According to analysts, these 2 stocks are very undervalued and should not be overlooked
There is a saying on the stock market "Sell in May, go away". But how about using this saying to your advantage, and in a potential downturn, buy, for example, these 2 stocks that analysts say are undervalued?
Bank of America technical strategist Stephen Suttmeier recently predicted that the stock market could rise as much as 5% this summer, presenting an investment opportunity for shareholders. Analyst Stephen Suttmeier recommends taking advantage of the May downturn to buy stocks. According to other analysts, these 2 stocks are rated as strong buys. So let's take a look at what stocks are involved?
ModivCare Inc. $MODV+3.6%
ModivCare Inc.
MODVModivCare Inc, formerly known as Providence Service Corporation, is a healthcare company that provides patient care management and coordination solutions. The company is focused on reducing healthcare costs and improving health outcomes through effective care coordination and technology-enabled solutions.
- Non-Emergency Medical Transportation (NEMT): providing reliable and affordable transportation for patients who need to travel for medical treatments but do not require an ambulance.
- Personal Care and Home Care: Offering care services for seniors and people with disabilities who need support in daily living, such as personal hygiene, meals, grooming and mobility.
- Care coordination: Helping patients with complex care needs navigate the health care system and ensuring they receive the right care at the right time and place.
Advantages and disadvantages of community:
Advantages:
- Reducing healthcare costs through efficient coordination and technology-enabled solutions.
- Improved quality of care and health outcomes for patients.
- Expansion into new markets and increased demand for their services due to an aging population and increasing need for home care.
Disadvantages:
- Strong competition in healthcare and social services.
- Potential regulatory changes and health care reforms that may affect the market environment and cost of services.
In its most recent financial statement, the company reported revenues of $653.9 million, an increase of 13% year-over-year. This growth is due to the company's expansion into new markets, increased demand for its services, and innovative solutions. The increased interest in their products and services signals significant potential for further growth and reinforces investor confidence in ModivCare as a strong buying opportunity.
These results have excited Jefferies analyst Brian Tanquilut.
MODV's guidance for FY23 appears conservative, which should lead to positive earnings surprises, combining with improving FCF and the outlook for accelerating growth for FY24 to drive the stock higher... Looking ahead, expect contract wins in NEMT (non-emergency medical transportation) to drive EBITDA growth acceleration from FY24.
Along with this comment, Tanquilut has set a target price of $150. In addition to him, 4 other analysts have recently looked at this stock and have agreed on an average target price of $153.
GitLab Inc. $GTLB-1.1%
GitLab Inc.
GTLBGitLab Inc. is a technology company that offers an open-source platform for application development, security and operations (DevSecOps). This platform allows developers to easily manage code, test and deploy applications, while security teams can monitor and address security risks. The company is known for its innovative and user-friendly platform that enables teams to collaborate more quickly and efficiently on software development.
The company's main products and services include:
- GitLab Platform: a comprehensive open-source platform for DevSecOps that includes tools for code version management, change tracking, automated testing, deployment, monitoring, and application security.
- GitLab CI/CD: A continuous integration and continuous delivery (CI/CD) tool that automates the software development, testing and deployment process, accelerating development and improving code quality.
- GitLab Security: A suite of tools and features to ensure application security throughout the development lifecycle, including automated vulnerability scanning, attack detection, and security policy management.
In addition, GitLab announced new AI-driven features to help developers better identify and address potential issues in code. The company also announced plans to expand these features, which could lead to further improvements to their platform and strengthen their competitive position. These new features and expansion plans indicate that GitLab is well positioned to sustain its growth in the future.
Company Pros and Cons:
Advantages:
- The open-source approach allows for easy integration with existing tools and technologies and gives developers the flexibility to choose the best solutions for their needs.
- A comprehensive DevSecOps platform increases team efficiency, reduces development costs, and improves application quality and security.
- Innovative AI-driven features help developers identify and resolve potential code issues faster and improve overall productivity.
Disadvantages:
- Strong competition in DevSecOps, including big players like GitHub (Microsoft), Atlassian and others.
- Dependence on the open-source community can affect the pace of innovation and quality of some platform features.
- Potential security and privacy issues associated with the storage and processing of sensitive developer and customer data.
GitLab recently released financial results for the fourth quarter and full fiscal year 2023, beating both revenue and profit forecasts. The top line came in at $122.9 million, $3.3 million above expectations and an impressive 58% year-over-year increase. Non-GAAP earnings of 3 cents per share marked the third straight quarter of moderating losses and beat analysts' forecasts by 11 cents. This result is a testament to the company's strong market position and its ability to grow and generate profits in a competitive environment.
Despite all the numbers, analyst Joel Fishbein believes this is a great opportunity.
Early in 2023, GTLB has developed into a story with many significant moving parts that have led to volatility in the stock. Investors continue to examine the competitive landscape for its DevOps platform offering and the potential changes presented by the introduction of large-scale language models and AI more broadly. As with many new technologies, we believe the near-term impacts of AI are overstated, and we think the investments GitLab is making in its own AI capabilities that will accrue to platform adoption over the long term.
Along with this comment, Fishbein set a target price of $50. In addition to him, 15 other analysts have recently looked at the company, agreeing on an average target price of $45.
Conclusion
Both ModivCare and GitLab operate in different industries and offer unique products and services that allow them to compete in the marketplace. Their advantages such as innovation, efficiency and expansion into new markets may offer the potential for further growth and profitability. On the other hand, disadvantages such as strong competition and potential regulatory changes that could affect their future performance need to be considered.
WARNING: I am not a financial advisor, and this material does not serve as a financial or investment recommendation. The content of this material is purely informational.
