Today, May 3, 2022, Dow Jones is trading at 32,846, the S&P 500 at 4,116, and Nasdaq at 12,349.
Market uncertainty continues to be in the picture as this downtrend has been going on for a while now. We also had a rough last week which further contributes to this bearish outlook. In such times, it sure isn’t easy to find stocks that can grow your money at an above-average pace.
Another huge issue unrelated to market conditions is that those stocks that are overwhelmingly covered by analysts may be overvalued and those that are not covered at all can be risky.
Here at Big Stocks, we aimed for a balance between those two extremes and found the 4 best stocks to buy now.
They are covered by at least one major Wall Street analyst, have at least a 20% upside, and are issued by companies with strong business fundamentals.
Let’s take a look…
1.) Mueller Industries (MLI)
Our first pick is Mueller Industries (NYSE: MLI), an American manufacturer of copper, aluminum, brass, and plastic products.
The company derives the largest portion of its revenue from its piping systems business which involves producing tubes, rods, valves, fittings, etc.
Though Mueller Industries makes most of its sales in the US, it operates worldwide.
Based on one analyst’s 12-month $100 price target, MLI has an 87.13% upside right now (currently trading at $53.25 per share).
This is an impressively bullish outlook, but not without good reason. Let’s dive into the fundamentals…
MLI proved to be an outstanding growth business last year. Its return on equity was 39%, while its revenue and earnings per share growth (Y/Y) were 57% and 234%, respectively.
With a current ratio of 2.6 and an 85x interest coverage, it also seemed to have very strong liquidity.
On top of that, the company seems to have low debt relative to its equity (D/E: 0.37), making it creditworthy enough.
Still, it’s very surprising that with such good performance and financial stability MLI is that cheap. It has a P/E ratio of 6.4 and a P/B of 2.4. So, even if the recent performance turns out to be unstable, you can count on the inexpensiveness for a still satisfying return.
Source: MLI 10-K
2.) Stride (LRN)
The company mainly offers alternative curriculum programs to school districts to replace traditional on-campus schooling, but also operates virtual charter schools that are state-funded.
Based on 4 analysts, the stock has an averagely estimated 27.55% upside for the next 12 months as the median price target is $50 per share (currently trading at $39.20). The highest price target is at $65 per share and the lowest at $39.
We think that with a market capitalization of $1.7B and the realization of the above forecasts, Stride is well on its way to entering the mid-cap club soon and receiving even more attention from Wall Street. Which is likely to contribute to a further increase in its market cap.
First, the company’s profitability… It has enjoyed a great performance with an 8.9% return on equity, year-over-year revenue growth of 47.6%, and 185% year-over-year earnings per share growth.
This may be enough to justify the analyst forecast price targets, but what if you’re looking for long-term stability?
With a current ratio of 2.8 and a 6.1x interest coverage, Stride is adequately liquid and isn’t likely to experience any shortage of cash any time soon.
We were also happy to see a conservative capital structure reflected in the company’s debt to equity ratio of 0.96. That leaves enough room for debt financing if capital is needed in the future and decreases the chance of stock dilution.
Lastly, the risk would be relatively low considering the current stock’s price trading at 22.9 times the diluted earnings per share and 2.1 times the book value.
Source: LRN 10-K
3.) Berry Global (BERY)
Berry Global Group Inc. (NYSE: BERY) is a global market leader in the plastic packaging products business, which involves manufacturing and selling products like apparel bags, bulk bags, plastic bottles, applicators, etc.
The company’s raw material is plastic resin which can be obtained from a variety of global suppliers.
Considering BERY’s market prominence, attractive business model, and valuation right now, we think that this forecast is reasonable. But we should let the numbers speak too…
When it comes to its performance, BERY had a return on equity of 23%, an 18.2% revenue and 28% EPS YoY growth.
As for liquidity, its last reported current assets were 1.6 times larger than its current liabilities and its EBIT was 3.7 times its interest expense. We think that this level of liquidity can make up for the company’s level of debt (D/E: 4.6).
The opportunity lies in large part in the current trading price, though. A P/E ratio of 10.6 and P/B of 2.4 don’t fit a market leader with such growth potential. So, we think that a correction is imminent here.
Source: BERY 10-K
4.) Ciena (CIEN)
The company’s clients are in the communication service, web-scale, and cable operators industries, among others, from all around the world.
Ciena operates in the United States, Canada, the Caribbean, Latin America, Europe, the Middle East, Africa, the Asia Pacific, Japan, and India.
We are a bit skeptical if this median price target is going to be reached in 12 months, but the company’s financials look solid enough to suggest some great returns in the future…
Ciena’s performance has been pretty decent recently. Its return on equity was 16.5%, revenue remained stable with a 2.5% growth (Y/Y), and its EPS grew by 37.5%, year-over-year.
Now, with a current ratio of 3.5 and a 16x interest coverage, the company looks to have enough leeway to weather a bad year. Its capital structure is also so conservative (D/E: 0.6) as to suggest that bankruptcy won’t be a likely scenario under any circumstances any time soon.
As for value, a P/E ratio of 17.4 and a P/B of 2.8 make us think Ciena is under-appreciated by the market right now.
Source: CIEN 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.
Following recent media reports that the healthcare company CVS Health Corp (NYSE: CVS) is in advanced discussions to acquire home-healthcare provider Signify Health (NASDAQ: SGFY) for roughly $8 billion, two companies confirmed the deal on Monday. CVS agreed to...
Nvidia shares dropped on Wednesday after the United States government limited sales of top AI chips to China. The tech company claims that its A100 and H100 high-performance AI chips would be impacted by the limitation in order to lessen the possibility that the...
September 6, 2022, World Wrestling Entertainment (NYSE: WWE) and Live Nation Entertainment, Inc. (NYSE:LYV) These two entertainment juggernauts have all the catalysts in the world pushing them as the best stocks to buy now. Just because American markets were closed on...
On the first day on the job, Oliver Blume informed the public that Volkswagen will quicken its transition to electric vehicles (EVs), but that the company has to find the correct "rhythm" as it makes the necessary changes. Blume revealed a ten-point strategy...
Lululemon Athletica shares increased by roughly 9% in after-hours trading Thursday, as the company announced quarterly earnings and revenue that exceeded analysts' estimates. U.S.-Canadian retailer reported better-than-expected results despite rising costs hurting...
Shares of Best Buy (NYSE: BBY) are down over 5% this week after the retailer reported a 13% drop in sales for the second quarter on Tuesday as consumers grew weary of inflation-driven price increases. How Did Best Buy Perform in Q1? Despite the sales...
September 2, 2022, Signet Jewelers Limited (NYSE:SIG) and Pure Storage, Inc. (NYSE:PSTG) Despite selling off following decent earnings, these two companies have considerable upside as the best stocks to buy now. As recession risks mount, the market is amid a...
Shares of the Chinese manufacturer of electric vehicles, XPeng (NASDAQ: XPEV), are trading over 20% lower in August after the EV company disclosed a wider-then-anticipated loss for the second quarter and disappointing delivery expectations. How Did XPeng...
September 1, 2022, Scorpio Tankers Inc. (NYSE:STNG) and EOG Resources, Inc. (NYSE:EOG) Singled out by a legendary growth investor, these energy standouts have more room to run as the best stocks to buy now. Investors appear to be in full-blown panic mode. The...
Shares of Dell Technologies (NYSE: DELL) fell to their lowest level since 2018 earlier this week after the technology company reported solid Q2 results but warned of a significant slowdown in the second half of the year as raging inflation continues to weigh on...