Concerns over the Federal Reserve’s tightened monetary policy to fight multi-decade-high inflation, the Russia-Ukraine war, and a potential economic slowdown have dampened investor sentiment so far this year. Furthermore, many analysts believe that the Fed’s aggressive interest rate increases could limit economic growth and push the U.S. economy into a recession. According to research from Moody’s Analytics and Wall Street economists, the odds of recession stand at 30%.
As a result, growth stocks have witnessed a sharp sell-off over the past few months. However, this has led several quality growth stocks to trade now at attractive valuations. “There are plenty of growth companies that will continue to exhibit robust and durable profitability, and those names that look set to exceed expectations are particularly attractive,” said Tai Hui, Chief Market Strategist, Asia Pacific. With markets rebounding since last week, fundamentally sound growth stocks are expected to rally in the near term.
Given these factors, Wall Street analysts expect the stocks of quality small-cap growth companies Traeger, Inc. (COOK), Blink Charging Co. (BLNK), Digital Turbine, Inc. (APPS), DraftKings Inc. (DKNG), and AudioEye, Inc. (AEYE) to surge in price in the coming months.
Traeger, Inc. (COOK)
COOK in Salt Lake City, Utah, designs, sources, and sells wood pellet fueled barbeque grills to retailers, distributors, and direct to consumers in the U.S. Its wood pellet grills are internet of things devices that are programmed, monitored, and controlled through its Traeger app. In addition, it offers wood pellets; rubs, spices, sauces; covers, bucket liners, drip trays, and other grill accessories; and apparel and merchandise. It has a market capitalization of $561.51 million.
On March 30, COOK launched its fully reimagined Timberline grill. The all-new Timberline perfects the outdoor cooking experience through consistency with its smart combustion system, DownDraft Exhaust, and full stainless-steel insulation; Traeger App featuring WiFIRE Technology, and Traeger x MEATER Wireless Meat thermometers, and ultimate versatility with induction cooktop and Traeger P.A.L. Pop-And-Lock rail system. The launch might boost the company’s revenue streams.
In its fiscal 2022 first quarter, ended March 31, 2022, COOK’s revenue came in at $223.71 million. Its net other income increased 218.8% year-over-year to $544,000. In addition, the company’s net cash provided by financing activities amounted to $45.92 million, registering a 23.9% increase over its year-ago value.
The company has an impressive growth history; its trailing-12-month revenue increased 15.9% year-over-year.
Analysts expect COOK’s revenue for its fiscal 2023, ending Dec. 31, 2023, to be $961.45 million, indicating a 16.6% increase year-over-year. It is no surprise that it has topped the consensus revenue estimates in each of the trailing four quarters. Also, the $0.38 consensus EPS estimate for the next year represents an 85.3% rise from the previous year.
The stock has gained 3.7% in price over the past five days and closed yesterday’s trading session at $4.75.
Among the nine Wall Street analysts that rated COOK, six rated it Buy, and three rated it Hold. The 12-month median price target of $9.22 indicates a 94.1% potential upside. The price targets range from a low of $4.00 to a high of $16.00.
Blink Charging Co. (BLNK)
BLNK in Hollywood, Fla., is a leading owner, operator, and provider of EV charging and networked EV charging services in the U.S. and internationally. The company provides residential and commercial EV charging equipment. In addition, BLNK offers EV charging hardware, software services, and service plans. The company has deployed more than 30,000 charging ports. It has a market capitalization of $680.87 million.
Yesterday, BLNK agreed with Q-Park, a leading parking infrastructure operator in Europe, to deploy nearly 600 charging points across 80 sites in the United Kingdom and Ireland. “We are excited to rapidly expand our presence in the U.K. and beyond and continue to fuel Europe’s position as a leader in the transition to EVs,” said Michael Farkas, Founder, and CEO of BLNK.
BLNK announced an international expansion in April through hardware and software upgrades and newly signed distribution agreements. The company has completed a global advancement of the Blink Network and made the proprietary software available in 17 countries and U.S. territories. It is expected to grow BLNK’s international footprint by adding five more counties to the Blink Network in the coming weeks.
BLNK’s total revenues increased 339.1% year-over-year to $9.80 million, and its product sales grew 381.9% year-over-year to $8.05 million in its fiscal 2022 first quarter, ended March 31, 2022. The company’s gross profit grew 1,552.1% from the prior-year period to $1.59 million.
The company’s financials have grown substantially over the past three years. BLNK’s revenue has risen at a 120.3% CAGR over the past three years. And its total assets have grown at a 130.3% CAGR over this period.
The $9.25 million consensus revenue estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents 113.3% growth versus the same period in 2021. The Street expects the company’s EPS for the fourth quarter to improve 15.9% year-over-year. BLNK has surpassed the consensus revenue estimates in each of the trailing four quarters.
BLNK’s shares have gained 10.5% in price over the past five days and closed yesterday’s trading session at $15.93.
Among the five Wall Street analysts that rated BLNK, two rated it Buy, and three rated it Hold. The 12-month median price target of $29.20 indicates an 83.3% potential upside. The price targets range from a low of $17.00 to a high of $50.00.
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Digital Turbine, Inc. (APPS)
APPS in Austin, Tex., provides media and mobile communication products and solutions and serves mobile operators, application advertisers, publishers, device original equipment manufacturers (OEMs), and third parties. Its application media software platform enables mobile operators and OEMs to control, manage, and monetize devices. The company also offers programmatic advertising and targeted media delivery services, and other professional services related to its core platform. APPS has a market capitalization of $2.47 billion.
