After ending in the black on Friday, markets have started this week with additional gains – although year-to-date the S&P 500 has slipped back into bear territory. The recent high volatility comes in the wake of the Fed’s interest rate hike last week and its intention to keep interest rates high as it struggles to contain inflation.
It’s hard to say where the markets are headed right now, but at least according to market expert Ed Yardeni, we’re already near the bottom of the bear market. Yardeni believes the Federal Reserve is unlikely to raise rates much further and that the bad news on interest rates has already been factored in.
“It looks like we’re in a bottoming process. I think the market has certainly discounted to a large extent what the Fed is going to do,” Yardeni noted.
If Yardeni is right, then investors now have an opportunity to heed the age-old investment advice: buy low, sell high. Many stocks fit the “bottom fish” profile. we pulled two from the TipRanks database, stocks with consensus Strong Buy ratings and roughly 70% decline in share price this year. In fact, analysts see both rising more than 90% next year. Let’s take a closer look.
Thoughtworks Holdings (TWKS)
We’ll start with technology, where digital consultancy Thoughtworks offers adaptive expertise to its clients. The company’s services include digital strategy, design and software engineering, which combine to make Thoughtworks a valuable partner for enterprise clients and technology disruptors. The company has a footprint in 17 countries and its clients include major names such as Paypal, Daimler and Bayer.
For bottom fishing investors, the first thing to know about Thoughtworks is that the stock is down 70% so far this year. The second thing to know is that even though the stock price has fallen, the company has reported modest sequential revenue growth in each quarter of this year so far.
In its most recent quarterly report, from 2Q12, the company posted a top line of $332.1 million, up 3.8% sequentially and a stronger 27.5% year-over-year gain. The company’s adjusted diluted EPS increased 10% year over year, from 10 cents in 2Q11 to 11 cents in 2Q12. On the balance sheet, Thoughtworks in Q2 was able to pay down $100 million of its fixed debt, bringing the total down to $406.1 million, and had cash and liquid assets of $274.5 million. The company also has access to a $165 million revolving credit facility. Thoughtworks has scheduled its 3Q12 FY22 report for this coming November 14th.
RBC Capital analyst Daniel Perlin describes TWKS shares as “constructively positioned” heading into the third-quarter earnings release, with currency issues from a rising dollar presenting the strongest headwind.
“Despite potential challenges related to currency volatility and a tight labor market, we believe current valuations offer an attractive entry point given TWKS’ unique position to capture share of a large and growing global addressable market with an attractive underlying business model with strong growth projection,” Perlin said.
All of the above makes it clear why Perlin is now standing with the bulls. The 5-star analyst rates TWKS as Outperform (i.e. Buy), while the $16 price target suggests ~98% upside over the next year. (To follow Perlin’s history, Click here)
In total, 8 Wall Street analysts have weighed in on Thoughtworks shares, and their ratings include 6 Buys and 2 Holds – for a strong Buy consensus. The stock is currently selling for $8.09 and its average price target of $17.13 implies a ~112% gain in the coming months. (See TWKS Stock Prediction on TipRanks)
Cryoport, Inc. (CYRX)
Now we’ll turn to the healthcare world and look at Cryoport, a company that has established a solid position in the field of cold. That is, in the cold storage and transport of biological tests and samples. These are highly perishable, time-sensitive items, and reliable cold storage and courier services are essential for laboratories, medical offices, and research facilities utilizing Cryoport’s capabilities. These capabilities include liquid nitrogen dry product shippers and refrigerated transport solutions for various materials in the 2 to 8 degree Celsius range. Cryoport’s transportation services are end-to-end and the company backs them up with extensive cold chain experience and 24/7 customer support.
Cryoport holds a prominent position in the healthcare industry, but that doesn’t insulate the company from financial and occasional headwinds. Lockdowns in China have put pressure on the company’s product supply and manufacturing chains. The strong dollar and the resulting negative currency impact cost the company $2.6 million in the third quarter. and the effects of inflation and tighter money are visible in reduced customer orders for freezers and refrigerators despite high demand for cryogenic flasks (Dewars).
Those headwinds were partially offset by the reopening in March of the company’s Prague, Minnesota plant (part of the 2020 acquisition of MVE), which was badly damaged by a fire early last year.
Overall, the pressures have pushed CYRX shares down 70% this year – and its recent 3Q12 report showed both a loss in revenue and earnings and a cut in full-year guidance, further exacerbating the stock’s slide.
On the company’s top line, revenue of $60.5 million was up ~7% from last year’s quarter, but nearly $9 million below the consensus forecast. On the earnings side, GAAP EPS posted a loss of 15 cents, 7% worse than expected. While those numbers were bad, the company’s future guidance seems to be what spooked investors. Cryoport cut its full-year revenue guidance by an average of 10% to a range of $232 million to $238 million. That guidance was also well below the $251.7 million forecast.
Through it all, BTIG analyst David Larsen continues to maintain an upbeat stance on Cryoport’s prospects, noting: “While the quarter was disappointing, we would encourage investors to buy weakness as we believe management has good control over the business and we consider the headwinds in the quarter to be temporary.”
“Given that MVE’s factory in China that had been locked down has reopened and given that demand for Dewars is high, we would expect some relief from MVE manufacturing. We also like the fact that there has been no weakness with the Dewars shipment and we believe it is only a matter of time before the demand for large coolers increases. The administration has a plan to take CRYOPDP services to countries outside of Eastern Europe. We like the actions the administration is taking,” the analyst added.
Looking forward from here, Larsen rates CYRX stock a Buy, and his $40 price target implies an impressive 130% one-year upside potential. (To follow Larsen’s history, Click here)
Clearly, the headwinds here haven’t deterred Street analysts, with 6 of the recent analyst reviews on CYRX being positive, for a strong buy consensus. The stock is trading at $17.38 and its average price target of $34.67 suggests a 99% gain over the next 12 months. (See CYRX Stock Prediction on TipRanks)
Would you like to identify the stocks that have received the most bullish recent ratings from the Street? Check out TipRanks’ Analysts’ Top Stocks tool. The tool also reveals which stocks have fallen over the past three months – allowing you to spot the best stocks trading at compelling levels.
Denial of responsibility: The views 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.