Volatility has become a defining characteristic of investing in 2020.
The market has seen record lows followed by record highs over the course of this year, and investors who have been sitting on the sidelines to avoid the madness might believe that they’ve missed an opportunity to jump in at a good entry point while stocks were down earlier this year.
Just because the market has recovered doesn’t mean that there isn’t still value to be had — in fact, analysts believe that these five companies still have huge upside potential of nearly 50% or more:
— Revolve Group (ticker: RVLV)
— ANGI Homeservices (ANGI)
— Lyft (LYFT)
— Albertsons Cos. (ACI)
— Magellan Midstream Partners (MMP)
Revolve Group (RVLV)
On July 2, 2019, Raymond James analyst Aaron Kessler initiated coverage of Revolve Group and gave shares a $40 price target.
Since then, shares have declined by more than 50% — yet on Aug. 13, he upgraded his call, though the price target has since declined to $32. That’s still nearly 90% upside for shares of this online retailer focused on the millennial and Generation Z, and given the company’s strong performance in the second quarter of fiscal 2020, investors should be confident in Kessler’s call.
In the midst of a global pandemic that has thrashed retailers around the world, Revolve posted record earnings per share of $0.20 and its earnings before interest, taxes, depreciation, and amortization, or EBITDA, grew 10% — though sales did decline 12% year over year. That indicates that the company is keeping expenses under control and positioning itself to capitalize on an eventual economic recovery.
ANGI Homeservices (ANGI)
Wells Fargo analyst Brian Fitzgerald likes what he sees at ANGI Homeservices, and it’s easy to understand why.
In a year that has forced Americans to stay at home due to the pandemic, many people have taken up home improvement projects to fill their time and spruce up their living spaces. That’s where ANGI Homeservices comes in, connecting consumers with local professionals through Angie’s List, HomeAdvisor and other services.
The result was a 9% increase in revenue year over year during the second quarter, and a 13% increase in adjusted EBITDA. While shares of ANGI Homeservices have risen more than 18% year to date, Fitzgerald thinks there’s more to come — and he has given ANGI a price target of $18, or roughly 70% upside from the stock’s current market value.
Lyft (LYFT)
Lyft has suffered throughout the pandemic, with shares down more than 35% this year.
The decline is understandable, given that not only are customers hesitant to get into close quarters with others for fear of contracting the virus, but there has also been nowhere for customers to go considering that many restaurants and business have been closed down for months now. The result was a 61% decline in revenue year over year during the second quarter, thanks to a 60% decrease in active riders.
Yet Fitzgerald sees huge potential in Lyft, and he believes that the company could hit $48 per share — giving the stock more than 70% upside — as the economy reopens. Lyft has already begun to see some recovery in ridership, with rides growing 78% in July compared to April. If that trend continues, Lyft will be well on its way to meeting Fitzgerald’s target.
Albertsons Cos. (ACI)
You’d be forgiven for thinking that companies would avoid going public this year, considering how topsy-turvy the market has been.
Despite this environment, Albertsons boldly went public back in June to the tune of $16 per share. Since then, the stock has sputtered down by 15%. Yet the grocery store chain has plenty of potential, according to Telsey Advisory Group analyst Joseph Feldman, who initiated coverage with a $26 price target for the company — a whopping 63% upside from its initial public offering price. He believes that Albertsons “is in the early stages of a transformation that should drive market share gains, earnings growth, and free cash flow for multiple years.”
It certainly doesn’t hurt that current trends such as more Americans eating at home instead of eating out at restaurants are helping to buoy Albertsons’ business, which helps explain how the company increased sales by more than 21% last quarter.
Magellan Midstream Partners (MMP)
2020 has been a difficult year for many industries, but it has been historically bad for the energy industry.
Magellan Midstream Partners has not escaped the carnage, with shares of the company dropping more than 40% this year as the industry suffered from a price war between OPEC and Russia, then a steep decline in demand from consumers who aren’t driving as much.
None of this was Magellan’s fault, as Morgan Stanley analyst Devin McDermott well knows — which is why he has set a $50 price target for Magellan, a more than 40% upside from today’s price. While the rest of the industry struggles, Magellan has a strong balance sheet that the company has recently shored up with the sale of $500 million in 10-year senior notes, and its distributable cash flow remains strong enough for MMP to support a dividend of roughly 12%.
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5 Stocks With 40% Upside or More for Investors originally appeared on usnews.com
