JPMorgan, Citi, and others helped unofficially kick off the heart of Q3 earnings season on Tuesday. The market did slip on the day, but the downturn followed a strong stretch that saw the market post its best week in months.
The S&P 500 has popped roughly 4% in the last month, as it regains momentum from its early September tumble. The positivity comes as Wall Street grows more hopeful about a second stimulus bill, and analysts look to the possibility of a decisive victory in the presidential election.
On top of that, investors appear to be expecting solid overall quarterly earnings results that showcase an improving trend as the economy slowly reopens. And the most recent Zacks estimates clearly support the broader market optimism on this front (also read:
Q3 Bank Earnings in the Spotlight Next Week
).
That said, near-term volatility could remain and the coronavirus creates the possibility for continual uncertainty. Yet, investors with long-term horizons don’t need to be as worried about shorter-term movements, and timing the market can mean missing out on some of the biggest rallies.
Therefore, with the Fed set to keep its interest rate pinned near zero through at least 2023, investors likely want to consider adding stocks, as Wall Street will be hunting for returns. So here are two highly-ranked stocks trading for under $25 a share that might be worth buying right now…
Nautilus, Inc.
NLS
Prior Close: $21.79 USD
(close of regular trading Tuesday, Oct. 13)
Peloton
PTON
has grabbed most of the attention when it comes to stay-at-home stocks that cater to the fitness crowd. Yet, another home gym company’s stock has roughly tripled Peloton in 2020. Nautilus and its home-gym portfolio includes Bowflex, Nautilus, Octane Fitness, and Schwin. These offerings feature free weights, treadmills, ellipticals, indoor cycling equipment, and more, which makes it a much more diverse firm than Peloton as well.
Nautilus saw its Q2 revenue soar 94% from the year-ago period to reach $114 million. This topped Q1’s 11% sales growth and highlights how much demand there is for at-home fitness equipment as gyms either remain closed or are open under heavy restrictions. Therefore, the growth of the industry could last longer than initially anticipated, as it’s unclear when people will race back to crowded gyms, especially when there are more convenient alternatives.
NLS entered Q3 with a $34 million backlog, as demand outpaced supply. Zacks estimates call for NLS Q3 revenue to surge 81%, with Q4 projected to pop 30%. Meanwhile, it is projected to swing from an adjusted loss of -$0.23 per share +$0.30 in Q3, with an even larger swing projected for fiscal 2020. On top of that, Nautilus has crushed our EPS estimates in the trailing three periods and its earnings revisions activity helps it land a Zacks Rank #2 (Buy) at the moment.
NLS shares have soared nearly 1,150% in 2020 and 1,700% in the past 12 months, and it currently sits about 5% off its recent highs. And Nautilus sports an “A” grade for Growth in our Style Scores system and it is part of an industry that rests in the top 3% of our over 250 Zacks industries.
Plug Power Inc.
PLUG
Prior Close: $17.10 USD
(close of regular trading Tuesday, Oct. 13)
Plug Power helped commercialize hydrogen fuel-cell technology. The firm’s hydrogen and fuel cell technology began by “replacing lead-acid batteries to power electric industrial vehicles, such as the lift trucks customers use in their distribution centers.” PLUG has since expanded its offerings to the on-road EV market, which includes buses and delivery vehicles. The firm is part of the growing hydrogen power market and its hydrogen fuel cell-based turnkey solutions are being used by the likes of BWM, Amazon
AMZN
, Walmart
WMT
, and others.
Plug Power plans to help power everything from warehouses and data centers to zero-emission on-road vehicles for decades to come. PLUG stock has soared 440% in 2020 and 800% in the past 24 months. This run includes a 40% climb in the last month, which came as investors continued to dive into the stock even after it announced in August that it was selling almost 31 million more shares for $10.25 each. And the stock currently rests about 10% off its recent highs.
Zacks estimates call for Plug Power’s third quarter sales to jump 86%, with its adjusted loss projected to shrink. Meanwhile, its FY20 revenue is projected to jump 35% to reach $300.9 million, with FY21 expected to climb over 31% higher—to mark three-straight years of 31% or strong top-line expansion. PLUG is also expected to continue to cut its adjusted losses over this year and next.
Plug Power’s strong earnings revisions activity helps it earn a Zacks Rank #2 (Buy) right now. It’s also worth pointing out that Morgan Stanley and others have taken a liking to this pure-play clean energy stock, as hydrogen-based solutions become more economically viable. Investors should also know that no matter who is in power in Washington, market forces are slowly
shifting toward
clean and renewable energy sources. And six of the eight brokerage recommendations Zacks has for Plug Power come in at a “Strong Buy,” with one more at a “Buy.”
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