters have shown sequential gains, and the 4Q top line was up 31% year-over-year. Non-GAAP EPS was steady at 3 cents per share in the first three reports, and slipped to 2 cents in the 4Q report; all four met or exceeded the earnings forecasts. On the balance sheet, Olo had $ 514.4 million in cash at the end of 2021.
This emerging tech company caught the eye of Piper Sandler’s Brent Bracelin, a 5-star analyst ranked among the top 5% of his Wall Street peers. Bracelin writes, “Q4 marks the seventh straight quarter of balancing profitable growth, which is unique for a high-growth small-cap cloud software model … We continue to view 1Q22 as a potential growth trough as the company laps its toughest compare period, ahead of the Q2 reset in DoorDash pricing. That said, the FY22 outlook of 31% y / y at the midpoint suggests that top-line growth could reaccelerate exiting Q1. ”
Bracelin’s comments support his Overweight (ie Buy) rating on Olo shares, and he gives them a $ 20 price target, indicating his confidence in ~ 78% upside potential for the next 12 months. (To watch Bracelin’s track record, click here)
That the bullish view is par for this course is clear from Wall Street’s consensus – a Strong Buy, based on 5 unanimously positive analyst reviews. OLO shares are trading for $ 11.24, and their $ 21.60 average price target suggests an upside of 92% from that level over the next 12 months. (See OLO stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.