J.P. Morgan Says These 2 Stocks Are Ready to Rip Higher
Year-to-date, the market trends are highly positive. The S&P 500 is up ~18%, while the tech-heavy NASDAQ, has put up a 14.5% year-to-date gain. There are potential headwinds – inflation is a worry, as is the possibility of further COVID-related restriction policies. But for now, the economy is mostly open, consumers are starting to spend, and investors seem optimistic.
As J.P. Morgan’s chief US strategist Dubravko Lakos-Bujas recently put it, the economic gains are “not an event but rather a process, which in our opinion is still not priced-in…”
According to Lakos-Bujas, now is the time to go bullish on stocks. He presently sees a combination of a healthy economy and the release of pent-up consumer demand – a pairing that gives potential for steady gains in the stock markets.
“We remain constructive on equities and see the latest round of growth and slowdown fears premature and overblown,” Lakos-Bujas added.
JPM’s stock analysts have been following the strategist’s lead and finding equities that look primed for gains in today’s market environment. Using the TipRanks database, we’ve found two stocks that JPM’s analysts have picked out for 60% or better gains. The rest of the Street also backs both tickers, with each sporting a “Strong Buy” consensus rating.
The first JPM pick we’ll look at lives in the tech world. EverCommerce is a software company offering business management, payment acceptance, marketing tech, and customer engagement SaaS solutions for service-based businesses. In short, EverCommerce has the answers to e-commerce companies’ needs, for growth, streamlining, and customer retention. The company was busy last month. In July, it held its IPO – and conducted two acquisitions to expand its business.
First off, the IPO. EverCommerce put nearly 19.12 million shares on the market, with an initial price of $17 per share. The offering raised the planned $325 million in gross proceeds, which the company planned to use for debt reduction and general corporate purposes.
After the public offering, EverCommerce announced two acquisition moves. The first saw the company complete its acquisition of Timely, a global appointment booking and business management software company particularly popular in the UK, Australia, and New Zealand. The move brings Timely’s SaaS packages into EverCommerce’s suite of products.
The second merger announced in July was with MDTech, a Houston-based e-commerce tech company providing solutions for mobile charge capture. MDTech’s products are in use with small- and mid-sized business across 29 states. While EverCommerce disclosed the completion of these mergers, it did not disclose financial details of either transaction.
Checking in with the analysts, JPM’s 5-star analyst Sterling Auty has initiated coverage of EVCM with an Overweight (i.e. Buy) rating and a $30 price target. Investors could be sitting on gains of 66%, should Auty’s forecast play out as anticipated. (To watch Auty’s track record, click here)
Auty backs his position with a positive outlook on the company’s acquisition strategy, writing: “Small businesses that focus on the services sector rather than selling a product have been left behind in terms of the digital transition. EverCommerce is utilizing a strategy of organic development plus acquisition to grow the portfolio solutions needed to serve services-based small businesses in three key vertical segments of the economy… We believe that there is an abundance of additional acquisition opportunity and ample capital to deliver further acquisition value creation.”
The analyst summed up, “We believe that EverCommerce’s current set of businesses supports an organic price target of $22 and that the acquisition program could arguably add $8 in value on top of that, bringing our overall December 2022 price target to $30.”
This newly public stock has picked up 13 reviews in its short time on the markets, including 11 Buys and 2 Holds for a Strong Buy consensus rating. EverCommerce shares are selling for $18.06, and their $22.15 average price target suggests a one-year upside of ~23%. (See EVCM stock analysis on TipRanks)
EverQuote, Inc. (EVER)
Next up, EverQuote, is an established company on the markets. It inhabits an insurance industry niche, where it acts as an online marketplace for insurance customers and companies to find each other. The company’s platform allows insurers to post policy offerings and pricing points, while customers can search by sector, including auto, home, and life. Insurance customers pay no fees – EverQuote derives profits from insurers’ referral fees paid at the time of purchase.
It’s a sound business model, as seen by the company’s revenues over the past few years. In 2019, EverQuote brought in $248.8 million, while in 2020, the company saw a 39% yoy gain to $346.9 million.
The company has continued delivering strong results this year too. In the latest quarterly statement, for Q2, EverQuote posted beats both on the top-and bottom-line. Revenue grew by 34% year-over-year to reach $105 million, coming in ahead of the estimates by $2.75 million. At -$0.07, EPS also bettered the Street’s call by $0.03.
However, EVER shares plunged 16% following the earnings release, as the company also reported lower-than-expected 3Q guidance due to higher customer acquisition costs and incremental investments ahead of healthcare open enrollment in 4Q.
JPM analyst Cory Carpenter sees the pullback as a chance for investors to buy into a sound stock at an opportunistic price, and likes the company’s latest quarterly display.
“We believe EVER continues to execute well, with strong 2Q results and the DTC channel representing a significant growth opportunity longer-term… We believe more insurance shopping and buying will move online, and EverQuote will benefit from this secular shift as insurance providers and agents focus on online channels where they can better target the customers they want… We believe EVER shares should trade at a premium over time given EverQuote is growing at a much faster revenue CAGR (25% for ’19-’23E vs. the peer median 12% which includes TREE, CARG, TRIP, Z, & MAX),” Carpenter explained.
In line with these comments, Carpenter gives the stock an Overweight (i.e. Buy) rating, and his $41 price target suggests an upside of ~63% this year. (To watch Carpenter’s track record, click here)
With a share price of $25.13 and an average target of $43.40, EVER shares have a 12-month upside potential of ~73%. All 5 of the recent ratings here are positive, giving the stock a unanimous Strong Buy consensus rating. (See EVER stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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