This article will focus on five stocks that were uncovered using a stock screener on May 8, 2013. This is meant to help you identify companies that have the potential to provide significant returns. Many of these stocks have seen large price decreases over the past year, and now might be a great time to scoop them up.
The companies that I uncovered were Allied Nevada Gold Corp. (NYSEMKT:ANV), Aruba Networks, Inc. (NASDAQ:ARUN), athenahealth, Inc (NASDAQ:ATHN), Ixia (NASDAQ:XXIA), and Zagg Inc (NASDAQ:ZAGG). These companies are in various industries, which is something I like to see if I wanted to make a portfolio of these stocks. Diversification of industries would be something I view as value-added for a random assortment of stocks that have these factors in common.
The following is a one year price chart, expressed as percentage changes. It includes the S&P 500 to compare the performance of these stocks to the index.
The performance of these stocks over the past year has lagged the S&P 500. As a potential investor in these companies, if I were looking to invest, this would not necessarily be a bad sign. Past results are not indicative of future results, and if these companies have solid fundamentals and potential, their current price levels could prove to be a great entry point.
Allied Nevada Gold’s Credentials
Allied Nevada Gold Corp. (NYSEMKT:ANV) is currently sitting right near its 52 week low of $9.16. It earned $0.52 per share last year and is forecasted to earn $1.02 per share this year. Next year, analysts are calling for earnings of $2.09 per share. In addition, the company is forecasted to grow earnings by 96.2% this year and by 104.9% next year. Potential catalysts for this stock include the chance that the stock bounces strongly off of its 52 week low. If analysts start to revise the company’s earnings estimates upward again, and if positive developments for the company come out, moving back up toward that 52 week high is possible.
In order for Allied Nevada Gold Corp. (NYSEMKT:ANV) to achieve its growth targets, there are key events that need to occur. In its most recent 10-Q for the quarter ending in March 2013, it had some areas where large growth has been realized. 174,000 ounces of silver were sold in the first quarter of 2013, compared with 128,000 in the first quarter of 2012. Gold ounces sold also saw an increase of 34% in the first quarter of 2013 compared to the year ago period. If the company can continue producing and selling more of these metals, it will only need to see the price of each stabilize in order to grow. A significant increase in metal prices and/or a better than expected increase in production and sales could fuel growth.
Information about Aruba Networks
Aruba Networks, Inc. (NASDAQ:ARUN) currently trades at $12.85 per share. Analysts call for full year earnings per share $0.73 this year and $0.89 per share next year. The company is expected to grow earnings by more than 18% per year over the next five years. Despite the fact that the company recently revised its earnings forecast downward, this may be short-term, and the long-term growth story may still remain. The company has generated positive and growing free cash flow in the past three annual cash flow statements. Free cash flow rose from $20,535,000 to $99,817,000 in July of 2012 compared to July of 2010. This solidifies its high earnings growth, as the money is available to the company. It has grown its cash on its balance sheet in every quarter, and as of the last balance sheet it is at $177,645,000. If this keeps up, we may see a dividend at some point.
Analysts and investors see earnings growth for Aruba Networks, Inc. (NASDAQ:ARUN) coming from ClearPass and the 802.11ac product cycles in 2014. Sales are expected to grow by 14% in its 2014 fiscal year. Realizing this growth by successfully integrating its products to the market is key. The competition from Cisco Systems, Inc. (NASDAQ:CSCO) is currently raising a lot of concern, and the company needs to overcome this risk going forward. In its fiscal third quarter 2013 results its president and CEO, Dominic Orr, said “The proliferation of mobile devices and applications as well as BYOD is changing access networking and Aruba Networks, Inc. (NASDAQ:ARUN)’s application-aware MOVE architecture is at the forefront of this technology shift.” The company’s revenue growth will be strongly correlated to its success in cashing in on this technology.
Here’s Athenahealth
athenahealth, Inc (NASDAQ:ATHN) is the next stock we will discuss. It currently trades at $85.71 per share, but is well off of its 52 week high of over $99 per share. This may be the perfect stock to look at if the fundamentals and earnings are strong. It has beaten analyst estimates for earnings in the past 4 quarters, which is a sign I like to see if I want to determine if a stock has the potential to test or exceed its 52 week high. Analysts expect the company to grow by an astounding annual rate of 27.8% each year for the next 5 years. The company has a high PE ratio, but this is because earnings are expected to grow so rapidly. If it can do that, it is well deserving of its growing share price. It entered technically oversold territory on May 6.
