Today, May 9, 2022, Dow Jones is trading at 32,899, the S&P 500 at 4,123, and Nasdaq at 12,144.

The consensus is that the markets still have a long bumpy road ahead. With inflation going up, interest rates rising, and growth going down, now’s the time to consider where you put your money.

Even though analysts are bearish on the market as a whole, they are bullish on stocks with strong fundamentals and growth potential. For this post, we compiled the 4 best stocks to buy now, May 9, 2022, based on an average upside of at least 20% given by Wall Street.

Let’s take a look…

1.) Lithia Motors (LAD)

Lithia Motors Best Stocks To Buy Now May 9th 2022 BigStocks.io

Lithia Motors (NYSE: LAD), is one of the largest US auto retailers, selling both used and new vehicles in 25 states.

Founded in 1946 and based in Medford, Oregon, the company owes its growth in large part to its dealership acquisitions in small markets during all these decades.

Recently, it entered the Canadian market through its acquisition of Pfaff Automotive and now aims to grow in any part of the US, regardless of market size. Perhaps, more strategic acquisitions are on the way.

Forecast

 

Based on a 12 analysts 12-month median $445 price target, Lithia has a 49.91% upside right now (currently trading at $296.84 per share). There’s a high estimate of $578 which presupposes that the stock’s price will nearly double in under a year and a low estimate of $300.

Frankly, we think that the high estimate is overly optimistic, but based on the recent performance and the current valuation of the business, a 50% change in price could be justified. Let’s see why…

Fundamentals

 

For an auto dealer, Lithia’s revenue was outstanding considering it generated 74% more sales than it did the previous year. Its return on equity was also exceptionally high at 23% and it grew its EPS by 87%.

As for liquidity, Lithia seems to have plenty of it too. The current ratio was 1.4 and its earnings before interest were 9.1 times its interest expense.

Last but not least, we were happy to find out that Lithia’s performance is still undetected by the market. The stock is trading at only 8.1 times its EPS and 1.8 times its book value. It must be a matter of time until a correction occurs here.

Source: LAD 10-K

2.) Encore Wire (WIRE)

Encore Wire Best Stocks To Buy Now May 9th 2022 on BigStocks.io

Encore Wire (NASDAQ: WIRE) is in the business of manufacturing electrical building cable and wire and supplying them to both commercial and industrial buildings.

The largest portion of its target market consists of electrical distributors providing building wires among other products to electrical contractors.

What’s noteworthy here is that Encore Wire is in a business that is expected to enjoy good growth in the following decade. Copper wire demand may increase all over the world and this market could reach $267.17B by 2030, realizing a 6% CAGR from 2021 to 2030.

Forecast

 

Based on 2 analysts, WIRE seems to have a 12-month estimated 38.95% upside (average estimated price target is $178.50 per share (currently trading at $128.46). The highest price target is $182 per share and the lowest $175.

The stock is already ~60% up in the last 12 months and it only recently became a mid-cap. This means that even if coverage is thin right now, it’s only a matter of time for Wall Street to focus on the company’s merits and be the catalyst for the currently projected upside.

And the numbers support this upside…

Fundamentals

 

First of all, Encore had outstanding revenue growth of 103% last year and its EPS Y/Y growth was 612.5%, which we could safely say that it’s phenomenal.

And if that wasn’t enough, the company generated an impressive 40.4% return on its equity. However, even more impressive is their return on assets being at 35.4%.

Setting these results aside, it’s also interesting to observe how close ROE and ROA are to each other, indicating a conservative capital structure. In fact, the company has a debt to equity ratio of 0.11 and no long-term debt at all.

But a conservative capital structure is not enough if a business lacks liquidity. That is, however, not the case with Encore. It has a current ratio of 6.7 and its most liquid assets are 2.8 times bigger than its current liabilities.

These promising numbers are accompanied by an incredibly low valuation too. The stock is currently trading at 4.9 times its EPS and 2 times its book value. That certainly seals the deal and makes the projected median target price far from unreasonable.

Source: WIRE 10-K

3.) Essent Group (ESNT)

Stocks To Buy Now Berry Global Inc May 3rd 2022

Essent Group (NYSE: ESNT) is a US mortgage insurer that provides credit protection to mortgage investors and lenders mainly by backing a portion of the unpaid mortgage principal in the case of default.

Starting just before the housing market crisis in 2008, Essent Group grew to a market leader and today writes mortgage insurance in all 50 states.

Forecast

 

Based on 10 analysts average 12-month price target of $54 per share for ESNT and its current price of $42.13, the stock has a 25.80% upside. The highest price target is $72 and the lowest is $47.

For such a prominent company as Essent, the median price target is reasonable. Its fundamentals also point to a positive price change in the short term…

Fundamentals

 

Let’s look at profitability and growth first. Essent has had a ROE of 16.1% and a ROA of 11.9%. What’s even better is the 57.5% Y/Y growth of its EPS.

