Investing is all about developing a strong return on your money. There are a wide range of strategies to accomplish this, but the simplest is just to find stocks that are on an upward price appreciation trend and have a robust upside prediction from the market analysts.
You can find stocks to fit that profile pretty easily, among the big-name market leaders, but those stocks usually come with a serious drawback: a high cost of entry. Not every investor wants to shell out several hundred – or more – dollars per share. Some can’t afford it, and some would prefer to buy more shares for their money. Fortunately, there are lower-cost stocks available with great upside potential.
TipRanks, a company that measures and tracks the performance of market analysts, also tracks the movements of the stock markets. After all, if you truly want to understand an analyst’s review of a stock, you’ll need to know that stock’s market history.
Even better for investors, TipRanks also offers an array of tools to find the right stock for any investing situation. Using the Stock Screener, the basic stock-selecting tool, we can search for stocks with upwards of 20% growth potential, that earn Strong Buy consensus ratings from the analysts. And when we sort the results by share price, we can find investment opportunities with an easy entry point. Let’s dive in and look at three such stocks.
Trip.com Group, Ltd. (TCOM)
By making it easier than ever to find and book flights, lodgings, and accommodations, the internet has changed the way we travel. No more appointments with travel agents – now we can just log on to our favorite search and booking website and make our arrangements online. Trip.com is a Chinese company in the online reservation sphere. The company’s revenues show the magnitude of the business – it did $4.5 billion worth of business in 2018.
Trip.com is a new name for the company, adopted earlier this year. Before the change, it was called Ctrip. It made the name change – adopting the name of a US company it acquired in 2017 – to make it more “user friendly” for US based investors, as the newly re-named company is aiming for a more global audience.
November was an all-around good month for the company, as Q3 results, reported just a few days after the name change, showed strong numbers. Income from operations increased by 52% year-over-year to hit $314 million, and total quarterly revenues came in at $1.5 billion. In forward guidance, the company predicted year-over-year growth of 8% to 13% in the fourth quarter. For 2019 as a whole, TCOM is up 27.9%, within 2 points of the S&P 500’s 29.3% gain.
5-star analyst James Lee of Mizuho Securities maintained his Buy rating on TCOM earlier this month. He believes that long-term fundamentals remain intact for “China outbound” travel opportunities despite geopolitical uncertainties in regard to Hong Kong and Taiwan. In his comments on the stock, Lee said, “…we believe that non-GAAP operating margin of 20% for 2020 appears to be achievable… On revenue, management maintains confidence in its international business due to limited competition in outbound travel and continued growth in Skyscanner and Trip.com’s air business.” Lee’s $40 price target and 16% upside for the stock are slightly cautious compared to the analyst consensus. (To watch Lee’s track record, click here)
That analyst consensus is based on the 6 most recent reviews of TCOM, which include 5 Buys and 1 Hold, and give the stock Strong Buy status. The share price is a bargain, at just $34.61 – especially when you consider that the average price target of $41.38 suggests an upside potential of 20%. (See Trip.com stock analysis on TipRanks)
Liberty Media Corporation (LSXMA)
As the name suggests, Liberty is a media company. The company has owned over a dozen different outlets since the 1990’s, primarily in television and broadcasting. Currently, Liberty has three diverse divisions, controlling its ownership stakes in the Atlanta Braves, Sirius XM satellite radio, and the Formula One Group.
The third quarter was mixed for LSXMA. Revenues, at $2.01 billion, beat the estimates by 2.5%, but EPS missed badly, coming in at just 5 cents per share compared to a forecast of 54 cents. The company has supported share values in the quarter with a $464 million repurchase program. Liberty CEO Greg Maffei was upbeat in his comments, despite the EPS miss, saying, “SiriusXM continues to deliver and posted another record-breaking quarter… Formula 1 continues to show great momentum and is on track to hit 2019 targets… and the Braves secured their second straight NL East division title.”
Investors weren’t phased by the low earnings. LSXMA shares are up 2.8% since the earnings report, and the stock has shown 31% growth in 2019, modestly outpacing the broader markets.
Writing from Deutsche Bank, 5-star analyst Bryan Kraft notes, “Liberty’s history of tax-efficient solutions to ownership structures gives us confidence they can, once again, find a way to resolve the NAV discount without material tax leakage. That may come some time down the road, but we continue to see LSXMA as the preferred way to own SIRI.” Kraft gives the stock a Buy rating with a $66 price target, suggesting an impressive upside of 37%. (To watch Kraft’s track record, click here)
The Strong Buy analyst consensus on LSXMA is unanimous, with 4 recent reviewers giving the stock Buy ratings. The average price target is $61.37, implying a 27% premium from the current share price of $48.17. (See Liberty Media stock analysis on TipRanks)
Sterling Bancorp (STL)
From travel websites and media companies, we now move to the banking sector. Sterling is a regional company, based in metro New York and the Hudson Valley, and serving customers through is main subsidiary, the Sterling National Bank. Sterling caters to small businesses and individuals, as well as offers a full range of banking and financial services. The company has a market cap of $4.24 billion, and the bank controls assets exceeding $31.3 billion.
The third quarter was good to STL this year. The company reported revenues and EPS that both exceeded the forecasts. Revenue came in at $275.2 million, and EPS, at 59 cents, was 9.2% better than expected. Commercial loans grew 14.4% year-over-year, an important gain in a key metric.
The company felt confident enough in the quarterly results to maintain its dividend, a modest 7 cents per share, with a yield of 1.3%. This yield is slightly lower than the S&P average of 2%, but still represents a steady income for return-minded investors. Shares of STL are up 27% this year, beating the Dow Jones return of 23%.
RBC Capital analyst Steven Duong met with STL management last month and came away impressed. He wrote, “Conversations with management and investors reinforce our view that STL is a best-in-class company supported by strong organic and acquisitive growth and a diversified balance sheet offering optionality in various operating environments.” Duong duly set a Buy rating on the stock, along with a $26 price target that implies an upside of 24%. (To watch Duong’s track record, click here)
Like the other stocks on this list, STL gets a Strong Buy from the analyst consensus – and like LSXMA, that consensus rating is unanimous. Four of Wall Street’s analysts have given STL a Buy rating in recent months. The stock has the lowest share price on this list, at $20.98, and the average price target of $26.13 suggests an upside of 25%. (See Sterling Bancorp stock analysis on TipRanks)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
