2 “Strong Buy” shares trading in oversold territory

The investment game is rarely common. While investors no doubt want the choices that make up their portfolio to always rise, the reality is more complicated. There are periods when even stocks in the world’s most successful companies have been on a downward trajectory for one reason or another. Amazon is a good example.

While it’s not fun to watch a stock you own slip to the bottom, any savvy investor knows that if the company’s fundamentals are sound to begin with, the withdrawal is often a gift in disguise. This is where the chance for strong returns really comes into play. “Buy the Dip” is not a cliché for no reason.

Wall Street analysts have noted that lots of stocks are oversold these days, and they are not shy away from pointing it out. Using the TipRanks platform, we have gathered the details of two such shares. Both strong purchases with significant upside potential, according to the analyst community. Let’s dive down.

Twilio, Inc. (TWLO)

We start with Twilio, a cloud-based software company offering a full-service enterprise communications platform designed to facilitate multiple telecommunications channels, including telephone and VoIP, instant messaging and video chat, to name a few, in a single web-based browser output. The company’s service allows users to keep all their communication systems and sockets together, making them easier and more efficient to use and protect.

That the Twilio shares were clearly adapted to thrive during the corona pandemic is clear from the stock’s performance history. TWLO rose sharply from May 2020 and peaked in February last year. Thereafter, however, the stock became volatile and has now fallen 55% year-to-date. It is a dramatic reversal of the fortune of the company.

At the same time, Twilio has had steadily rising revenues since the end of 2019. In the 4th quarter of last year, reported last quarter, Twilio’s top line hit $ 842 million, an increase of 54% over the previous year. For the whole of 2021, the company showed an increase in turnover of 61% y / y to 2.84 billion USD. But a bit of fog worried some investors – the company’s EPS turned negative in early 2021, and Twilio had a loss per share. share of 20 cents in the 4th quarter. This compared unfavorably with the profit of 4 cents reported in the quarter last year – although management said it expects the company to return to profitability in the first half of the year 23.

This coincided with a market macro trend that we just can not avoid right now – high and rising inflation. This metric hit 8.4% year-on-year in March this year, the worst since December 1981, and is now showing signs of slowing. In the last six to eight months, inflation has pushed investors away from growth-oriented technology stocks like Twilio. And a top analyst believes that push in this case has been too strong.

Cowen analyst Derrick Wood, rated 5-star at TipRanks, writes of Twilio: “We believe the stock remains deeply oversold. We see catalysts for more expansion, including 1) organic growth acceleration in 2H on lighter comps, increasing traction with newer products and political traffic benefits; and 2) gross margin pressure is declining and starting to strengthen.These two factors have been the biggest overhangs of the stock and we see a way for both to reverse as we navigate through the year, which in our opinion creates a compelling time buying.”

Not surprisingly, Wood estimates that Twilio shares an Outperform (ie Buy) along with a price target of $ 300. Possible gains of 154% could be on the way to investors if the target is reached over the next 12 months. (To see Woods track record, click here)

Even a quick glance at the consensus view on this one shows that Wall Street broadly agrees with the bullish stance – Twilio has 25 reviews on record, with a distribution of 24 to 1 in favor of Buy Over Hold, which backs the Strong Buy consensus view . The stock is selling for $ 118.03 and its average price target of $ 297.58 suggests that it has room for a 152% stock rise in the coming year. (See TWLO share forecast on TipRanks)

Western Alliance (WAL)

Now we turn to Western Alliance, a banking holding company whose main subsidiary, Western Alliance Bank, focuses its activities on corporate customers. The company’s activities are mainly located in the western United States, where it serves its customers both online and through a modest network of physical bank branches. The company is based in Phoenix, Arizona.

Western shares have fallen in recent months, falling 36% from the peak it reached in January this year. This decline largely reflects a general concern for the US economy going forward. Recent government data showed that GDP in the 1st quarter 22 fell by 1.4%, as a sharp reversal from the growth of almost 7% in the 4th quarter of 2021. The banking sector was among the hard hit.

At the same time, Western Alliance reported some solid data in its financial announcement for 1Q22. The bank saw its balance sheet grow to more than $ 60 billion in total assets, growth that included an additional $ 2 billion in loans and $ 4.5 billion in deposits. The two key bank surveys increased year-on-year by 43% and 35%, respectively. The bank’s net income in the first quarter hit $ 240.1 million, to an EPS of $ 2.22. This EPS result, even though it fell slightly from the 4th quarter, still increased by an impressive 51% y / y.

This gives Piper Sandler analyst Brad Milsap’s conclusion that the withdrawal represents an attractive starting point. He says bluntly: “We simply believe the stock will remain oversold to less than 8x our 2022E and 7x our 2023E, especially as we expect WAL to continue to generate over peer growth and profitability in both 2022 and 2023.”

“In our opinion, it would be ideal to achieve $ 9.80 in EPS, but the stock at $ 78 still looks very oversold, even to something less than $ 9.80, as we believe there is a positive risk / reward with a decent margin of error. , “added Milsaps.

Looking ahead, Milsaps rates the stock as overweight (or, buy) with a price target of $ 117 to indicate a 50% upside for the next 12 months. (To see Milsaps’ track record, click here)

Western Alliance may be a smaller regional bank, but it has still garnered interest from 7 Wall Street analysts whose reviews are consistently positive, giving the stock a unanimous Strong Buy consensus rating. The average price target of $ 115 suggests ~ 48% upside from the current trading level of $ 77.82. (See WAL stock forecast on TipRanks)

To find great stock trading ideas for attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ stock insights.

Disclaimer: The opinions 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.

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