Updated: Aug 17
At the beginning of 2020, I put together 2 lists of stocks to watch using 2 strategies:
Value stocks based on Price-to-Earnings-Growth.
Stocks of companies with the fastest-growing sales.
Last week I summarized the performance of these 2 strategies. You can find that article here: https://www.wininstocks.com/post/comparing-performance-of-value-vs-growth-strategies-for-picking-stocks-end-of-5-month-experiment
Realizing that I put together the lists just before COVID hit, the summary showed that the Value Stocks severely underperformed the rest of the market with an average decline of 29% across 15 stocks. Only 1 stock slightly gained.
However, the stocks of companies with the fastest-growing sales performed very well and beat the market by 20%.
While analyzing the performance of the 12 stocks with the fastest-growing sales I started to draw a conclusion:
The performance in this portfolio is dependent on how close the company is to profitability. Examples of such stock are EXPI (+72%) and TWLO (+115%), both are on fire.
With this in mind, I put together below the second list of 15 stocks. But this time the companies have to meet 2 criteria:
The company must have solid sales growth in the past year and also have grown in the 5 years before that.
The company must be nearing profitability in the next 1 to 3 years.
Drum roll! Here is my next list of stocks to watch:
In the table below you can find the following information: year-on-year sales growth, average sales growth for the past years, market cap. Also, we have the prices, target prices, the gaps between the two, and analyst ratings. As you can see there are a few stocks with a wide gap to target, for others, it is narrow or negative. Now we do have to take into consideration that sometimes analysts are lagging behind with their new targets.
In the table below I collected Price-To-Sales ratios. This is good to look at as almost all of them are in negative EPS, so we cannot calculate the Price-to-Earnings ratio. Also, I pulled the estimated earnings predictions for the next 5 years from different sources. I put a column stating when the company is about to hit profitability for quick reference.
The last table presents 2 points of information:
Stocktwits watchers, sentiment, and average message volume. While these metrics most likely have little impact on share price I want to see if the quick addition of watchers correlates to the price movements.
Forward PE using EPS information from the previous table and current price from the first table. Basically, this just tells us if the price would remain the same for the future, what would be the PE at expected earnings. Technically, we should expect that price will increase to have a PE in the usual range of 10 to 30.
Check my portfolio performance, watch list, and list of past stock analysis here: https://www.wininstocks.com/watch-list-and-portfolio
Now, let's deep dive a bit into each of the above companies.
Please note this is the preliminary look. I will analyze these stocks in more detail later.
If you plan to invest in any of these stocks please do your due diligence and research future plans, business sustainability, liquidity, etc.
GW Pharmaceuticals PLC (GWPH) stock analysis
Price at the date of analysis: $129.89
GW Pharmaceuticals Plc is a biopharmaceutical company, which engages in the discovery, development, and commercialization of novel therapeutics. It offers its cannabinoid product, Epidiolex oral solution CV, a pharmaceutical formulation of cannabidiol (CBD) focusing on the treatment of seizures associated with tuberous sclerosis complex. The company was founded by Geoffrey William Guy and Brian Whittle in 1998 and is headquartered in Cambridge, the United Kingdom.
GWPH is expected to get to profitability in 2021 at which point its PE ratio is going to 375. The PE will then slowly reduce to 90 in 2024, but even then it is going to be quite high. Unless the company suddenly finds new revenue streams that will significantly boost its EPS the company looks overpriced to me. I would HOLD for now.
Antero Midstream Corporation (AM) stock analysis
Price at the date of analysis: $6.00
Antero Midstream Corp. owns, operates and develops midstream energy assets to service Antero Resources production and completion activity. It operates through the following segments: Gathering and Processing and Water Handling. The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources wells in West Virginia and Ohio. The gathering and processing segment also includes equity in earnings from the Company's investments in the Joint Venture and Stonewall. The Water Handling segment includes two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs and several regional waterways. The company was founded on September 23, 2013 and is headquartered in Denver, CO.
AM grew sales at over 200% year-on-year. It is given a HOLD rating by analysts as EPS is expected to be down in 2020 from 2019 levels. However, EPS is expected to increase in 2022 at which point EPS is going to stand at 6.5. The question is whether it will be able to grow EPS after that. Analysts think no. If EPS is going to stay at that level, then PE of 6.5 is just what it deserves. The price may go up to match PE of 10, but there is quite some risk associated with this given the industry volatility. I would wait till we have a bit more clarity about situation in the world. For now, I would HOLD.