Upon looking at athenahealth, Inc (NASDAQ:ATHN)’s most recent 10-Q for the first quarter of 2013, it is apparent where its revenue growth is coming from. Revenues from business services rose to $121 million for the first quarter of 2013, up from $93 million for the first quarter of 2012. Per the 10-Q, this growth has been driven by an increase in the number of physicians and providers using its services. In order for the company to continue its growth, it needs strong recommendations from its current customers to attract new business. Furthermore, some customer service awards for this area of its business could attract more physicians to use the services.
All About Ixia
Ixia (NASDAQ:XXIA) is the fourth stock that this screener found. It currently trades at $14.71 per share, which is well off of its 52 week high of over $22 per share. It has met or exceeded analyst estimates in each of the past four quarters, with three of the quarters having beaten the estimate. Analysts have revised their estimates for earnings downward recently; however, and this could be why the stock is not near its 52 week high. Nonetheless, the company is forecasted to have 10% annual growth in earnings over the next 5 years.
Upon looking at Ixia (NASDAQ:XXIA)’s most recent 10-Q for the first quarter of 2013, some things become apparent. Its “revenues are principally derived from the sale and support of our test and visibility systems.” Sales to AT&T Inc. (NYSE:T) and Cisco Systems, Inc. (NASDAQ:CSCO) make up 30.1% of its total revenues for the three months ending in March of 2013. Obviously, continued sales to these key customers are paramount, and if the company can increase its sales to these two companies, its results could benefit greatly. International sales grew by 9.4% in this quarter compared to the same period a year ago. Going forward, the company says “Over the next 12 months, we expect to leverage and expand our international sales force to sell our Anue and BreakingPoint products to a larger global customer base, and as a result, we expect to increase our percentage of revenue from shipments to international locations.” If this can be achieved and if its key customers continue purchasing from the company, its growth target rates can easily be reached.
What You Need to Know About Zagg
Zagg Inc (NASDAQ:ZAGG) is the final stock that we will look at today in this article. It is currently trading right near its 52 week low of $4.75. It was downgraded by Northland Capital on May 3 to a market perform from outperform. In its most recent earnings release, it missed analyst targets. It reported earnings per share of $0.03, compared with the consensus estimate of $0.21 per share. Despite that fact, the company is still forecasted to earn $1.02 per share this year, though that might be revised downward after this miss. It earned $0.71 per share last year, so significant growth from that is still possible. Analysts expect the company to grow 22.5% per year over the next 5 years, and if this happens, look for the stock to strongly rebound from this testing of its 52 week low.
Upon analyzing Zagg Inc (NASDAQ:ZAGG)’s 10-Q for the first quarter of 2013, there are things that need to occur in order for the company to meet its growth targets. Net sales for this quarter decreased 7% compared to the same period a year ago. The bright spot was sales of its keyboard product line, which accounted for 32% of its revenue in this period. In the same period a year ago, it only accounted for 21% of its revenue. A large reason for the overall decrease in revenue for this period compared to last year was due to the fact that there was an Apple Inc. (NASDAQ:AAPL) iPad launch in the first quarter of 2012. When there is a new significant technology product launch, expect the company’s sales to rise in that period accordingly. The company has ended relationships with some distributors and has instead decided to focus on a few key distributors. The keys to it meeting its growth targets are as follows: getting good results from the distributors it has chosen to include, growth in its invisibleSHIELD product line, and continued growth in its keyboard product line.
Conclusion
I like the different stocks that this analysis has produced. I would recommend allocating a small amount of money to each of these five stocks if someone wanted to invest in any of these names. These companies are in varying industries, with some being closer to 52 week highs and others testing 52 week lows. I think the stocks offer good diversification for a small portfolio that would rival something a mutual fund would choose for you.
The article 5 Solid High Growth Oversold Stocks originally appeared on Fool.com and is written by Anthony Parsons.
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