Investors looking for stock ideas into the second half of 2021 may want consider some of these fresh ideas.
These are stocks that Wall Street analysts believe are primed to surge over the long run and offer good value now. The names highlighted in this article not only fit the mold, but also have been given a thumbs up by pros that consistently get it right. TipRanks analyst forecasting service attempts to identify the best-performing analysts on the Street. These are the analysts with the highest success rate and average return per rating, factoring in the number of ratings assigned by each analyst.
Here are five stocks that Wall Street’s best-performing analysts think can continue to surge:
FIGS is a direct-to-consumer (DTC) healthcare apparel company which designs products that are both comfortable and durable. Over the last five days, shares have gained 33%.
The name has racked up several bullish recommendations recently, including one from Oppenheimer’s Jason Helfstein. On June 21, he kicked off his coverage of the stock with a Buy rating and set a $45 price target.
According to Helfstein, FIGS has 1.3 million active customers, with the number of healthcare workers throughout the U.S. and globally landing at 21 million and 118 million, respectively. “As a technology-enabled DTC brand, FIGS is disrupting the $79 billion-plus healthcare apparel industry that has historically consisted of thousands of small brick & mortar retailers lacking a strong digital presence,” the analyst cheered.
By creating the largest DTC platform in the healthcare apparel industry, Helfstein says that FIGS will have more control when it comes to the end-to-end user experience.
What exactly makes the company a stand-out in the space? Helfstein argues that its “focus on product design and functionality has allowed FIGS to disrupt legacy operators still relying upon tired and undifferentiated product offering.” This has led to higher repeat buyer activity, with repeat customers making up 62% of FY20 revenue, up from FY18′s 52%.
It’s worth mentioning that approximately 55% of FIGS’ active customers are 18-35 years old, which Helfstein thinks “makes FIGS well positioned to benefit from a lifetime of recurring product sales.” He added, “We believe young cohorts will become increasingly valuable as they progress in their careers and have more disposable income available.”
As for the valuation, Helfstein’s price target implies 17.5x FY23E EV/ gross profit, which is a premium to other high growth digital players. That being said, the analyst states that a “premium multiple is justified given faster growth than peers, higher likelihood of repurchase activity, and disruptor status in a largely underpenetrated market with ample room for expansion.”
A top 25-ranked analyst, Helfstein boasts a 69% success rate and 39.9% average return per rating.
For BTIG analyst Jake Fuller, real estate and rental marketplace Zillow Group reflects an exciting investment opportunity. As such, the top analyst reiterated a Buy rating and $202 price target, which puts the upside potential at 75%.
“Our favorable view of ZG is driven by healthy growth prospects in its core high-margin advertising business, as well as increased comfort in the ability to ramp the Offers platform over the next several years,” the BTIG analyst opined.
Fuller tells investors that he has been tracking the number of active listings, removals and additions across several iBuyers in the space. It should be noted that active listings refer to an inventory proxy, but pending sales and homes undergoing renovations are not included. The analyst added that “new listings are a lagging indicator of purchases as a purchased home isn’t listed until renovations are complete” and “removed listings are a leading indicator of sales.”
With this in mind, Fuller found that “ZG looks to be back on track in the iBuyer business following a January-February lull in purchase activity and that should put it ahead of Q2 guidance.”
Digging a bit deeper into the details, through the middle of June, Zillow has added 2,600 listings and removed 2,000. This “should be enough to top the Offers revenue guide of $720-750 million,” in Fuller’s opinion, with solid pricing trends potentially resulting in “elevated gross margins.”
From March to May, listing additions grew from 648 to 1,000, and the listing count was at 721 as of June 15.
Fuller also noted, “On the other side, ZG has removed over 2,000 listings with volume ramping sequentially throughout Q2. We also see ZG’s average listing price tracking 5%-plus sequentially. Depending on how the rest of June plays out, Offers could be on a path for revenue in the $800 million-plus range.”
According to TipRanks, on average, Fuller’s calls generate returns of 20.8%, with his success rate coming in at 64%.