Buy cheap? Even in the stock market, buyers like to find a bargain. Defining a bargain, however, can be tricky. There’s a stigma that gets attached to low stock prices, based on the reality that most stocks don’t fall without a reason. And those reasons are usually rooted in some facet of poor company performance.
But not always, and that’s why finding stock bargains can be tricky. There are plenty of low-priced equities out there with sound fundamentals and solid future prospects, and these options make it possible for investors to ‘buy low and sell high.’ These are the stocks that Warren Buffett had in mind when he said, “Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Using TipRanks' database, we identified two stocks that feature both low prices now – and powerful upside potential for the coming year. Not to mention each one gets a “Strong Buy” consensus rating from the analyst community. Let’s dive in and find out what’s driving that prospect.
First up is GAN, a tech company that provides a platform and SaaS solutions in the online gaming sector. GAN works on a business-to-business model, supporting business clients in online gambling, primarily among US brick-and-mortar casinos. The company’s GameSTACK platform is designed for casinos taking their gaming and sports betting segments online.
GAN’s shares peaked in February of this year, at more than $30. Since then, the stock has fallen 55%. During these past few months, that the share price has been falling, GAN has still been expanding its operations. In July, the company entered an agreement to design a customized simulated gaming solution for Treasure Island Hotel & Casino. The Treasure Island gaming solution will be available on both desktop and mobile devices, and was GAN’s fifth new B2B client this year.
In other news, GAN earlier this month announced a two-year extension to its contract with the WinStar World Casino and Resort of the Chickasaw Nation. WinStar is the largest gaming property owned by the Chickasaw nation, with approximately 145 table games and 7,500 electronic games, and serves customers across Oklahoma and north Texas.
And just yesterday, GAN released its 2Q21 earnings report, and several of the metrics indicate a sound company. Revenue grew 24% sequentially, to $34.6 million. The company’s net loss moderated from Q1’s $4.5 million to $2.7 million. GAN reported having no debt and $52.1 million in cash at the end of Q2. Looking forward, GAN raised its full year revenue guidance of $125 million to $135 million. At the mid-point, this represents an impressive 270% year-over-year growth prediction.
Northland's 5-star analyst Greg Gibas is impressed by GAN’s forward prospects, writing: “GAN reported Q2:21 results that were in-line with our estimates and the company's preliminary results in July, which saw considerable upside to our estimates due to strong levels of B2C growth in international markets."
The analyst added, "We continue to be comfortable with GAN's positioning heading into 2H21, as the company is slated to launch new clients in existing and new markets over the next several quarters... GAN is set to launch its retail sports betting product, which will offer much more attractive revenue share agreements.”
These comments support Gibas’s Outperform (i.e. Buy) rating on the stock, and his $30 price target implies a one-year upside of 121%. (To watch Gibas’s track record, click here)
Overall, there are 4 recent analyst reviews on GAN, and they are unanimously positive, giving the stock its Strong Buy consensus rating. The shares are priced at $13.58, with a $26 average price target that suggests ~91% upside for the next 12 months. (See GAN stock analysis on TipRanks)
Shifting gears, we’ll look at Kura Oncology, a clinical-stage biopharma firm with a focus on new anti-cancer precision medications. The company is developing small-molecule drug candidates designed to target cancer signaling pathways. On the precision end, Kura is using molecular and cell diagnostics to identify patients most likely to respond to treatment. The company is pursuing its research pipeline both independently and in partnership with other firms.
Kura’s pipeline currently features two drug candidates at the clinical stage. Tipifarnib is an orally dosed drug targeting head and neck squamous cell carcinomas (HNSCC) in patients with HRAS mutations. These mutations were discovered several decades ago, but tipifarnib is the first drug candidate specifically designed to target tumors with the mutated protein. The candidate is described as ‘a potent and highly selective inhibitor of farnesyltransferase, a critical enzyme for the activity of HRAS.’
At the clinical end, tipifarnib has been observed in over 5,000 patients and seen to have a manageable safety profile. Kura is prepping the KURRENT study, a Phase 1/2 clinical trial of tipifarnib in combination with alpelisib. The study’s initial cohort will focus on patients who have PIK3CA-dependent HNSCC. Kura expects to begin the trial during the fourth quarter of 2021.
Also in the pipeline is KO-539, a drug candidate under investigation for the treatment of acute myeloid leukemia (AML). KO-539 blocks two proteins, menin and KMT2A/MLL, that are important in the proliferation of certain leukemia cells. The drug is currently in a Phase 1b study, with the first patients dosed this past June. Results are expected by 1Q22, and will be used to determine the proper dosing for a Phase 2 study.
Even with these upbeat pipeline updates, Kura’s share price has been slipping. The stock is down 51% so far this year. It’s important to note here that the company has no revenue stream as yet, and reported over $21 million in research and development expenses in the second quarter. On a positive note, Kura had $567.5 million in available cash as of June 30 this year.
Covering this stock from JMP, Reni Benjamin sees the clinical trials and the solid cash position as key, writing: “Kura reported 2Q21 financial results and provided key clinical updates expected for the remainder of 2021. With enrollment ongoing in the Phase 1b expansion cohorts for KO-539…, tipifarnib (tipi) advancing in a pivotal trial of HNSCC…, and a strong cash position of $567.5MM, we believe Kura represents an attractive investment opportunity in the targeted oncology space…”
Benjamin rates KURA stock an Outperform (i.e. Buy), and his $38 price target suggests it has room to grow 135% over the coming year. (To watch Benjamin’s track record, click here)
Evidently, Benjamin's colleagues also think Kura is well-positioned to deliver. The stock has a Strong Buy consensus rating, based on a unanimous 5 Buys. The forecast is for one-year gains of ~150%, given the average price target currently stands at $40.40. (See KURA stock analysis on TipRanks)
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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.