New Age Beverage Corporation (NBEV) stock analysis
Price at the date of analysis: $2.15
New Age Beverages Corp. engages in the development and commercialization of a portfolio of beverages. It operates through the Noni by NewAge and NewAge segment. The Noni by NewAge segment focuses on the development, manufacturing, and marketing of Tahitian Noni Juice, MAX and other noni beverages as well as other nutritional, cosmetic, and personal care products. The NewAge segment markets and sells a portfolio of healthy beverage brands including XingTea, Marley, Búcha Live Kombucha, Coco-Libre, Evian, Nestea, Illy Coffee, and Volvi. The company was founded by Neil Fallon on April 26, 2010 and is headquartered in Denver, CO.
NBEV grew sales by over 300% in the past year. Analysts expect it to hit profitability in 2021 at which point its PE will stand at 30. However, in 2022 EPS is expected to grow 4 times and PE will fall to just over 6. Moreover, analysts did not weight in the news about acquiring ARIIX which resulted in a spike in NBEV stock on the day of the announcement. The increase in price was not sustained, but there is a lot of trading at the moment.
Even before the announcement, analysts gave the stock a target price of $6 which is 180% above its current price.
This stock is a BUY for me.
Five Point Holdings, LLC (FPH) stock analysis
Price at the date of analysis: $4.68
Five Point Holdings LLC engages in the development and design of mixed-use, master-planned communities that combine residential, commercial, retail, educational, and recreational elements with public amenities. It operates through the following segments: Valencia, San Francisco, Great Park, and Commercial. The Valencia segment includes the community of Valencia being developed in northern Los Angeles County, California, as well as other land historically owned by FPL, including 16,000 acres in Ventura County, California and approximately 500 acres of remnant commercial, residential and open space land in Los Angeles County. The San Francisco segment involves the Candlestick Point and The San Francisco Shipyard communities located on bay front property in the City of San Francisco, California. The Great Park segment refers to the Great Park neighborhoods being developed adjacent to and around the Orange County Great Park, a metropolitan park under construction in Orange County, California. The Commercial segment consists of the Five Point Gateway Campus, an office and research and development campus within the Great Park Neighborhoods, consisting of four newly constructed buildings. The company was founded on July 21, 2009 and is headquartered in Irvine, CA.
FPH is a bit risky investment in times of COVID due to its key line of business. It grew revenue by over 250% over the past year and is expected to hit profitability in 2020 at which point it will have a PE of 14. But the coverage for the company is limited for after 2020. I would keep watching the company to see if it truly moves to profitability. HOLD for me.
Pfenex Inc. (PFNX) stock analysis
Price at the date of analysis: $7.99
Pfenex, Inc. is a development and licensing Biotechnology Company, which focuses on leveraging its Pfenex Expression Technology platform for developing and improving protein therapies. Its products include PF708, PF743, PF745, CRM197, PF810, PF753 and PFXX. The company was founded on November 19, 2009 and is headquartered in San Diego, CA.
PFNX sales grew 240% vs. the previous year. It is expected to hit profitability in 2021, at which moment it will have a PE ratio of 16.6. In 2022 it is expected to further grow profits and have a PE of 8.7. There are 5 analysts that have an average target price of $17.20 which is 115% above the current price. This stock shows quite some potential. It is a BUY for me.
Great Panther Silver Limited (GPL) stock analysis
Price at the date of analysis: $0.81
Great Panther Mining Ltd. engages in the mining and exploration of precious materials. It operates through the following segments: Operations; Coricancha, Exploration, and Corporate. The Operations segment involves in the Tucano, the GMC, and Topia mining operations. The Coricancha segment focuses in the gold-silver-copper-lead-zinc mining in central Andes of Peru. The Exploration segment focuses in the following properties: El Horcón, Santa Rosa, and Plomo in Mexico; and Argosy in Canada. The Corporate segment provides financial, human resources, and technical support to the three mining operations and Coricancha. The company was founded by Robert Alexander Archer on November 30, 1965 and is headquartered in Vancouver, Canada.
The recent increase in gold and silver prices resulted in an increase in GPL's price. So, it is likely to further grow its already fast-growing sales. It was predicted to hit profitability in 2021, but I do think it now could do it faster. At current predictions, it was supposed to have EPS of $0.19 in 2021 which would give it PE ratio of only 4.3. There are 5 analysts covering the company with an average target price of $1.26 which is 56% above the current price. Definitely a BUY for me.
Option Care Health, Inc. (OPCH) stock analysis
Price at the date of analysis: $12.14
Option Care Health, Inc. provides home and alternate site infusion services. The firm's infusion services include the clinical management of infusion therapy, nursing support and care coordination. It also offers Therapeutic Services like Anti-Infectives, Nutrition Support, Heart Failure, Chronic Inflammatory Disorders, Immunoglobulin, Bleeding Disorders, Women's Health, Neurological Disorders and Specialized Therapies. The company was founded in 1996 and is headquartered in Bannockburn, IL.
