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2 actions that are flirting with a fund; Analysts say ‘buy’
The stock market closed the first week of 2021 on a positive note, with the top three indexes reaching new record levels. The gains come at a time when investors are feeling confident. COVID vaccines are coming and, according to US President-elect Joe Biden, a further round of stimulation of the coronavirus is underway. But even in a bull market, it is still possible to find some stocks that have not yet joined in general gains. These stocks, whose prices are hitting bottom, present investors with a choice and an opportunity. The choice is to take a risk or not; the opportunity is to buy low, when the chance of earnings is better. The Wall Street analyst corps knows this and is not afraid to recommend actions that may have hit rock bottom. Using the TipRanks database, we identified two of these actions. Each has dropped significantly, but each also has sufficient growth potential to guarantee a Purchase rating. BlueCity Holdings (BLCT) We will start with an online platform and community service company, focused on the LGBTQ audience (lesbian, gay, bisexual and transgender). The company offers a variety of online services, including online dating, entertainment, health advice, online pharmacy and family planning. BlueCity provides a way for users to connect with service providers and platforms. The company connected more than 50 million registered users in China and other Asian countries and has 6.3 million average monthly users. Serving a niche audience can be profitable, and BlueCity has found its way. In the third quarter, the company recorded a 43.8% growth in relation to the previous year in paying users and a 47.3% growth in first-line revenues. Total revenue reached US $ 43.8 million. BlueCity reported a total of 494,000 paying users on its Blued dating app. In July last year, BlueCity held its IPO. The event was a success, as the company debuted its shares in the middle of the expected price range and raised more than US $ 85 million in new capital. At the end of the first trading day, BLCT closed at $ 23.43; since then, however, stocks have dropped ~ 60%. Covering Oppenheimer’s shares, analyst Bo Pei sees a clear path to greater profits and believes that the current low price is a buying opportunity. “BLCT generates 85% of revenue from live streaming and 6% from subscription services. The current proportion of member payments is significantly lower than that of peers. We expect the association to contribute 21% of revenue in 22E, which could increase the assessment, as the model has better retention, margins and visibility “, noted Pei. They represented only about 10% of BLCT’s total revenue, as the monetization resources abroad were launched recently. The BLCT sees positive feedback as monetization efforts increase, and we expect its revenue contribution abroad to increase to 21% by 22E. “It is not surprising, then, why Pei gives BLCT an Outperform rating (ie Purchase). Its $ 20 price target supports its optimistic stance and suggests a sharp 97% rise for 2021. (See TipLCanks BLCT stock analysis) Some stocks fly below the radar, and BLCT is one of them. Pei is the only recent analysis by analysts at this company, and it is decidedly positive. (See BLCT stock analysis at TipRanks) Strategic Education (STRA) Next up is a private, for-profit education company. Strategic Education owns two online universities, Capella and Strayer, as well as several programming schools, including DevMountain, Generation Code and Hackbright Academy. The company also recently closed the acquisition of colleges in Australia and New Zealand. The interruptions caused by the corona have been hard for STRA, and stocks have fallen 42% in the past 52 weeks. Q3 revenue and profits were below expectations and fell year on year. Sales were US $ 239 million, with EPS of 47 cents. In the third quarter, however, STRA began reopening face-to-face classes for students in select cities, including Augusta, Georgia and Arlington, Virginia, and that Minneapolis corporate offices were also reopening on a limited basis. Jeffrey Silber, 5-star analyst at BMO, sees positives and negatives in STRA right now. He writes about the current situation of the company: “STRA reported mixed results for 3Q20, with low performance Strayer subscriptions, offsetting the improvement in Capella subscriptions and cost management … Although the ‘outlook’ was disappointing, we are cautiously optimistic that the trend will be ‘less worse’ during 2021. ”Looking to the future, Silber believes that the various STRA schools offer some protection for the current economy – a general positive aspect for the company. “Strayer U. continues to see a decline in the number of new enrollments due to the demographics of its students (eg, graduate students, first-time college students) are being disproportionately affected during the pandemic. By contract, enrollment at Capella U. was better than expected, as the demographics of their students may be less affected (for example, graduate school, more ability to work from home). ”Silber wrote. To this end, Silber classifies STRA as Outperform (ie Buy), and its target price of $ 126 implies a 39% upside in the next 12 months. (To see Silber’s history, click here) In the past 3 months, only two other analysts have thrown their hat on with a view of STRA. The two additional Buy ratings provide the stock with a Strong Buy consensus rating. With an average price target of $ 121, investors are expected to take home a 33% gain if the target is met in the next 12 months. (See STRA stock analysis at TipRanks) To find good ideas for trading defeated stocks with compelling valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of TipRanks stock insights. Disclaimer: The opinions expressed in this article are only those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.