Investors are constantly searching for the next big winner. We mean the stocks that are on track to see explosive growth, handsomely rewarding the investors that managed to get onboard at the right time. But how are investors supposed to know when it’s time to snap up the right stock?
The Street’s seasoned pros tell investors that compelling investments can be found among names that have stumbled lately. Rockiness in share prices can present a unique opportunity to get in on the action before the stock heats up.
Taking this into consideration, we’ve used TipRanks’ database to pinpoint 3 tickers with strong growth narratives that remain intact despite recent weakness. If this wasn’t promising enough, each of the names has received enough bullish calls in the last three months to be given a “Strong Buy” consensus rating.
Marathon Digital Holdings (MARA)
The first beaten-down stock we’re looking at is Marathon Digital Holdings, one of the US’s biggest Bitcoin miners. The company operates a data center in Hardin, Montana with a maximum power capacity of 105 Megawatts. That said, aiming to become 100% carbon neutral by the end of 2022, the company has pledged to move out of the coal-powered facility by Q3. At a co-hosted facility in North Dakota, Marathon also owns 2,060 top of the line ASIC Bitcoin miners.
The company has set its sights on expansion. By-mid 2022, Marathon is on schedule to install a total of 133,000 miners, generating around 13.3 exahash while it also remains on track to meet its hashrate guidance of 23.3 exahash per second (EH/s) by early 2023.
To reach that goal, the company is setting up shop at Compute North’s new 300-megawatt Texas data center which will become home to Marathon Digital’s recently purchased bitcoin miners – 73,000 of them.
However, there have been delays in the installation and despite producing a record 1,259 BTC in Q1 2022 (amounting to a 556% year-over-year uptick), the lack of new rig installs in March saw figures miss analysts’ expectations.
Unfortunately for investors, Marathon Digital stock has been falling, and is down ~80% from its November peak. However, this is not much of an issue for Davidson analyst Christopher Brendler. In fact, Brendler remains resolutely upbeat regarding Marathon’s prospects.
“March results came in below expectations, but we’re bulled on the stock here,” the analyst said. “Although estimates fall due to final TX delays and the move out of Montana, this is just timing and we’re more confident in MARA’s growth trajectory. With one of the strongest balance sheets in the sector and TX now finally opening, we are increasingly confident Marathon will be able to hit its remarkable hashrate goals (from 4 EH/s to 23+ EH/s by early 2023).”
Accordingly, Brendler rates MARA stock a Buy, while his $65 price target makes room for one-year growth of a whooping 317%. (To watch Brendler’s track record, click here)
Other analysts agree; based on Buys only – 4, in total – the stock boasts a Strong Buy consensus rating. Moreover, the average price target is a bullish one; at $57.67, the figure suggests shares will climb ~270% higher over the next 12 months. (See MARA stock forecast on TipRanks)
Let’s move from crypto mining to a tech healthcare company which offers a unique proposition in the biotech drug discovery industry. Schrodinger’s computational platform aids biopharmaceutical and industrial businesses, academic institutions, and government laboratories across the globe in their research. Additionally, Schrödinger has both fully-owned and partnered drug discovery activities in a variety of therapeutic fields. The company has received the backing of some very prominent investors – namely the Bill & Melinda Gates Foundation.
Highlighting the growing adoption of its platform, in Q4, the last reported quarter, software sales increased 55% year-over-year to reach $38.6 million, while for the full-year 2021, the company generated $113.2 million in software revenue – amounting to 22% y/y growth. The figure also came in above Schrodinger’s guidance of $102 million – $110 million.
Jefferies’ Michael Yee notes the software segment is “quite attractive,” but the analyst is mostly excited about the “underappreciated biotech pipeline.”
And while still in its early stages, there is an upcoming catalyst. The company is on track to submit to the FDA the IND for its MALT1 (mucosa-associated lymphoid tissue lymphoma translocation protein 1) inhibitor program in the first half of 2022. The drug has been earmarked as a potential therapy for several non-Hodgkin’s B-cell lymphomas as well as chronic lymphocytic leukemia. Following which, a Phase 1 study could get underway in 2H22.
Schrodinger shares have been falling steadily for the past 12 months; the stock is down 68% in that period. However, Yee sees that share retreat, as an ‘in’ for investors.
“Stock came in a lot in 2021 on a risk-off environment especially as quarters were tepid until Q4. They put up a strong Q4 and guide and we think the stock could partially rebound in 2022 as they appear to have confidence in hitting numbers and the pipeline could generate value (has never really traded on pipeline, it always traded on quarters…). Investor focus on the stock may shift partially from quarters to actual cancer drugs now in Phase I and internal pipeline. At $1.75B cap, we think the pipeline is almost free (we value software at ~$1.5B, drug discovery at $1-1.5B) and the market could see substantially more value as management shows they can execute into FY23,” Yee opined.
To this end, Yee puts a Buy rating on SDGR shares and backs it up with a $50 price target, suggesting shares could double over the one-year timeframe. (To watch Yee’s track record, click here)
The Street is also in agreement on this one; all 5 recent ratings are positive, making the consensus view here a Strong Buy. The average target is even more bullish than Yee will allow; the forecast calls for 12-month gains of ~195%, considering the average price target clocks in at $73. (See Schrodinger stock forecast on TipRanks)
indie Semiconductor (INDI)
Let’s switch gears again and hop over to an entirely different sector. As the name implies, indie Semiconductor is a chip maker, although one with a special focus on the auto industry. The company’s products are geared toward ADAS (Advanced Driver Assistance Systems) and connected cars, with indie providing user experience solutions, lidar sensors and vehicle electrification offerings.
Auto production has been severely hit by supply shortages over the past year, but as an indication of the healthy demand for its products, the company has been posting some impressive growth.
In 4Q21, the last reported quarter, revenues soared by 185% from the same period a year ago to reach $19 million, with the company forecasting that figure would rise to $21.5 million at the mid-point in Q1 – amounting to a 165% year-over-year increase. However, at the end of March, indie announced that revenue for the quarter had exceeded the high end of guidance with sales topping $22 million.
That hasn’t kept the stock immune to the market’s vagaries in 2022; shares are down by 42% year-to-date.
Nevertheless, with the company making inroads with auto OEMs, and pushing toward another doubling of revenue again in FY22, Benchmark analyst David Williams sees plenty of reasons to stay bullish.
“We remain positive and believe INDI is increasingly well positioned to capture a significant share of the $40B SAM over the next few years,” wrote the 5-star analyst. “We view the 12+ Tier 1 relationships, accelerating momentum, and execution as a solid foundation to deliver progressively higher quality results with outperformance relative to the market and peers. In our view, the current share price is attractive and offers investors exposure to the long-term secular growth trends in automotive.”
Given these comments, it’s no wonder Williams reiterated his Buy recommendation and $17 price target. This target conveys his confidence in INDI’s ability to climb 146% higher over the next twelve months. (To watch Williams’ track record, click here)
Williams’ positivity chimes well with his colleagues too; while only 2 other reviews have been posted over the past 3 months, they both say Buy, providing the stock with a Strong Buy consensus rating. Going by the $15 price target, shares are expected to appreciate by 117% in the year ahead. (See INDI stock forecast on TipRanks)
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.