3 monstrous growth stocks that have legs for future gains
Which investment strategy has stood the test of time? Investing in growth. Wall Street professionals say stocks with high growth prospects reflect some of the most compelling plays out there. This growth potential extends beyond the short term, and these names will provide a beautiful return by 2020 and beyond. However, finding stocks that fall into this category can be the least challenging. According to analysts, one of the strategies is to take a step back and look at the big picture, focusing on names that are ready to see long-term growth on top of their impressive profits for the year. With this in mind, we used the TipRanks database to identify three growth stocks at the end of receiving significant praise from analysts. All three tickers have already achieved significant growth in 2020 and are ready to continue to climb higher. Penn National Gaming (PENN) First, we have Penn National Gaming, which owns and operates gaming and racing facilities, as well as video game operations for terminals in the United States. That name has already jumped 1
46% so far, but some Wall Street analysts believe there is a lot of fuel left in the tank. PENN recently announced in advance the results for the third quarter, which blew estimates from the water. For the quarter, the company expects margins to increase by more than 900 basis points and adjusts EBITDAR to increase by 5% on an annual basis, although revenues are tracked by 10% on an annual basis. Weighing JP Morgan, five-star analyst Joseph Gref told customers: “The regional recovery in games observed in May / June continued in Q3, with revenues coming in better than expected; we had previously adopted a slower ramp after normalized demand normalized and little / no creep of opex from efficiency gains after COVID. “With that in mind, Gref acknowledges that, given the stellar stock price performance, some other analysts have ‘thrown the towel down.’ However, he still sees ‘value and catalysts going forward.’ … there is a buzz in investor sentiment – which we think is healthy for stocks and almost necessary for stocks to continue to move up, in our opinion traditional investors in gaming stocks are not fully accumulated and we actually think much investor skepticism about PENN’s ability to compete with DraftKings, Fanduel, Caesars Entertainment, MGM / GVC, etc., given the relative size of PENN’s balance sheet to finance early acquisition costs. sports betting, but we believe that this risk, insofar as it is significant, to compete has already been reduced given the ~ 950 million USD raised by the recent increase in your capital. On top of that, PENN recently launched the Barstool Sports betting app in Pennsylvania. Calling for an early start-up “both in terms of volume and in terms of marketing costs”, Gref claims that this demonstrates “the potential of his unique approach to grabbing shares”. In addition, momentum increases for the Barstool Sportsbook. Moreover, Gref believes that the current sports betting and iGaming environment resembles the emergence of regional markets in the 1990s, when budget deficits targeted new revenue streams such as riverboat games to help fund budgets. deficits. Explaining this, the analyst said: “We believe that the United States will look at USSB and iGaming in much the same way and PENN will be one of the winners. We like the American regional ground games / sports betting / iGaming and we see up. “Then it should come as no surprise that Gref was left with the bulls. In addition to the overweight rating, he left a price price of $ 83 per share. Investors could gain a 32% profit if this goal is met over the next twelve (To watch Gref’s recording, click here) What does the rest of the street have to say? 9 purchases, 3 retentions and 1 sale have been issued in the last three months. Therefore, PENN receives a moderate rating for buying consensus. at an average price of $ 76.77, stocks could rise 22% next year. (See Penn National Gaming StockRanks Stock Analysis) Redfin (RDFN) Starting with the card-based search space, Redfin has expanded its offering of products to make the home tour, listing debut and recruitment processes faster and easier.On Wall Street, some believe that the name is experiencing more than just a rise in demand for COVID, as its they 113% profit from the beginning of the year are just the beginning. Although RDFN is coming out of strong notice for the third quarter, investors were somewhat disappointed with the results. Jake Fuller of BTIG points out that stocks may have been traded because expectations were high and earnings were modest at around 2%, and “inertial investors tend to reward volume-driven risks, and RDFN is actually lagging behind.” from expectations in this aspect. It doesn’t help that RDFN