Business

These 2 stocks can go 60% higher (or more)


It is now between January and 2023 is about to begin. The holidays are behind us, and the future ahead of us is not yet written – and what better time than now to start building a stock portfolio toward that future. The key to success, as always, is finding the right stocks that are forecast to deliver solid returns and profits. Recognizing them is the trick.

That’s where Smart Score born. Based on TipRanks’ advanced AI algorithms, Smart Score collects data on all of Wall Street’s publicly traded stocks – it then sorts and contrasts them by a set of eight factors, one each. has a history of predicting outstanding performance. The factors are averaged together and the result is a single-digit score, on a scale of 1 to 10, allowing investors to glimpse the ‘key opportunity’ for any given stock. Investors looking for the best possible investment opportunity are attracted to the perfect Number 10.

So let’s switch to Smart Score and use it to sort the TipRanks database for some potentially winning stocks. According to the data, each of these has a perfect 10 from Smart Score, a Strong Buy from Street consensus rating, and at least 60% upside potential over the next year. Let’s take a closer look.

Clearfield, Inc. (CLFD)

We’ll start with Clearfield, a technology industry company focused on the development, deployment, and expansion of fiber optic broadband networks. Clearfield manufactures and distributes equipment to distribute, manage, and protect fiber-optic communications; the Minnesota-based company names its platform ‘fiber to everywhere’. Clearfield can boast over a million fiber port deployments each year.

Clearfield’s product lines include a wide range of hardware for fiber optic network installation, including frames & panels, cabinets & wall boxes, cassettes, terminals, test access points, and optical components . The company’s sales for the most recent reported quarter – the fourth quarter of fiscal year 2022, reported this past November – were $95 million. Top sales for fiscal year 2022 reached $271 million. These numbers are up 110% and 92% year over year, respectively.

Finally, Clearfield’s net income for fiscal year ’22 was reported to be $49 million, up from $20 million in fiscal year ’21. The company’s diluted EPS for the year was $3.55, up 141% year-on-year. Work backlog, a metric that helps predict future jobs and revenue, grew 148% year-over-year, to $165 million.

Clearfield’s rapid growth caught the attention of five-star Cowen analyst Paul Silverstein, who wrote: “CLFD has demonstrated impressive vision and execution in establishing a leading position in the industry. The number of Tier 2 and 3 BSPs in the fiber distribution, management and protection solutions segment of the FTTH broadband access market is very attractive.”

“We see a number of longer-term growth opportunities for Clearfield in the larger FTTH and FTTP markets. These include the expansion of FTTP fiber management products such as Clearfield’s recently introduced stand and acquisition of Nestor Cable for fiber; expands FTTP customers through new and deeper penetration of tier 1 CSPs and MSOs, and expands FTTP use cases to MDU, FTTB and 5G FTTT,” Silverstein added.

Everything CLFD is doing has prompted Silverstein to rate the stock Outperform (i.e. Buy). Cherry on top? His $141 price target means a ~72% increase from current levels. (To see Silverstein’s achievements, click here)

Overall, all four recent Wall Street analysts’ ratings of the stock have been positive, leading to a consensus rating of Strong Buy. (See CLFD stock analysis)

Rent-A-Center, Inc. (RCII)

From fiber, we’ll move on to consumer retail, where Rent-A-Center (RAC) is a longtime leader in the rental-to-own segment. The company offers a wide range of products to customers who are looking for the lowest prices. RAC stores display everything from consumer electronics, home appliances, furniture and even computers through flexible lease-purchase agreements. The arrangement offers customers immediate benefits when the product is available – and the option to buy at a reduced price when the lease expires. Lease-to-own offers small-scale consumers the opportunity to avoid high-interest, long-term debt, which can be especially crippling in today’s rising interest rate environment. RAC operates primarily through a network of brick-and-mortar stores, most recently estimated at 1,970 stores, and also operates an e-commerce website.

Last year was a difficult year for the RAC. Sales and earnings both showed some consecutive declines, as consumers often cut back on spending in an environment of high inflation and high interest rates. The company’s small-scale consumer base has been particularly hard hit by those headwinds. The company’s most recently reported quarterly results, for the third quarter of 2022, showed a 13% year-over-year decline in revenue, to $1.02 billion, and a quarterly net loss, calculated under GAAP, is 10 cents per share. In non-GAAP terms, the RAC reported a diluted EPS profit of 94 cents; this figure is still down 38% over the same period.

For investors interested in returns, RAC generated $412 million in cash from operations in the first three quarters of 2022. That total includes $363 million in free cash. The company’s ample cash flow allowed it to buy back $75 million worth of stock in the third and October quarters – while maintaining a stable, high-yielding dividend payment. The final dividend statement, made in December for a payout on January 10, puts the common stock div at 34 cents. At that rate, the annual dividend amounts to $1.36 per share and yields a 5.4% yield, more than double the average found among Listed Stocks S&P.

When covering the stock for Craig-Hallum, analyst Alex Fuhrman sees a reason for investors to pick RCII stock, explaining: “Rent-A-Center is a rental-to-own operator. The best in class (LTO) should be one of the biggest beneficiaries of falling inflation. High inflation has reduced consumer spending on high-priced items among subprime customers, and the RCII has felt that pain severely…. With the stock down nearly two-thirds from its 2021 peak, we think the worst-case scenario is already priced into the stock and Rent-A-Center is well positioned for substantial growth over the cycle. next economic period.”

“In the meantime,” the analyst added, “RCII’s dividend yield gives investors an attractive incentive to wait. With signs already emerging that inflation is easing and Consumer credit is tightening, investors may not have to wait long.”

Ultimately, Fuhrman rates RCII stock as a Buy and has a price target of $40, suggesting the stock will rise ~60% in a year’s time. (To see Fuhrman’s achievements, click here)

Craig-Hallum’s view is not the only optimism here; the stock has had 5 recent analyst reviews recorded and they’re 4 to 1 in favor of Buy over Hold, favoring a Strong Buy consensus rating. (See RCII stock analysis)

Keep up with the Best TipRanks smart score must provide.

Disclaimer: The opinions expressed in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.

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