3 ‘Strong Buy’ Stocks At Steep Discounts

With the markets so volatile right now, there is plenty of room for compelling investing opportunities. But how do you know where to jump in? Which stocks are trading at an unfair discount, and which stocks deserve a lower valuation? It can be tricky to differentiate. One option is to turn to the Street’s top analysts. TipRanks tracks and ranks over 4,800 Wall Street analysts, so we can quickly eliminate advice from anyone who under-performs.

And by following analysts who consistently get it right, it’s easy to pinpoint top stock ideas with big upside potential. As you will see below, the analysts quoted here all have five-star ratings for their stock-picking ability. We can also tune into their price targets to get a better idea of just how far the stock can climb.

The best part: it’s not just one analyst who’s bullish. In fact, all three of these stocks have 100% Street support right now. This means that in the last three months, these stocks score an unanimously bullish rating from analysts. So no hold or sell ratings here.

Let’s take a closer look now:

Dropbox

Top 25 RBC Capital analyst Mark Mahaney (Profile & Recommendations) has just upgraded Dropbox   (Nasdaq:DBX) from Hold to Buy. His new rating comes with a $36 price target.

Despite strong earnings, shares are currently down 12% on a one-month basis. For Mahaney, this is “likely due to COO resignation news, lack of material Operating Income raise, and very high recent expectations/stock rise.”

However, he isn’t concerned. Far from it. First up: he views the departure of COO Dennis Woodside as an “entrepreneurial itch” transition. Moreover: “We view the lack of material Operating Income raise as conservatism more than anything. And we believe high expectations/multiples are warranted. Hence the upgrade.”

For any remaining skeptics, Mahaney sums up his bullish take on the stock here: “We continue to view Dropbox as addressing a large TAM and view it as one of the clear market leaders. DBX’s freemium model enables highly cost-efficient customer acquisition, very high customer retention levels, and substantial revenue visibility.”

In fact, four analysts have published recent buy ratings on DBX. This is with a $37.33 average price target, indicating impressive upside potential of over 35%.

View DBX Price Target & Analyst Rating Details

IAC 

Even if you haven’t heard of IAC (Nasdaq:IAC), you know the companies it owns. Media giant IAC/InterActiveCorp owns over 150 brands including Tinder-parent Match Group Inc (Nasdaq:MTCH) and Angi Homeservices Inc (Nasdaq:ANGI). And with 100% Street support and sizeable upside potential of over 20%, IAC is a top stock to track right now.

Five-star Aegis Capital analyst Victor Anthony (Profile & Recommendations) has just ramped up his price target to $240 from $200 previously. His new price target indicates upside potential of over 26%. According to Anthony: “IAC remains one of our top SMID [small and mid cap] picks. Continue to buy the stock.”

So what drives this bullish sentiment? Anthony cites higher valuations for MTCH and ANGI- both of which are outperforming right now.

At MTCH, Q2 revenue, Adj. EBITDA, Adj. EPS, and subscribers all came in above estimates, 3Q guidance was above consensus, and full year guidance was raised, all on strength from Tinder. Meanwhile at ANGI, growth of revenue per service request and revenue per service provider both accelerated on the opt-in program and sales force efficiency. “We expect further revenue growth acceleration in 3Q and 4Q” this top analyst concludes.

View IAC Price Target & Analyst Rating Details

K2M Group Holdings 

This medical device company (Nasdaq:KTWO) is a global leader of complex spine and minimally invasive solutions. It is also a popular pick for analysts. Five-star Piper Jaffray analyst Matt O’Brien (Profile & Recommendations) calls K2M Group Holdings his favorite name in spine. Following a beat-and-raise quarter, O’Brien expects “continued strong growth” in the coming quarters.

Similarly top Needham analyst Michael Matson  (Profile & Recommendations) notes that management has now raised its guidance on stronger international growth. “We think that KTWO is well-positioned for strong growth in 2H18 given new products (including its Mojave expandable spacer, Yukon OCT system, Palo Alto corpectomy cage, and BACS Surgical Planner), its new distributor agreements, and its Brainlab agreement” cheers Matson.

The bottom line: “We reiterate our Buy rating given this and its large discount to peers (2018E EV/sales of 3.4x vs. small/mid-cap growth peers at a median of 9.5x).” He sees prices spiking 42% to $29. Indeed, even the average analyst price target of $27 still offers over 30% upside potential.

View KTWO Price Target & Analyst Rating Details

Disclosure: 

View KTWO Price Target & Analyst Rating Details

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Angry Old Lady 5 years ago Member's comment

Shhhhhh! The more this drops the more I buy, I’d like at least a few hundred more shares before the rally!