These 3 stocks are down more than 50%. Analysts say this could be a good opportunity.
There is one opinion on Wall Street, and that is buy when there is blood in the streets. That means trying to find good, quality stocks in times of uncertainty, and buying them just as they are being carved up. According to Wall Street analysts, these 3 stocks are hot candidates.
Investing in the stock market can often be a game of reverse psychology, where the smart investor looks for stocks that are currently in the doldrums but have the potential for growth. In this article, we'll look at three such companies that are at their lowest valuations and have strong buy ratings, according to Wall Street analysts.
Aspen Aerogels $ASPN-3.0%
Aspen Aerogels, Inc.
ASPNAspen Aerogels operates in the construction, energy, petrochemical, and other industries where it offers its aerogel insulation materials. Aerogels are highly porous, low-density materials that have excellent insulating properties and minimize heat loss. The company offers several products such as Pyrogel, Cryogel, and Spaceloft that are designed for various applications such as insulating buildings, pipelines, equipment, and more.
The advantages of Aspen Aerogels lie in its innovative aerogel technology that offers significant energy savings and reduction in greenhouse gas emissions. The company also creates products that are resistant to moisture, fire and pressure. Disadvantages include competition from insulation materials such as conventional mineral and glass wool, and dependence on economic cycles that affect demand for construction and industrial projects.
Despite the aforementioned drawbacks, analyst Eric Stine is bullish on the company and sees Totu as a potentially good investment in the long run.
Aspen Aerogels should see meaningful multi-year growth given the company's disruptive product offering with compelling product offerings, top-tier customer list, massive opportunity in the energy insulation and EV markets. In the near term, we believe that investors will have to deal with volatility and a degree of uncertainty regarding the timing of growth, and large expenses to take full advantage of the EV opportunity with a significant multi-year growth outlook. In our view, it is not about 2023 or even 2024 for ASPN, but rather how it is positioned for 2025/2026/2027 and beyond. In short, we see ASPN as ideally positioned, consider it our top name.
Along with his comments, Stine added a price target of $32. A similar view is shared by 6 other Wall Street analysts, who agree on a BUY rating and an average price target of $25.25.
Lsb Industries $LXU+0.7%
Lsb Industries operates in the industrial and agricultural chemicals sector, manufacturing and supplying products such as fertilizers, chemical compounds and gas processing technologies. The company focuses on segments such as agriculture, industrial, energy, automotive, and construction.
Lsb Industries' strengths include a broad portfolio of products and services that cover many industries and allow it to spread its risk. The company also invests in research and development to create innovative products and improve the efficiency of its processes. However, LXU faces significant challenges such as volatility in raw material prices, which can cause profitability fluctuations, and competition from other chemical manufacturers.
Despite the fact that the company has gone through a rather rough patch regarding gas price fluctuations, analyst David Begleiter remains optimistic about the stock.
We believe the decline in LSB stock is an opportunity for investors as strong Ag fundamentals are expected to persist for at least 2-3 more years, highlighted by a low stock-to-use ratio and high commodity prices, and U.S. nitrogen producers continue to enjoy a significant cost advantage over European producers as European gas prices are still 7x higher than U.S. Thus, 20-30% of European nitrogen production remains offline in FY23. Together, these factors support LSB's projected mid-cycle earnings power of $250-300 million (EBITDA), or 4 times its FY18-20 earnings.
Along with this commentary, Begleiter assigned a $16 price target to the stock. But Begleiter is not alone in being optimistic about this stock. A total of 8 analysts have recently looked at this company and have agreed on an average price target of $16.13.
Adtran Holdings $ADTN+5.7%
ADTRAN, Inc.
ADTNAdtran Holdings operates in the telecommunications sector, where it specializes in the supply of networking and communications equipment. The company offers products and solutions to segments such as Internet service providers, telecommunications companies, enterprises, and public institutions. Their products include optical devices, routers, switches, Wi-Fi access points, management platforms, and cloud service solutions.
Adtran Holdings' strengths include a broad portfolio of products and services that cover various segments of the telecom market. The company also invests in research and development to keep pace with rapid technological advancements and provide customers with the latest and best solutions. As a result, Adtran adapts to growing market needs such as the demand for faster internet speeds and wider coverage.
However, Adtran Holdings faces challenges such as strong competition from other network and communications equipment suppliers, which can lead to pressure on margins and the need to continually invest in innovation. The Company may also be vulnerable to changes in the regulatory environment that could affect its ability to operate in certain geographic areas or market segments.
Despite the fact that the company has not done well and the share price has fallen so Mike Genovese thinks it could be a potentially good investment.
We're disappointed with the Q1 2023 setback, but still find ADTN a compelling stock. We think the correction in CPE stock will be temporary and a multi-year fiber cycle is well underway. Incentives through the BEAD program should be a key driver starting in 2024. ADTN trades at 9 times our 2024 EPS forecast and 0.5 times 2024 EV sales. We think this valuation is too low for a company with a solid balance sheet and long-term demand drivers.
Along with this comment, Genovese gives this stock a price target of $16. But he's not alone in being optimistic about this stock. A total of 5 analysts have recently looked at this company, and they agree on an average price target of $21.20.
Conclusion
Aspen Aerogels, Lsb Industries, and Adtran Holdings present opportunities for investors looking for stocks with growth potential in a variety of sectors. These companies offer innovative products and services in areas such as insulation, industrial and agricultural chemicals, and telecommunications infrastructure. While they face challenges such as competition, commodity price volatility and regulatory changes, their strong market positions, broad product and service portfolio and commitment to innovation give them the potential for growth. Investors who are willing to take a risk and bet on these companies could benefit from their potential resurgence in the market.
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.