Since the beginning of the year, the stock market has been hit hard due to economic and geopolitical factors, including 40-year high inflation, worries about the Fed’s forthcoming interest rate hikes, an escalating Russia-Ukraine war, and worsening supply chain issues. Although the major U.S. equity indices have managed to recover from the correction territory since March, they are now sliding again due to rising U.S. Treasury bond yields amid expectations of the Fed’s tighter monetary policy and a resurgence of COVID-19 cases in China. This is further fueling the stock market’s volatility.
However, expectations of a continuing recovery by the U.S. economy this year are still strong. According to the Bureau of Labor Statistics, the nation’s unemployment rate declined to 3.6% in March, as the economy added nearly 431,000 jobs. Therefore, it may be high time to invest in hard-hit stocks with strong financials and solid earnings growth prospects, which are expected to witness significant price appreciation in the coming months.
Wall Street analysts expect fundamentally solid stocks Tilray Brands, Inc. (TLRY), Alibaba Group Holding Limited (BABA), SoFi Technologies, Inc. (SOFI), Opendoor Technologies Inc. (OPEN), and DraftKings Inc. (DKNG) to regain forward momentum soon.
Tilray Brands, Inc. (TLRY)
TLRY in Nanaimo, Canada, cultivates, produces, markets, and distributes medical cannabis products. The company operates through five segments: Cannabis Business; Distribution Business; Beverage Alcohol Business; Wellness Business; and Business Under Development. TLRY operates primarily in Canada, the U.S., Europe, Australia, Latin America, New Zealand, and internationally.
Yesterday, TLRY signed a definitive agreement with HEXO Corp. (HEXO) for a commercial and financial partnership. TLRY will acquire 100% of the remaining $193 million in outstanding senior secured convertible notes issued by HEXO. This partnership might strengthen TLRY’s operations alongside its global cannabis expertise.
In its fiscal year 2022 third quarter, ended Feb. 28, 2022, TLRY's net revenues increased 22.6% year-over-year to $151.87 million. Its gross profit improved 30.8% from the prior-year period to $39.83 million. TLRY’s adjusted EBITDA grew 7.7% year-over-year to $10.09 million. And the company’s net income and net income per share came in at $52.48 million and $0.09, respectively, registering a 120.3% and 108.7% increase from the prior-year period.
The $156.20 million consensus revenue estimate for its fiscal year 2022 fourth quarter, ending May 31, 2022, represents 9.8% growth from the same period in 2021.
The stock gained 16.9% in price over the past month and closed yesterday's trading session at $6.23.
Among the eight Wall Street analysts that rated TLRY, two rated it Buy, while six rated it Hold. The 12-month median price target of $9.25 indicates a 48.5% potential upside. The price targets range from a low of $6.00 to a high of $17.00.
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Alibaba Group Holding Limited (BABA)
Headquartered in Hangzhou, the People’s Republic of China, BABA provides technology infrastructure and marketing reach to merchants, retailers, brands, and other businesses. The company operates through four segments: Core Commerce; Cloud Computing; Digital Media and Entertainment; and Innovation Initiatives and Others.
On March 22, BABA upsized its share repurchase program to $25 billion from $15 billion. The share repurchase program will be effective for the two-year period through March 2024. This is expected to sustain the company’s growth in the future.
Last November, BABA concluded its 13th annual 11.11 Global Shopping Festival, and it generated RMB540.30 billion ($84.54 billion) in gross merchandise volume (GMV) during the 11-day campaign. “This 11.11 Global Shopping Festival delivered steady and quality growth that is a reflection of the dynamic Chinese consumption economy. We also leveraged the power of 11.11 as a platform to fulfill our social responsibility,” said Yang Guang, Vice President at BABA.
BABA’s revenue increased 9.7% year-over-year to $38.07 billion in its fiscal 2022 third quarter, ended Dec. 31, 2021. The company’s revenue from its international commerce wholesale business grew 29% year-over-year to $760 million. Its net cash provided by operating activities amounted to $12.61 billion for the third period. BABA’s total current assets rose 4.9% over the nine months to $105.94 billion.
Analysts expect BABA's revenue for its fiscal year 2022 fourth quarter, ended March 31, 2022, to come in at $31.74 billion, representing a 9.3% rise year-over-year.
The stock has slumped 16% in price year-to-date. However, the 12-month median price target of $174.12 indicates a 74.6% potential upside from yesterday’s closing price of $99.75. The price targets range from a low of $75.00 to a high of $276.00. Among the 17 Wall Street analysts that rated BABA, 16 rated it Buy, while one rated it Sell.
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SoFi Technologies, Inc. (SOFI)
San Francisco-based SOFI offers digital financial services. The company operates through three segments: Lending; Technology Platform; and Financial Services. SOFI provides cash management, technology, and investment services. The company also offers Galileo, a technology platform that offers services to financial and non-financial institutions, and Technisys, a cloud-based digital core banking platform.
