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Assorted boots from Boot Barn.
Adam Jeffery | CNBC
Investors looking for value should look no further than “underappreciated” stocks such as Boot Barn, Pure Storage, Roku, Upwork, Lam Research, and Nasdaq, according to Wall Street analysts.
CNBC combed through recent Wall Street research to find companies that analysts say have “underappreciated” stock stories.
Competition may be heating up in the online streaming space but that’s not stopping some analysts from getting bullish on one “underappreciated” company.
And it’s not Netflix.
Roku is an “industry-leading” streaming video platform, analysts at Guggenheim said this week.
“As the company expands its international offering and numerous new streaming video services launch with global growth ambitions, we see underappreciated opportunity for the company to drive significant economic growth and create value for shareholders,” they said.
Shares of the company were down significantly on the week.
Another underappreciated name getting analyst attention is flash data storage and hardware developer, Pure Storage, which held an investor event at a recent tech conference.
The company presented a wide range of new products impressing analysts at William Blair.
“”We attended Accelerate 2019 and came away with reinforced conviction that Pure Storage is a tremendously underappreciated growth story,” they said.
“Management articulated its ‘modern data experience’ vision for the next decade and rolled out an expanded product portfolio, continuing its heritage of innovation and broadening the serviceable market for its technology,” the analysts said.
Shares of Pure Storage were up 0.8% on the week.
Also named as underappreciated is Upwork, the online platform for employers to find and connect with freelancers.
While analysts at BTIG admitted the stock wasn’t cheap, they did say the company’s “potential is underappreciated as it is poised to reap future benefits from strategies being implemented today.”
Specifically, “we believe the direct sales force, new membership plans, hyperlocal marketplaces, specialized profiles and other initiatives will yield gross sales value growth and/or higher monetization,” they said.
The stock was down 8% on the week.
Here’s what else analysts are saying about underappreciated stocks:
Piper Jaffray – Boot Barn, Overweight rating
“In our view, BOOT remains the most underappreciated growth story in our coverage universe with steady comp growth, unit growth, and margin growth leading to 20%+ EPS growth. Yet we foresee no change in business momentum, and shares trade at 19x EPS on decelerating sell-side estimates into CY2020. Importantly, BOOT has a number of initiatives all working together right now. And its heavy functional use product exposure acts like an annuity. All in, our farm & ranch channel work remains highly positive, tariff exposure appears minimal/immaterial, and we expect BOOT to continue to post strong growth numbers.”
William Blair – Pure Storage, Outperform rating
“We attended Accelerate 2019 and came away with reinforced conviction that Pure Storage is a tremendously underappreciated growth story. Management articulated its ‘modern data experience’ vision for the next decade and rolled out an expanded product portfolio, continuing its heritage of innovation and broadening the serviceable market for its technology (total addressable market expansion from $24 billion in 2016 to $50 billion today). Yet, at its current scale, Pure is no longer just an upstart innovator, but has become a safe choice for enterprises—which should allow the company to deliver a broader suite of products to the world’s biggest buyers.”
Guggenheim – Roku, Buy rating
“Roku is the industry-leading streaming video platform providing growing value for viewers, marketers, content owners, and TV brands. As the company expands its international offering and numerous new streaming video services launch with global growth ambitions, we see under-appreciated opportunity for the company to drive significant economic growth and create value for shareholders.”
BTIG – Upwork, Buy rating
“While we acknowledge UPWK is not inexpensive on current numbers, we believe Upwork’s potential is underappreciated as it is poised to reap future benefits from strategies being implemented today. Specifically, we believe the direct sales force, new membership plans, hyperlocal marketplaces, specialized profiles and other initiatives will yield gross sales value growth and/or higher monetization. We believe investors are overly focused on revenue, which can be misleading given active strategies that depress sales.”
Wells Fargo – Lam Research, Market perform rating
“While we think Lam’s services business remains underappreciated, pushback from investors has consistently highlighted the lack of quarterly revenue disclosure with many focused on the mix of lumpier upgrades & refurbs vs. LT service contract penetration.”
Oppenheimer- Nasdaq, Outperform rating
“While NDAQ is well known for the exchange, the company is in the middle of a strategic pivot growing its non-transaction revenue to over 70% of overall revenue. While the transaction business is still crucial to providing proprietary trading data, we believe Information Services and Market Technology will fuel major revenue growth. In particular, we believe Market Technology is still a misunderstood and underappreciated asset. Additionally, multiple catalysts, including margin expansion, solid organic growth and name change can also re-rate the company. We believe NDAQ is also attractive to tech investors who are looking for a strong balance sheet and robust bottom line.”