These 2 stocks should be on your radar according to analysts
2022 was not a good year for investors. But there is one very positive thing about it. That is the situation where there were super investment opportunities on the markets that investors could take advantage of and make a lot of money from in the future. If you missed out last year, don't despair. Today, we're going to take a look at 2 stocks that analysts say you should be on the lookout for.
How to spot great investment opportunities for the future. In short, just look at what traits companies that are successful today have exhibited in the past. These traits may be strong fundamentals supported by above-average revenue and earnings growth, for example, or they may show trends in fund ownership, or they may simply thrive in declining markets. Today, we look at two companies that are not in many investors' sights at the moment, but analysts believe they are quality investments.
Iridium Communications $IRDM+0.6%
The first of these two companies is Iridium Communications $IRDM+0.6%, which operates in the communications services sector. Specifically, the company is a provider of mobile voice and data communications services. In short, the company operates a constellation of satellites through which it continues to provide its services. Thanks to these satellites, the company has virtually unlimited possibilities of using its services, and can provide its services in many sectors, whether it is the traditional telecommunications sector or, for example, the military sector, and it also provides its services to rescue workers, etc.
So let's take a look at the company's results. Revenues have grown at an average annual rate of around 7.5% over the last 5 years. In terms of net profit over the last 5 years, the company has been slightly loss making here, but this year the company should report its first profitable year, where currently for the last 12 months the company has reported a profit of about 3.6 million. USD. As for EBITDA, it has grown at an average annual rate of about 11.5% over the last 5 years. In practice, this means that earnings before interest, tax, depreciation and amortisation have been positive, and have grown by an average of around 11.5% per annum.
As regards debt, the company's balance sheet shows a certain financial stability. The company has short-term liabilities covered by its current assets. And as for long-term debt, it looks fine too. The ratio of long-term debt to equity here is roughly one to one, which means that the company is fairly well financed.
From a cash flow perspective, the company also looks solid. The company's operating cash flow has grown at an average of about 3.5% per year over the past 5 years. The company has also managed to drastically reduce its capital expenditures over the past 5 years, which has caused the company to be in the positive numbers in terms of free cash flow for the third year.
The company's numbers don't look all that appealing, so why should investors keep an eye on this stock? That's because earlier this year, the company unveiled a new partnership, with Qualcomm Technologies $QCOM+0.2%, a leader in mobile technology.
This collaboration is aimed at supporting satellite services for various smartphone brands and has the potential to expand to other consumer devices in the future. The collaboration is now set to start in the context of Android mobile phones, but in the future it could also extend to the automotive industry, for example in the context of navigation systems.
This collaboration should extend mobile coverage anywhere on the planet with an open view.
According to analysts, the stock is currently in a buy zone, and even big banks such as JP Morgan are bullish on the stock.
My personal stance on this stock is that I'm not currently planning to buy, but I'll definitely be watching this stock, if only because the company's first satellite-enabled mobile phones should start coming out of production sometime in the second half of the year. This is where I personally think this collaboration can help the company a lot to grow, and to be more profitable.
The company also has a definite competitive advantage, because starting a business in this field is not exactly easy, and not every company has 66 satellites in orbit.
Medpace Holdings $MEDP-0.4%
The Company is engaged in providing outsourced clinical development services to the biotechnology, pharmaceutical and healthcare industries. Its services include medical affairs, clinical trial management, data-driven feasibility, study initiation, clinical monitoring, regulatory affairs, patient recruitment and retention, biometrics and data science, and quality assurance of studies conducted.
The Company provides services for Phase I through IV drug and medical device development trials, including regulatory and central laboratory services.
In terms of longer-term results, the company's revenues have grown at an average annual rate of approximately 32% over the past 5 years. Net income has grown at a compound annual growth rate of about 73% over the past 5 years, implying highly expanding net margins. In terms of earnings before interest, taxes, depreciation, and amortization, it has grown at an average rate of about 23% over the past 5 years. As we can see from the results, this is a relatively fast-growing company. In addition, this company is also a contract agency for clinical trials.
Again, looking at the balance sheet, there is some financial stability, with the company having its short-term liabilities covered by short-term assets. As far as the company's long-term financing is concerned, here too the company looks financially stable. The company's debt to equity financing ratio is also approximately one to one, with the company's equity predominating.
The company's operating cash flow has grown at an average rate of about 37% over the last 5 years. The company has not reduced its capital expenditure here, but instead capital expenditure has been increasing over the last 5 years. Despite rising capital expenditure, the company has been very good at increasing free cash flow, which has grown by an average of about 39% over the last 5 years.
The second company operates in a very attractive sector, with decent potential, which is reflected in the very decent growth in their results. After all, new drugs, and devices are always being developed, and there will always be a need for clinical trials.
Here we have presented two companies that analysts believe have decent growth potential. In the first case, it is a company that operates in an industry where it has a fairly decent competitive advantage, and a very good catalyst for growth could be a newly agreed collaboration that just offers further opportunities for the company to grow.
In the second case, it is a company operating in an industry with great potential, and the company's services will be more and more needed than ever in the future.
Personally, in both cases, I will not be diving into the current purchases, but I will certainly be keeping an eye on the companies. Personally, I particularly like the first company, where a deal is currently imminent that could cause decent growth for the company, and could also open up new opportunities for the company.
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.