This company is definitely "research more" for me. The services and products roster looks great. Interesting to note, I did not find a page for it on Stocktwits. I think I will be the first to post for it and watch it.
The company is expected to reach profitability in 2021 at which moment it is going to have a PE of 110. There is not enough analysis for the following to say whether the company is going to keep growing to reduce this PE score to normal range. If it does show growth in the future, the stock is definitely a BUY.
BioDelivery Sciences International, Inc. (BDSI) stock analysis
Price at the date of analysis: $4.27
BioDelivery Sciences International, Inc. operates as a pharmaceutical company, which engages in the development and commercialization of new applications of approved therapeutics to address important unmet medical needs. It focuses on pharmaceutical products in the areas of pain management and addiction. The company was founded in 1997 and is headquartered in Raleigh, NC
BDSI grew sales 100% year-on-year. It is expected to show a profit as early as this (2020) year. With predicted $0.20 in earnings it would have PE of 21. But its growth does not stop here: it is predicted to grow earnings at an average 66% in the following 4 years. This would mean its Price-to-Earnings-Growth (PEG) ratio would be 21/66 = 0.32 when everything under 1 is considered to be cheap. This is why analysts have a "BUY" rating for the stock with the average target price of $8.04. This is 88% higher than its current price. This stock is a "BUY" for me.
Exp World Holdings, Inc. (EXPI) stock analysis
Price at the date of analysis: $20.87
eXp World Holdings, Inc. operates as a cloud-based real estate brokerage firm. It focuses on the development and use of cloud-based technologies in order to grow an international brokerage without the burden of physical brick and mortar offices and redundant staffing costs. The firm offers offers software subscriptions to customers to access its virtual reality software platform through VirBELA. The company was founded by Glenn Darrel Sanford on July 30, 2008 and is headquartered in Bellingham, WA.
EXPI is expected to reach profitability in 2020 at which point its PE ratio would be 99. In 2021 it is expected to double its EPS and get a PE of 48. There are no predictions yet for the following years. The stock price is a bit too high for the current PE, however, if the company manages to keep growing its EPS at that rate, the PE ratio is actually not that bad. Due to limited analysis for years past 2021 analysts are giving the stock a price target of $15.5, which current price has already surpassed. The stock did show some stellar movement over the past few months and went up from $7.50 in March to over $20 just a few days ago. So, investors did notice that EXPI is getting to profit zone. Right now the price retracted a bit as investors are taking profits. But, it is likely EXPI will continue to grow in the next few years. All will depend on whether the company manages to maintain its growth.
Antares Pharma, Inc. (ATRS) stock analysis
Price at the date of analysis: $2.82
Antares Pharma, Inc. is a combination drug device company, which engages in the development and commercialization of self-administered parenteral pharmaceutical products and technologies. Its proprietary products include XYOSTED injection, OTREXUP injection for subcutaneous use, and Sumatriptan injection. The company was founded in February 1979 and is headquartered in Ewing, NJ.
ATRS is another great looking stock that seems to have a lot of room to appreciate. ATRS grew sales by 95% over the previous year and is about to show some modest profit this year. This year, the PE ratio would stand at 141. However, analysts are predicting a boost in profit for 2011 and then a steady growth of around 33% for the following years. With that, its forward PE will quickly fall at the current price to under 10. Six analysts covering the company are giving the stock a "BUY" rating and a target price of $6.25 which is 122% above the current price.
Cloudera, Inc. (CLDR) stock analysis
Price at the date of analysis: $11.67
Cloudera, Inc. engages in the provision of enterprise-grade, global data management platforms, services and solutions. It offers enterprise data hub, data warehouse, sata science and engineering, operational database, Cloudera DataFlow, Hortonworks Data Platform, and data science workbench. It operates through Subscription, and Services segments. The company was founded by Amr A. Awadallah, Christophe Bisciglia, Michael Olson and Jeffrey Hammerbacher in June 2008 and is headquartered in Palo Alto, CA.
CLDR is expected to hit profitability in 2020 at which point it will have a PE of 42. Analysts are predicting EPS growth of 50% for 2021 at which point the PE (for the current price) would be 28. If the company manages to keep growing its profit at this rate PE of 28 is quite low, so we could expect the price to double by the end of 2021. However, analysts' predictions don't go past 2021 for now, so caution has to be exercised. For me, the company is still a BUY given how the company products fit with the new reality of our world.
MercadoLibre, Inc. (MELI) stock analysis
Price at the date of analysis: $995.66
MercadoLibre, Inc. engages in the provision of online commerce platform with focus on e-commerce and its related services. It operates through the following geographical segments: Brazil, Argentina, Mexico, Venezuela, and Other Countries. The firm provides users a mechanism for buying, selling and paying as well as collecting, generating leads, and comparing lists through e-commerce transactions. The company was founded by Marcos Eduardo Galperin on October 15, 1999 and is headquartered in Buenos Aires, Argentina.
