The road to recovery for a beleaguered stock can be long and winding. Yet, the payoff of patience on these risky bets can be sweet and sustaining for investors. That’s the magic of turnaround investing.
Here, we turn to TipRanks’ Stock Screener to discover which hot stocks are hinting at signs of a turnaround. We used the Best Analyst Consensus filter to choose names that have earned a ‘Moderate Buy’ to ‘Strong Buy’ rating, indicating confidence from the Street.
eBay
Online auction giant eBay may have fallen behind in the internet pack, but it is certainly putting up a good fight. The eBay team has been hard at work with a fierce comeback initiative. However, after eBay’s first fiscal quarter proved rocky, investor sentiment took a turn for the worse.
The stock has fallen 18% since the April print. Investors were disappointed to see buyer growth crash to its worst numbers in more than a year. Meanwhile, eBay’s second batch of fiscal quarter earnings yielded a beat, but revenue did not satisfy analyst’s targets. Cue another post-print dip. That said, one of Wall Street’s best performing analysts is holding tight in eBay’s bullish corner.
Scott Devitt of Stifel Nicolaus just assigned a Buy on eBay with a $43 price target. In other words, the analyst spotlights 28% upside potential for eBay to recover. Notably, Devitt boasts a stellar ranking on Wall Street: #45 out of over 4,800 analysts covered on TipRanks.
Devitt is excited about the news that eBay is partnering with fintech company Square. eBay sellers will gain access to Square’s lending arm, Square Capital, to grow their business operations. “We believe the eBay/Square partnership will benefit both companies as the collaboration will enhance the financing process for eBay’s sellers as well as help Square expand its reach in non-Square merchant lending,” cheers Devitt.
The ‘Moderate Buy’ stock has won over 15 buy ratings in the last three months. Consensus expectations speak to positive sentiment on eBay’s rebound prospects. The 12-month average price target stands tall at $45.48, marking nearly 36% in upside potential.
Chipotle
Burrito chain Chipotle’s growth seemed to be tracking for a rebound. The company recently unleashed its third quarter in a row of positive earnings. However shares fell in hot water quickly thereafter, slipping 6% once word broke out of yet another food scare.
Rumor has it nine customers took ill at an Ohio location, suffering from nausea to fever after eating there. Chipotle in response closed the Ohio location.
That said, in the last week, the company has still drawn five buy ratings- one from a new bull. Jefferies analyst Andy Barish just upgraded the consumer player from a Hold to a Buy rating.
Barish makes a bullish case that Chipotle is in solid standing for robust comparable sales gains. In fact, the analyst forecasts the stock could jump up to $550 (26% upside potential).
Meanwhile, Canaccord’s Lynne Collier sees that Chipotle’s “recovery is building steam,” and cheers “multiple sales catalysts in place.” After the company’s strong quarterly earnings show, Collier reiterated a Buy rating on the stock while bumping up the price target. Echoing Barish, Collier also sees room for Chipotle to rise 26%.
Collier anticipates “material upside” in the next year to two years, calling this the “early innings of a turnaround” for Chipotle’s stock. In the next year, look for even stronger proof of recovery. “We remain buyers of Chipotle as a clearer path to improved same-store sales and margins have emerged under the company’s new leadership,” contends the analyst.
Ultimately, Wall Street looks cautiously optimistic on the outlook for the ‘Moderate Buy’ stock. Consensus expectations round out to a price target of $472.88, signaling 8% in return potential still in store.
Spotify
Music streaming giant Spotify (SPOT) is in recovery mode following its first report after going public in April. The company’s discounted subscriptions dialed down its average revenue per user, even though Spotify posted 75 million paying members. The revenue guide for the second quarter likewise came up shy of expectations.
To Spotify’s credit, the second quarter earnings show fared much stronger. This time around, the giant reached a record peak, between 83 million paid subscribers and 101 million ad-supported monthly active users. Recovery is in full swing.
Canaccord analyst Maria Ripps just got even more bullish on the tech stock, hiking her price target from $200 to $220 (22% upside potential). The two key home runs for Spotify in its second quarter: “strong subscriber trends and improving gross margins.”
Moreover, the analyst sees clues of a turnaround in the third quarter: “Early third quater is showing a recovery in the ad-supported segment.”
“We continue to see Spotify as a category leader in a large and expanding market, and expect a robust growth outlook for subscribers and continued stock strength,” highlights Ripps, who assures investors that “advertising softness should be temporary.”
The ‘Moderate Buy’ stock has received 12 buy ratings in three months. Considering expectations from best performing analysts across the Street, the 12-month average price target lands at $200.06. This reflects healthy upside potential of almost 11% ahead.