isn’t a focal name for many, suggesting that investors may not have ignored the disclosure of revenue, according to Fuller. However, he claims that key pieces of the puzzle may be missing on the street. The five-star analyst mentioned: “What can be overlooked here is that RDFN has increased the commission rate without an obvious impact on conversions, and this should become a much stronger gross profit outlook for RDFN.” to this end, it increased its gross profit forecast for 2021 by 47%. Looking at the details of the quarter, RDFN is in high demand, with revenue from real estate services increasing by 36% on an annual basis. Site traffic and transactions also increased quarterly compared to the quarter. However, it should be noted that the rise is due to transaction revenue. “This is important because it suggests that the expected increases in commissions are finally contributing,” Fuller said. “According to our calculations, revenues from real estate services increased from 1.68% of GTV in the third quarter of 2019 and 1.78% in the second quarter of 2020 to approximately 1.85% in the third quarter of 2020 d. Four points of the gross margin suggest a high flow on this. “Although it is difficult to assess the sustainability of demand, pricing gains and a better margin profile must be sustainable,” Fuller said. In line with his optimistic approach, Fuller joins the bulls, repeating a buy rating and a price tag of $ 65. This goal expresses his confidence in RDFN’s ability to climb 45% higher next year. (To watch Fuller’s recording, click here) Turning to the rest of the street, opinions differ. With 6 purchases, 5 retentions and 1 sale made in the last three months, the word on the street is that RDFN is a moderate purchase. At $ 50, the average price target assumes an 11% upside potential. (See Redfin inventory analysis for TipRanks) Vertiv Holdings (VRT) As one of the world’s leading providers of hardware, software and services, Vertiv Holdings helps facilitate the interconnected market of digital systems where they need to be transmitted, analyzing large amounts needed data processed and stored. Up to 71% so far, more profits could be on the horizon, says Wall Street. Even with the big rise in shares, Wolfe Research analyst Nigel Coe sees a favorable risk / profit profile. “We believe that Vertiv is a rare breed that can be enjoyed by a wide range of investors: a medium-sized company that can provide attractive margin expansion at a reduced rating, managed by a top-class executive team,” he explained. . As for the VRT growth track, the key end markets for customers are the data and telecommunications center. These spaces are areas where Coe expects to see growth in 2020 and 2021, as well as long-term secular winds from increasing data intensities and 5G upgrades. In addition, management has paved the way for 500 basis points for expanding margins, driven by efforts to maintain constant fixed costs through various operational improvements and reduced organizational complexity. “This is the game book that CEO David Coote implemented so successfully during his tenure at Honeywell, and it gives us the conviction that such a book could be implemented at Vertiv,” Coe said. It should be noted that VRT came out of the second quarter of 2020 with a net debt of about $ 2.1 billion and a net debt / EBITDA landing at 4.2 times. Although this is at the upper end of the range, Coe argues that the balance can quickly be diverted. To this end, it calculates a capital surplus of $ 1 billion by 2023, assuming a net debt / EBITDA ratio of 2x. “We do not currently see Vertiv as a clear history of capital deployment, but this may come to the fore in 2022/23 – we could certainly see acquisitions that strengthen its ability to distribute energy and perhaps the layer DCIM. Other potential options include settling money warrants (they are currently reflected in our diluted unit calculation) and introducing a dividend that would expand the potential for institutional ownership. “We also can’t ignore the possibility of a strategic partnership with much larger players in the electrical equipment market who are not significant players in the data center,” Coe said. All VRT has to do with this is convincing Coe to repeat the superiority rating. Along with the call, he set a price tag of $ 23, suggesting a 22% potential increase. (To watch Coe’s recording, click here) Do other analysts agree? They are. In the last three months, only Buy ratings have been published, namely 4. Therefore, the message is clear: VRT is a strong buy. Given the target of an average price of $ 20.75, stocks could jump 10% next year. (See Vertiv Holdings stock analysis for TipRanks) Disclaimer: The opinions expressed in this article are those of the analysts only. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.