Markets are down, but not collapsing. Investors remain worried about the coronavirus, and Tuesday’s election remains up in the air. Uncertainty rules the day, exacerbated by recent market losses. Wall Street, however, expects that the bulls will start running again after next week’s results – who wins will be less important than having a result.
In the meantime, market declines and low share prices make for a prime time to buy in – if you judge the bottom correctly. Do that, and the rest is just ‘buy low and sell high.’ And to that end, Wall Street’s analysts have been pointing out stocks that may have hit bottom.
Using TipRanks database, we pinpointed three such stocks. Each is down significantly, but each also has a Strong Buy consensus rating and at least 30% upside potential for the coming months.
Fury Gold Mines (FURY)
Gold – just the precious metal asset – has grown popular during the course of 2020. The coronavirus crisis and investors’ desire for a stable store of value pushed it above $2,000 earlier this year, and one ounce of gold is still selling for over $1,800. For those who haven’t got that kind of resource, however, buying stock in gold miners may be the next best thing.
Fury Gold Mines is a small-cap mining company headquartered in Toronto and focused on exploiting the vast resources of the Canadian North. With mines in British Columbia, northern Quebec, and the far-north territory of Nunavut, Fury has large gold reserves in both open pit and underground mines. World gold production dropped by 1% in the last 12 months, giving the first hint that we may be at ‘peak gold,’ and prices will soon increase further.
That development would bode well for Fury, which operates at a net loss. The company formed earlier this year, as a restructure of Auryn Resources that involved a merger with Eastmain and the divestment of Peruvian mines. The result is a company that is focused on Canadian development, able to take advantage of Canada’s stable work environment.
The stock saw sharp declines recently, when the new FURY ticker started trading, taking Auryn’s place in the market and keeping the older company’s trading history. The drop saw Fury shares shed 67% this month.
Covering the stock for Cantor, analyst Matthew O’Keefe sees plenty of upside ahead. The analyst noted, “Based on a combined gold equivalent resource of 3.9Moz, Fury is trading $43/oz versus peers at $60/oz. We expect that, as the new management makes its mark with new drill results (towards the end of 2020 and throughout 2021) and demonstrates advancement of its projects, the stock should move up.”
But how much up? O’Keefe’s $2.60 price target on FURY suggests a 126% upside potential for the coming year and supports his Buy rating. (To watch O’Keefe’s track record, click here)
The Wall Street analyst consensus on Fury is a Strong Buy, based on 4 Buy ratings with no Sells or Holds. The stock is selling for $1.13 and its $3.37 average price target suggests it has room to nearly double in the next 12 months. (See FURY stock analysis on TipRanks)
Star Bulk Carries (SBLK)
Next up, Star Bulk Carries, is a Greece-based shipping company specializing in the dry bulk ocean carry trade, the backbone of the world’s shipping industry. Star Bulk operates a fleet of 116 carriers, ranging in size from ~50,000 tons to giant Newcastlemax bulk haulers rated over 200,000 tons.
The trade disruptions caused by corona were hard on the industry, and SBLK was no exception. The stock is down 47% year-to-date.
However, the company’s financial performance this year has been in line with its historical pattern – the first half of a calendar year sees a net loss, while the second half sees net gains. The losses in 1H20 where normal for SBLK’s pattern – and the outlook for Q3 is a return to net profits, with EPS projected at 30 cents.
Covering this stock for Deutsche Bank, analyst Amit Mehrotra notes a series of related points: “[We] think the company’s net debt position should improve by about $50M vs. 2Q levels, reflecting cash flow generation in excess of >$40M of debt paydown in 3Q. We also expect the company’s prospective breakeven to reduce to under $11k per day… While we remain frustrated by the lackluster performance of SBLK shares in the context of above-mentioned improving fundamentals…we remain very comfortable that the intrinsic value of SBLK’s equity value is improving in the current environment…”
Mehrotra sums up his view of Star Bulk succinctly: “On the whole, we’re encouraged by the fundamental trajectory of the company…”
The analyst rates SBLK a Buy, while his $15 price target implies an upside potential of 143% from current levels. (To watch Mehrotra’s track record, click here)
With 3 recent Buy reviews, SBLK holds a unanimous Strong Buy rating from the analyst consensus. The stock is currently trading at $6.18 and has an average price target of $12.09, making the one-year upside 96%. (See SBLK stock analysis on TipRanks)
Heritage-Crystal Clean (HCCI)
Pollution is a problem, no matter what. We all want a clean environment to live in, and we should all care about how modern industrial pollutants are disposed of. Heritage-Crystal Clean inhabits that clean-up niche, providing environmental cleaning services, including vacuum services for street cleaning, light industrial and mechanical parts cleaning technology, and a variety of waste recovery services including recovery and disposal of oil and oil products, antifreezes, and general industrial liquid waste. It’s an important, often overlooked, and vital niche in a modern technological society.
After a dip into negative territory in Q2, HCCI reported stronger results for Q3. Revenues gained sequentially from $74 million to $82 million, and EPS swung from a 31-cent loss to an 18-cent gain. Despite the positive results, both earnings and revenues remain depressed compared to the year-ago quarter, and the stock has failed to regain traction after last March’s decline. HCCI is down 49% year-to-date.
Roth Capital’s Gerry Sweeney, in his comments on this stock, notes that “Revenue continues to rebound as economic activity improves from COVID shelter in place orders… The highlight in the quarter was a faster than anticipated rebound in margins. While margins are still down from last year’s pre-pandemic level of 25.7%, they are up from 2Q margins of (28.2%). The improvement was driven by higher labor utilization and leverage of assets, lower solvent costs, and the internalization of waste disposal…”
Sweeney rates the stock a Buy. His $21 price target indicates confidence in a solid 32% upside for the next year. (To watch Sweeney’s track record, click here.)
Over the past three months, three other analysts have thrown the hat in with a view on HCCI. The three additional Buy ratings provide the stock with a Strong Buy consensus rating. With an average price target of $20.75, investors stand to take home a 30% gain, should the target be met over the next 12 months. (See HCCI stock analysis at 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.