We’re in the stock market to generate a profitable return; there’s no other reason to invest in anything, really. That makes the first point any investor needs to consider, the most important question in stock investing, quite simple: Will this stock grow, and produce a return?
It’s a situation meant for data analysis, and the Smart Score. The Smart Score is a sophisticated data collection and collation tool, based on an AI algorithm, that scours the markets, gathers the data on thousands of publicly traded stocks, and measures it, for each stock, according to a set of factors that have been proven to correlate with future outperformance. The result is a single-digit score, on a 1 to 10 scale, pointing toward the stock’s likely near-term future.
Now link that with the analysts’ calls, the recommendations of the experienced stock pros who’ve built their reputations by analyzing and interpreting the stock market’s trends and patterns. When the analyst calls and the Smart Score match up, there’s a clear sign for investors that this stock deserves a closer look.
We’ve gotten a head start on this, using the TipRanks database to find two stocks that feature a ‘Perfect 10’ Smart Score and recent ‘Buy’ ratings from the analysts. And we’ll throw a third element into the mix here – a history of monster growth so far this year but of the kind the analysts think has yet to run its course. Here’s a closer look, at the data, the Smart Score, and the analyst reviews.
Arlo Technologies, Inc. (ARLO)
First on our list today is Arlo Technologies, a tech company that brings together wireless connectivity, smart home applications, and home security to provide its service subscribers with a range of options in integrated, easy-to-use, home security systems. Arlo’s product line includes wireless cameras, audio and visual doorbells, floodlights, and a smart-device app that gives the homeowner access to insights and visibility from anywhere with a cellular or wi-fi connection. In addition, the AI-based subscription service provides personalized notifications and emergency services to optimize security and response times when they’re needed most.
Arlo boasts that its products protect over 6 million families, and during Q1 of this year the company announced it had reached the milestone of 2 million paid subscription customers. Year-over-year, the company’s paid accounts grew by more than 60%.
Elsewhere in the quarter, revenue came in at $111 million. This was down 11% year-over-year, but was more than $6 million better than had been expected. The bottom line earnings figure, an EPS of 1 cent per share by non-GAAP measures, was profitable after two quarters of negative EPS – and was 6 cents per share above the forecast.
Arlo had $9 million in free cash flow in Q1, and finished the quarter with $118.7 million in cash and cash equivalents on hand. Looking ahead, the company is forecasting Q2 revenues between $105 million and $115 million, in line with the Q1 results.
Investors were pleased with the company’s quarter release, and shares in ARLO popped by over 30% in the aftermath of Q1’s results. In fact, investors have been getting behind this stock all year; the shares are up by a huge 208% since the onset of 2023.
Turning to the Smart Score, we find that Arlo’s ‘Perfect 10’ is based mainly on three of the factors: crowd wisdom, which was very positive, reflecting a 20.5% increase in individual holdings of ARLO in the last 30 days; blogger sentiment, which is 88% positive in recent coverage; and an increasingly positive stance from the hedges tracked by TipRanks, which increased their holdings by 1.6 million shares last quarter.
Finally, 5-star analyst Anthony Stoss, from Craig-Hallum, believes that Arlo is well on its way to meeting its subscription goals, and has plenty of growth potential for investors. As he sums up the company’s position, “ARLO has just passed the 2M paid subscriber mark, and we believe they will continue to increase subscriber count towards their goal of 10M. ARLO has increased its recurring paid subs over 7x in just three years. ARLO currently trades at 1.5x EV/2023E sales, but we believe as the business turns more SaaS dominated, they can earn a higher overall multiple… While the stock has performed well over the last three months, we believe it is still early for this relatively unknown SaaS play.”
Along with these comments, Stoss gives Arlo shares a Buy rating, and his $17 price target implies a 57% upside over the next 12 months. (To watch Stoss’ track record, click here.)
The analyst consensus on Arlo is a unanimous Strong Buy, based on 3 recent positive reviews. The shares are priced at $10.82, and the $13.33 average price target suggests a 23% one-year upside potential. (See Arlo’s stock forecast.)
Black Diamond Therapeutics (BDTX)
Next up is Black Diamond Therapeutics, an early-stage biopharmaceutical company working on the discovery and development of new precision medicines in the field of oncology. The company focuses its research on genetically-based cancers that have high unmet medical needs and limited current options for treatment.
Black Diamond’s work targets undrugged mutations in genetically-defined cancers, and its proprietary platform is based on a thorough understanding of several factors: cancer genetics, onco-protein function, and drug discovery. The use of genetic sequencing technology has revealed many unaddressed genetic mutations and new families of oncogenic targets have been identified, giving Black Diamond a wide field for research.
The company took a heavy hit in April of last year, when it discontinued research on drug candidate BDTX-189 and slashed its workforce by 30% at the same time. Currently, most of Black Diamond’s research tracks are at pre-clinical stages, but the company has, in recent months, returned to the clinic, with the move of one track into the Phase 1 clinical trial stage.
This drug candidate, BDTX-1535, is described as an investigational fourth-generation epidermal growth factor receptor (EGFR) MasterKey inhibitor and is being developed for the treatment of non-small cell lung cancer (NSCLC) and glioblastoma multiforme (GBM). Last month, Black Diamond announced positive initial Phase 1 dose escalation data, with the drug showing anti-tumor activity. Shares in BDTX jumped 235% after the data release, with the stock now up by 169% this year.
This company found support for its perfect Smart Score from two of the same factors as ARLO above. Black Diamond gets 100% positive coverage from the financial bloggers, who are usually quite fickle, and the individual investors also agree – the crowd wisdom is 74.4% positive over the past 30 days. In addition, corporate insiders have bought over 24 million shares of BDTX in the last 3 months.
This biotech has caught the attention of Stifel Nicolaus analyst Bradley Canino, who notes the potential of BDTX-1535 in the current market. “Compared to novel developments that have modest monotherapy efficacy in 2L post-Tagrisso, and are forced into combinations or lengthy randomized trials, the BDTX-1535 effect size may potentially allow for rapid monotherapy regulatory paths,” Canino explained. “Our original concern about the response durability persists, but the company now appears funded into 2024 dose expansion data to provide such answer. We see a positive risk/reward into those data that can clarify the regulatory path and market opportunity, with significant upside from our conservative model estimates if approximate replication of the phase 1 data is achieved…”
Canino sees plenty of growth potential here even after the recent massive surge; he rates the stock as a Buy, with a $10 price target that indicates his confidence in a robust 106% upside for the year ahead. (To watch Canino’s track record, click here.)
This is another stock with a unanimous Strong Buy consensus rating, this one based on 5 positive analyst reviews set in recent weeks. The shares are trading for $4.85 and their $11.60 average price target is even more bullish than Canino would allow, implying a gain of 139% on the one-year horizon. (See Black Diamond’s stock forecast.)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