Last month, SOFI completed the acquisition of Technisys S.à.r.l., a leading cloud-based digital multi-product core banking platform. Technisys adds strategic technology and business to SOFI. This might enhance SOFI’s Galileo business by supporting multiple products, including checking, savings, deposits, lending, credit cards, and future products. The acquisition is also expected to boost the company’s revenues.
In February, SOFI announced the completion of its acquisition of Golden Pacific Bancorp, Inc. and its wholly-owned subsidiary Golden Pacific Bank, national association. SOFI might provide an elevated digital and robust mobile banking experience to individual customers and businesses and boost its revenue streams through this acquisition.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, SOFI's adjusted net revenue increased 53.8% year-over-year to $279.88 million. Its net interest income grew 97.2% from its year-ago value to $76.58 million. The company’s proceeds from sales and its repayment of loans increased 22.6% from the prior year to $12.20 billion for its fiscal year 2021 ended December 31.
Analysts expect SOFI's revenue for its fiscal year 2022, ending Dec. 31, 2022, to come in at $1.43 billion, representing a 41.9% rise year-over-year. The Street expects the company's EPS for the current year to grow 37.5% year-over-year.
The stock declined 46.3% in price over the past three months. However, the 12-month median price target of $14.86 indicates a 98.7% potential upside from yesterday’s closing price of $7.48. The price targets range from a low of $10.00 to a high of $22.00. Among the 12 Wall Street analysts that rated SOFI, seven rated it Buy, while five rated it Hold.
Opendoor Technologies Inc. (OPEN)
OPEN in San Francisco operates a digital platform for residential real estate transactions in the U.S. the company’s digital platform enables consumers to buy and sell a home online, where sellers use opendoor.com, receive an offer, sign, and choose their closing date, and buyers tour and visit both Opendoor and non-Opendoor homes and make an offer digitally. In addition, OPEN offers title insurance and escrow services.
OPEN's revenue increased 1,434.9% year-over-year to $3.82 billion in its fiscal year 2021 fourth quarter, ended Dec. 31, 2021. Its adjusted gross profit grew 634.2% year-over-year to $279 million. The company’s contribution profit rose 390.3% year-over-year to $152 million. OPEN’s adjusted EBITDA increased 101.5% from its year-ago value to $400,000.
The $4.22 billion consensus revenue estimate for its fiscal 2022 first quarter, ended March 2022, represents 464.6% growth from the same period in 2021. Analysts expect the company's EPS for the current quarter to increase 63.4% year-over-year.
Shares of OPEN increased 13.7% in price over the past month. It closed yesterday's trading session at $8.03.
Among the seven Wall Street analysts that rated OPEN, four rated it Buy, two rated it Hold, while one rated it Sell. The 12-month median price target of $16.50 indicates a 105.5% potential upside. The price targets range from a low of $8.00 to a high of $30.00.
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.
DKNG added popular baseball personality and content creator Jared Carrabis to its media portfolio earlier this month. “We’re thrilled to add Jared Carrabis to our growing portfolio of content creators. He brings credibility as a subject matter expert while striking an authentic tone that resonates with sports fans. We continue to expand the DraftKings content experience by building a platform for independent voices and emerging talent such as Carrabis,” said DKNG’s Vice President of Programming, Stacie McCollum.
Also this month, DKNG and the Mashantucket Pequot Tribal Nation announced the expansion of their relationship and paved the way to offer the DraftKings Sportsbook to Puerto Rico. This agreement is expected to boost the company’s profitability.
In its fiscal 2021 fourth quarter, ended Dec. 31, 2021, DKNG's revenue increased 46.9% year-over-year to $473.33 million. Its net other income amounted to $11.95 million for the fourth quarter. The company’s cash and cash equivalents improved 18.5% from the prior year to $2.15 billion for its fiscal 2021 ended December 31, 2021. Its total current assets increased 25.5% year-over-year to $2.75 billion.
Analysts expect DKNG's revenue for its fiscal 2022 first quarter, ended March 31, 2022, to come in at $415.77 million, representing a 33.3% rise year-over-year. The company has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock declined 37.1% in price over the past three months and closed yesterday’s trading session at $16.41. However, the 12-month median price target of $32.18 indicates a 96.1% potential upside. The price targets range from a low of $18.00 to a high of $60.00. Of the 21 Wall Street analysts that rated DKNG, 10 rated it Buy, while 11 rated it Hold.
TLRY shares were trading at $6.38 per share on Wednesday afternoon, up $0.15 (+2.41%). Year-to-date, TLRY has declined -9.25%, versus a -6.71% 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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