On April 27, APPS and AccuWeather, a leader in weather forecast accuracy, entered a multi-year partnership to scale AccuWeather’s app and content globally by leveraging APPS’ full ad-stack across three areas, including app distribution, audience development, and in-app monetization solutions.
APPS’ net revenue increased 93.7% year-over-year to $184.14 million in its fiscal 2022 fourth quarter, ended March 31, 2022. Its gross profit rose 129% year-over-year to $90.24 million. Its adjusted EBITDA improved 123.7% year-over-year to $50.43 million. In addition, the company’s adjusted net income from continuing operations and adjusted net income per share from continuing operations came in at $40.99 million and $0.39, respectively, registering 67% and 56% year-over-year increases, respectively.
The company has an impressive growth history; its revenue and EBITDA have improved at CAGRs of 116.9% and 421.1%, respectively, over the past three years. And its levered free cash flow has increased at a 392.6% CAGR over the past three years.
The $319.46 million consensus revenue estimate for its fiscal 2023 first quarter, ending June 30, 2022, represents a 50.3% improvement from the same period last year. Analysts expect APPS’s EPS for the current quarter to rise 29.2% year-over-year to $0.44. The company has an impressive revenue and earnings history; It has topped the consensus revenue and EPS estimates in three of the trailing four quarters.
Over the past five days, APPS shares have increased 11.6% to close yesterday’s trading session at $25.43.
The Wall Street analyst rated APPS a Buy. The 12-month median price target of $51.00 indicates a 100.6% potential upside.
DraftKings Inc. (DKNG)
Boston-based DKNG is a digital sports entertainment and gaming company that operates in the U.S. and internationally. The company operates through two segments: Business-to-Consumer; and Business-to-Business. It provides users with fantasy sports, sports betting, and iGaming opportunities. DKNG also offers media and other online consumer products. It distributes through traditional websites, direct app downloads, and direct-to-consumer digital platforms. It has a market capitalization of $5.93 billion.
On May 18, DKNG launched its online sportsbook and online casino products in Ontario, Canada. It will deliver customers in Ontario a best-in-class sports betting experience through its top-rated sportsbook app and more than 130 online casino game variations through DraftKings Casino, including blackjack, roulette, baccarat, and slots. This is expected to accelerate the company’s global expansion and boost its revenues.
On May 5, DKNG completed the acquisition of Golden Nugget Online Gaming, Inc. “Acquiring Golden Nugget Online Gaming gives us synergies across our business. We anticipate that this acquisition will provide meaningful revenue uplift by utilizing our data-driven marketing capabilities and a dual brand iGaming strategy, gross margin improvement opportunities, and cost savings across external marketing and SG&A,” said Jason Robins, Chairman, and CEO of DKNG.
In the fiscal 2022 first quarter, ended March 31, 2022, DKNG’s revenue increased 33.6% year-over-year to $417.21 million, and its B2C segment revenue grew 44% from its year-ago value to $404 million. The company’s net other income amounted to $77.88 million for the first quarter.
DKNG’s trailing-12-month revenue and EBITDA rose 67.1% and 65.1%, respectively, year-over-year.
Analysts expect DKNG’s revenue for its fiscal 2022 second quarter, ending June 30, 2022, to come in at $432.34 million, representing a 45.3% rise year-over-year. The company has an impressive revenue history; it has surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past five days, the stock has increased marginally and closed yesterday’s trading session at $13.55.
Among the 18 Wall Street analysts that rated DKNG, 12 rated it Buy, and six rated it Hold. The 12-month median price target of $30.66 indicates a 126.3% potential upside. The price targets range from a low of $16.00 to a high of $60.00.
AudioEye, Inc. (AEYE)
AEYE in Tucson, Ariz., is a digital accessibility platform company that provides Website accessibility compliance to businesses in the U.S. The company’s software and services enable digital content conversion into accessible formats and allow for real-time distribution to end users on any Internet-connected device. It offers AudioEye, always-on testing, remediation, monitoring solutions, and other additional solutions, such as periodic manual auditing and legal support services. It has a market capitalization of $38.72 million.
On March 9, AEYE acquired the Bureau of Internet Accessibility (BoIA), a leading automated testing platform combined with a seamless guide for website owners and developers to fix accessibility issues. “BoIA’s impressive offerings teach developers and website owners how to remediate and maintain accessible content. Together, we can help businesses address every aspect of accessibility in a scalable and sustainable way, so they continue to provide accessible experiences to all their customers and build inclusive brands in our digital age,” said David Moradi, CEO of AEYE.
AEYE’s revenue has increased 19.3% year-over-year to $6.91 million in its fiscal 2022 first quarter, ended March 31, 2022. Its gross profit rose 17.2% year-over-year to $5.20 million. In addition, the company’s cash and total current assets came in at $11.96 million and $17.74 million, respectively.
The company’s financials have grown substantially over the past three years. AEYE’s revenue has increased at a 58% CAGR over the past three years. And its levered free cash flow has improved at a 36.4% CAGR over the past three years.
The $7.82 million consensus revenue estimate for its fiscal 2022 third quarter, ending Sept.30, 2022, represents 26.1% growth from the same period in 2021. Analysts expect the company’s EPS to increase 50% year-over-year for the same quarter.
Over the past five days, the stock has increased 4.7% in price and closed yesterday’s trading session at $3.37.
Each of the two Wall Street analysts that rated AEYE rated it Buy. The 12-month median price target of $8.50 indicates a 152.2% potential upside. The price targets range from a low of $8.00 to a high of $9.00.
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COOK shares were trading at $4.78 per share on Wednesday morning, up $0.03 (+0.63%). Year-to-date, COOK has declined -60.69%, versus a -13.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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