Now, the stock also ticks the box for long-term stability too if you consider that the company had a current ratio of 3.8x and an interest coverage ratio of 100.3x.

Obviously, the company has enough liquidity to make bankruptcy look like a far-fetched scenario. And its debt to equity ratio of 0.35x further contributes to its stability.

The cherry on top is that you can have all this stability and great performance for very cheap. Right now, the stock is trading at 6.9 times its EPS and 1.1 times its book value.

Source: ESNT 10-K

4.) Taylor Morrison Home
      Corporation (TMHC)

Taylor Morrison Home Coporation Best Stocks To Buy Now May 9th 2022 from BigStocks

Taylor Morrison Home Corporation (NYSE:TMHC) is a US house construction company with a concentration in single family homes in California, Florida, Texas, Illinois, Arizona, Colorado, Georgia, and North Carolina.

In addition, the company provides financing services to homebuyers. But it derives most of its revenue from construction projects mainly in the west and central states of the US.

Taylor Morrison also develops master-planned and lifestyle communities.

Forecast

 

Based on the 8 analysts $34 per share average price projection for the following 12 months and TMHC’s current price ($27.72), the stock has a 22.66% upside. The highest price target for the stock is $48 and the lowest one $28.

While the upside suggested by the highest estimate looks too optimistic, the median price target is reasonable. Based on the company’s fundamentals, we’d say it actually is very conservative and the stock price could grow even more once the market realizes the value here…

Fundamentals

 

Taylor Morrison had a good run last year with a 17.2% ROE and witnessed its revenue grow by 47.5% (Y/Y). Its earnings per share also enjoyed an outstanding Y/Y growth of 175.5%.

On top of that, its very high liquidity (current ratio: 3.9, interest coverage: 234.9) provides some stability to the profitability and growth that is yet to come.

As for value, the stock is trading at only 5.3 times its earnings per share and 0.9 times its book value.

For such performance, liquidity, and capital structure, the stock is unreasonably cheap right now. We believe such valuation provides a wide margin of safety that increases the chance of realizing the projected upside and more…

Source: TMHC 10-K

Beat The Market With Our Expert Stock Picks

If you invested in 10 of our featured stock picks over the last 5 years, your chances of beating the market would be 90%.

Our last 3 stock picks grew a combined 348% after our alert!

Want to be notified the next time we issue a “Big Buy” alert or update our stocks to buy list? Sign up below today.

 Get Our Top Stock Picks Sent To You Each Week!
We respect your email privacy
displays
Why is Unilever Stock Price Soaring This Week

Why is Unilever Stock Price Soaring This Week

Shares of Unilever (NYSE: UL) are up around 8% this week on news the company offered a board seat to activist investor Nelson Peltz as the embattled giant attempts to remodel its strategy. Peltz to Become a Board Member Peltz, CEO and founding partner of the hedge...

read more
Why is Tesla (TSLA) Stock Price Falling Again?

Why is Tesla (TSLA) Stock Price Falling Again?

Shares of Tesla (NASDAQ: TSLA) has erased all weekly gains on Friday after Reuters reported the company has paused hiring and will cut 10% stuff to cut costs and preserve margins. Musk Has a ‘Super Bad Feeling’ About Economy Elon Musk reportedly wrote an email to its...

read more
Why is Pinterest Stock Surging Today

Why is Pinterest Stock Surging Today

Shares of Pinterest (NYSE: PINS) are up around 4% Wednesday after the company announced a former Google executive will be replacing Ben Silbermann as the company’s CEO. Leadership Changes Announced Ready, a former chief of Google’s commerce unit and former COO of...

read more
Why is Boeing Stock Surging This Week?

Why is Boeing Stock Surging This Week?

Shares of Boeing (NYSE: BA) are trading sharply higher this week on reports China Southern Airlines is again testing the embattled 737 MAX jet. 737 MAX Closing in on a Return? China Southern Airlines flew test flights with Boeing 737 MAX jets for the first time since...

read more
Why are Mining Stocks Down?

Why are Mining Stocks Down?

The top three Australia-based mining companies were headed for a huge loss of as much as $11.12 billion in total market value. What is Happening With Commodity Stocks? A sharp pullback in commodity stocks is due to weakening China demand and concerns over a potential...

read more
Why are Airline Stocks Down Sharply This week?

Why are Airline Stocks Down Sharply This week?

Airline stocks tumbled sharply this week after the Federal Reserve announced a 75-basis-point interest rate hike Wednesday to curb the highest inflation in over 40 years. The decline in the airline sector outpaced the broader market’s slump, with American Airlines...

read more
This is Why Alibaba Stock is Soaring Lately

This is Why Alibaba Stock is Soaring Lately

Shares of Alibaba (NYSE: BABA) are trading about 30% higher in the last 4 weeks on several positive news from China. Ant Group Situation Improving The relationship between Alibaba Group and Ant Group has dwindled since last year, years after very close collaboration...

read more