These 2 “active buy” stocks still look cheap despite this year’s rally

It would be obvious to note that an important part of the investment game is looking for undervalued stocks. — that is, companies with sound fundamentals that the market does not currently fully value. Luckily for investors, after the massive carnage of 2022, many companies are still at relatively low levels.

In fact, even after the strong rallies seen earlier in the year, such as the relentless bear of 2022, there are plenty of stocks that have posted strong recent performance but still dropped significantly over the past year that Wall Street analysts see more in stock for. opportunities for growth.

Digging into the TipRanks database, we came across two tickers that offer just that; great recent performance but still looks pretty cheap if you zoom out a bit. And, even better, Wall Street pundits see both stocks as strong buys with a lot of upside potential. Let’s see why.

RumbleOn, Inc. (yuan)

The first cheap stock we’ll look at is RumbleOn, the largest sports car retailer in the US. The company uses advanced technology to collect and distribute used vehicles and offers technology solutions to dealers, including virtual inventory and a 24/7 distribution platform. The business is divided into three separate divisions; Powersports (including motorcycles), Automotive (cars and trucks), and Vehicle Logistics and Transportation (vehicle transportation services).

RumbleON is expected to release its Q4 2022 results next month, but a review of Q3 results could be informative. In particular, revenue rose an impressive 112.6% year-on-year to $470.3 million, just $3.93 million more than Street was required to.

However, the company missed the mark in net income, with adj. Earnings per share of $0.27 is well below analysts’ expectations of $0.83. The company blamed the weak performance for the margin squeeze affecting operations. As far as the forecast goes, RumbleOn’s full-year revenue will be between $1.85 billion and $1.90 billion. The consensus was $1.96 billion.

The story goes on

Investors were unimpressed with the results and the stock fell after the release. And while the stock is up 41% year-to-date, it’s still down 75% over the past 12 months.

Analyst Eric Wald, who covers the action for B. Riley, believes that many have yet to take advantage of this opportunity. He writes: “Our confidence that RMBL ended 2022 with a stronger power sports inventory balance and management confirmed that underlying demand for power vehicles remains robust, we remain confident in the company’s ability to increase its share of market in 2023 and improve operational efficiency as the new Fulfillment Centers will be online in H1 2023. We also expect a better understanding of RMBL’s strong liquidity position and cash flow outlook to help lift the stock in the coming quarters.”

Apparently, he also thinks the stock still looks cheap. His comments reinforce a Buy recommendation, while Wold’s $26 price target suggests the stock will generate 185% returns over the next year. (To view Wald’s track record, click here)

Two other analysts have been monitoring RMBL’s performance over the last 3 months and both are also positive, giving the stock a Strong Buy consensus rating. The average target price of $16.33 suggests that the stock will rise by about 79% in the coming year. (See RumbleOn stock forecast)

ACM Research Inc. (ACMR)

Our next cheap-looking stock comes from the chip sector, although not directly. ACM Research is a supplier of high quality equipment for global semiconductor manufacturers. The company pays great attention to cleaning equipment, although it is moving towards more diverse solutions. Founded in California back in 1998, the majority of the company’s business, however, is carried out in China, where ACM’s R&D and manufacturing takes place.

In Q3 2022, the last reporting quarter, revenue nearly doubled year-over-year to $133.71 million, beating Street’s expectations by $20.4 million. Similarly, at $0.42 corr. Earnings per share were some distance above analysts’ expectations of $0.23.

In early January, ACM reaffirmed its full-year 2022 revenue forecast of $365 million to $385 million and said 2023 revenue is expected to be in the $515 million to $585 million range. This is well above the consensus estimate of $425.52 million.

Investors liked the January news and it helped stocks rise 56% this year. However, given the high reliance on China and the resulting overweight (the US is cutting semiconductor sales and the Covid situation in China), the stock is still down 55% over the past 12 months.

Benchmark analyst Mark Miller believes these developments have “overwhelmed” stocks, but he sees plenty of room for optimism.

“With an expected 47% year-on-year revenue growth in fiscal 2023, following a 40% year-on-year revenue growth in 2022, ACM is the growth leader among semi-equipment companies,” the 5-star analyst explained. “This growth is driven by ACM’s SAPS and TEBO cleaning tools, which provide superior performance, as well as additional contributions from new customers and new products, including ACM’s Ultra C wb, ECP map, ECP ap and Ultra Furnace products. The firm recently announced its entry into the chemical vapor deposition market, significantly expanding the markets it serves.”

Based on the above, Miller maintains his Buy recommendation and $32 target price for ACMR shares. If his thesis is confirmed, the potential twelve-month gain will be about 166%. (To view Miller’s track record, click here)

Looking at the consensus breakdown based on 4 buys versus 1 hold, analysts view this stock as a strong buy. The forecast calls for an annual gain of 57.5% with an average target of $18.98. (See ACMR Reserve Forecast)

For good stock trading ideas at an attractive price, visit TipRanks Best Stocks to Buy, a recently launched tool that aggregates all of TipRanks stock analytics.

Disclaimer: The views expressed in this article are solely those of selected analysts. The content is for informational purposes only. It is very important to conduct your own analysis before making any investment.