I have warm feelings for MELI as I made good profit on it going from $380 to $650 back in 2019. I missed the rest of the movement as I thought it was overpriced. However, looking at future predictions, the company is expected to reach profitability in 2021. At that moment its PE will stand at 836 which is obviously too high. However, analysts predict that its EPS will grow at a whopping 200% per year for the next few years. With that, it will reach an EPS of $45 by 2024. At that moment its PE (using current price) will be just 22. The question is: can it keep growing its EPS at at least 40-50% past 2024? If you think that it can the price should at least double by the end of 2024. I would accumulate this stock when the price dips.
KIMBELL ROYALTY (KRP) stock analysis
Price at the date of analysis: $8.87
Kimbell Royalty Partners LP engages in owning and acquiring mineral and royalty interests in oil and natural gas properties. The company was founded on October 30, 2015 and is headquartered in Fort Worth, TX.
KRP grew sales at 165% in the past 5 years; in the most recent year sales grew 54%. The company is expected to reach profitability in 2021 at which point it will have a PE ratio of 296. It is then expected to drow its EPS to $0.22 in 2022 at which point its PE will decrease to 40. Analysts, unfortunately, predict modest EPS growth of just 5-9% after that. This growth is too little for PE of 40. If predictions are right, the stock is a bit overpriced. All that said, we do have to take into consideration the recent surge in gold, silver prices and predictions that oil prices will go up. If this indeed happens KRP stock could surge. Personally, I would HOLD for this stock.
Snap Inc. (SNAP) stock analysis
Price at the date of analysis: $22.31
Snap, Inc. engages in the operation of its camera platform. Its products include Snapchat, using the camera and editing tools to take and share Snaps, Friends Page, which lets users create and use Stories, Groups, Video and Chat, Discover for searching and surfacing relevant Stories, Snap Map, which shows friends, Stories and Snaps near the user, Memories, for saving personal collections, and Spectacles, wearable sunglasses capable of taking Snaps and interacting directly with the Snapchat application. The company's primary source of revenue is advertising. Snap was founded by Frank Reginald Brown IV, Evan Thomas Spiegel, and Robert C. Murphy in 2010 and is headquartered in Santa Monica, CA.
Who does not know SNAP and its stellar drop from $28 to just $6 and rebounding back to $22 (I missed it all). The company grows sales at 45-55% a year and analysts have an "OVERWEIGHT" rating for SNAP with the average target price of $25.50. Now, what is interesting, the stock price seems to be forming the cup and handle formation. We have yet to see if it indeed builds the handle. Now, I like to use technical formation patterns in combination with fundamentals. And it does seem that we will see the continuation of this formation with eventual break-through. The reason is: the company is expected to reach profitability in 2023 and further grow profit by $385% in 2024. This will give the stock a PE of 47 in 2024 (at current price). The question is, what EPS growth is expected after that? If it continues to grow at at least 40-50% we should expect the stock price to at least double. For me, the stock is a HOLD as profitability is still far ahead and the movement may start only in 1-2 years (the handle formation may take that long). I do realize that I may miss it as there would be no handle, so watching price when it breaks through $28 is needed.
Alexco Resource Corp (AXU) stock analysis
Price at the date of analysis: $2.85
Alexco Resource Corp. conducts mining operations and mineral exploration and development in Canada. It engages in the exploration of silver, lead, zinc, and gold ores. The firm operates through the following business segments: Environmental Services, Mining Operations, and Corporate and Other. The Environmental Services segment provides consulting and project management services in respect of environmental permitting and compliance, and site remediation and reclamation. The Mining Operations segment operates in Bellekeno mine, producing silver, lead and zinc in the form of concentrates. The Corporate and Other segment covers head office and general corporate administration activities. Alexco Resource was founded on December 3, 2004 and is headquartered in Vancouver, Canada.
AXU grew sales 43% over the past year. It is predicted to reach profitability in 2020 at which point its PE would stand at 71. For 2021 it is expected to grow EPS and reach PE of 13. Unfortunately, the predictions don't go past 2021 and it is hard to tell if it will continue to grow its profits. However, keep in mind that the predictions are not taking into consideration the recent surge in gold and silver prices that AXU already started to benefit in. With increasing prices, it could reach stronger EPS this and the following years. This stock is a cautious BUY for me.
Please share your opinions about this list and individual companies in the comments below. Are you investing in them already? Did any get on your list after you read this article? Hope this list will help somebody make profits. Good luck!
Don't forget to do your due diligence before investing.
Disclaimer: I already own a few of these stocks and plan to buy a couple of others.
Check my portfolio performance, watch list, and list of past stock analysis here: https://www.wininstocks.com/watch-list-and-portfolio