Stock Research and Analysis
3 Momentum Stocks That Score a "Perfect 10" |
| Investors are in the market game to make money – and there is plenty of it to be made, as stocks are hitting record levels in recent days. But the coronavirus hasn't gone away, unemployment is still high, and while it's possible to argue that we're in a V-shaped recovery, it's also possible to argue that the recovery is soft, and fragile. In this environment, investors want a clear sign to follow. Fortunately, there are two available. The first is momentum, the accumulated drive of a stock's market trends, and the second is the Smart Score, the single-digit score for every stock, pointing toward likely performance.
We've used the Investing Insights platform to find stocks that combine both of these signals for a compelling bullish case. The Smart Score is data-derived; the momentum is more subjective, but it is clear from a look at each stock's recent share appreciation. They all show strong run-ups to recent high points, a trend that investors should note.
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Arlo Technologies, Inc. (ARLO) |
| With so much in our digital age dependent on tech companies, it only seems fair to start our list with – a tech company. Arlo Technologies develops security systems, including wireless cameras, doorbells, and floodlights, along with the cloud-based software to link them in a smart network. The company markets its systems for home or business security.
Arlo's most recent quarter showed a forecast-beating top line of $66.63 million. This was more than 19% above expectations, and bodes well for Arlo's future sales. Arlo's shares rose sharply after the Q2 report. Investors were clearly impressed by the company's improving sales – and its new product and marketing announcements.
In recent weeks, Arlo has announced new floodlight cameras, as well as a partnership with a major home building in Utah and Idaho. While these states are not the most populous, the West is a fast-growing region, and home security systems are popular in sparsely populated rural areas.
Even though Arlo stock has already delivered a strong performance since the start of 2020 (it's up 42%), several members of the Street believe shares will further appreciate.
Jeffrey Rand, covering this stock for Deutsche Bank, is impressed by Arlo's services business model. He writes, "Arlo grew its services business 53% y/y as it continues to see higher attach rates on its new business model focused on shorter trial periods and no free storage. This momentum in its services business should continue as a higher mix of products being sold use the new business model and Arlo starts to see subscription growth from its recent partnerships. Post results, we have increasing confidence in Arlo's progress in growing its services revenue. With the recurring nature of its services business and a meaningfully higher gross margin vs. hardware sales, we believe that the more positive outlook on the services business should drive a higher valuation…"
To this end Rand rates ARLO a Buy along with a $7 price target. This figure implies an upside of 17% for the next months.
Overall, ARLO has 3 recent Buy reviews and 1 Hold, giving it a Strong Buy from the analyst consensus. Shares are selling for $5.98, and the average price target matches Rand's $7. ( See Arlo stock analysis)
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AXPEL, Inc. (XPEL) |
| Do you love your car? So many of us do. XPEL lives in the automotive protection niche, offering protective films for car exteriors, as well as tint films and treatments for the window. The company's products are custom-made to the car.
Last week, XPEL reported EPS far above the forecast, and the stock surged in result. The shares had already been trending somewhat upward; the strong Q2 earnings prompted a $7 spike in valuation that added 35% to the stock. The data that came in: 14 cents per share earnings, against a forecast of only 5 cents.
5-star analyst Jeff Van Sinderen, of B. Riley FBR, writes of XPEL, "Acceleration of overall revenue began in May and established a monthly record in June that was more than double April revenue… XPEL achieved record cash flow during 2Q, driven in part by inventory reduction. XPEL expects to build inventory during 2H. We remind that XPEL's supply chain has no direct exposure to China, including tiers of suppliers further down the supply chain."
Van Sinderen rates the stock a Buy, and lifts his price target from $19 to $33. His new target suggests room for 17.5% upside growth.
There are 2 recent Buy reviews on XPEL, making its Moderate Buy analyst consensus rating unanimous. The average price target, at $32.50, implies a 16% upside for the stock in the coming year. (See XPEL stock analysis)
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| These are just 3 stocks out of the many top 'Smart Score' stocks now available on Investing Insights Premium, allowing investors unlock stock recommendations of top Wall Street Analysts. Ready to get started? |
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