While every market advisor will tell you never to try to ‘time’ the market, timing is still important for success. Investors need to buy into low prices, and to do that, they need to know when prices are low. This doesn’t necessarily mean low in absolute dollar terms, but low relative to a stock’s recent past performance.
In recognizing that lower price range, investors can turn to Wall Street’s pros for help. The analysts have been busy lately, picking out stocks that are in their lower price range, and are flirting with the bottom.
We’ve used the TipRanks database to look up two such stocks, Strong Buys with at least 50% upside potential for the next few months – and each one is trading at or near its one-year low. Are these the low prices investors should consider? Let’s take a closer look.
CrowdStrike Holdings (CRWD)
First up, CrowdStrike, is a major name in cybersecurity. The company, which got its start in 2011, offers customers a range of online and system security solutions. CrowdStrike’s flagship product, the Falcon Endpoint Protection line, is available by subscription; customers can choose from four increasing levels of threat protection for their connected systems.
In mid-2020 CrowdStrike turned profitable, and the company has been reporting quarterly EPS profits ever since, along with steadily rising top-line revenues. In its most recent reported quarter, for fiscal 3Q22, the company showed just over $380 million in total revenues, for an impressive 63% year-over-year jump. Earnings per share rose to 17 cents, more than doubling the year-ago value of 8 cents. The rising revenue and earnings reflect the demand for cybersecurity services, and the value that users place on the product. The company didn’t just show positive revenue and earnings; it also showed a 67% yoy increase in annual recurring revenue, to more than $1.5 billion, and marked the second quarter in a row of 1,600+ new subscribers.
Nevertheless, CrowdStrike’s stock is down sharply lately. The stock peaked in November, at more than $293 per share, and has since fallen some 43%. CrowdStrike’s share value has been negatively impacted by overall market conditions, including prospects for Fed rate hikes which will correlate with generally falling stock values.
Wells Fargo's 5-star analyst Andrew Nowinski likes what he sees in CrowdStrike, saying: “We believe CrowdStrike is well-positioned to continue taking share from both legacy and next-gen vendors. The company offers one of the most comprehensive platforms in the industry, comprised of 21 modules, which can address a $67B market opportunity. The most important metric to measure the health of CrowdStrike and the success of these new modules is ARR, and we believe the Street is largely underestimating it by not factoring in enough of a contribution from the new products and modules."
Acknowledging the company's potential growth, Nowinski rates CRWD shares an Overweight (i.e. Buy), and his $15 price target suggests an upside of 68% for the year ahead. (To watch Nowinski’s track record, click here)
CrowdStrike has generated a lot of buzz on Wall Street, and has 24 reviews on file. These include 21 Buys along with 2 Holds and 1 Sell, for a Strong Buy consensus view. The shares have an average price target of $277.35, suggesting ~69% upside from the current share price of $163.8. (See CRWD stock forecast on TipRanks)
CoStar Group (CSGP)
Next up is a tech company in the real estate business. CoStar has a long history in the commercial real estate sector, providing data services including analytics, information, and marketing. The company operates in the US, UK, Germany, France, and Spain, and in recent months has been making moves to expand its operations into the residential real estate segment.
These moves included two major acquisitions in the last 15 months, involving Homesnap (a residential mobile app provider) and Homes.com (a residential real estate website). The two acquisitions cost CoStar a combined $406 million in cash. While the acquisition moves bode well for CoStar long-term, they have had an impact on the stock; both deals come with expenses related to integrating the companies into a whole, as well as bringing concerns over CoStar’s entry into a new market. In addition, CoStar has faced an unexpected headwind in the final quarter of 2021; recovering in the apartment leasing market has lead to a crunch in available apartments, leaving fewer units for CoStar to list and advertise. Taken together, the headwinds have pushed CoStar’s stock down 45% from its October high.
Going forward, however, CoStar has firm foundations to stand on. The company’s earnings have been stable for the past two years, holding in the range between 23 cents and 28 cents per share. Revenues have been showing modest sequential gains in each of the last 8 quarters. In the most recent quarterly report, for Q3, CoStar reported $499.3 million in revenue and 25 cents EPS; the top line was up 17% year-over-year while EPS was right in line with the recent average.
In his review of CoStar for Baird, analyst Jeffrey Meuler describes the stock as a ‘Top Idea for 2022,’ and rates it an Outperform (i.e. Buy). His $108 price target indicates potential for ~58% upside going forward. (To watch Meuler’s track record, click here)
"We expect organic revenue growth reacceleration in 2022, residential initiative progress should improve related investor sentiment, significant current growth investment provides flexibility to allocate between businesses/initiatives, and has over-capitalized balance sheet. Good relative value at 13x EV/'22E revenue for portfolio of extremely high-quality businesses we believe should all generate 50%+ adj. EBITDA margins (with good capital efficiency) at "maturity" and which each have considerable growth potential, with excellent founder-led management team regarding strategy, execution, and capital allocation," Meuler opined.
All in all, the Strong Buy consensus rating on CoStar is unanimous, based on 5 positive reviews set in recent weeks. The stock is priced at $68.53 and has a $104.60 average price target suggesting a 12-month upside of ~53%. (See CoStar stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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.