Before the Air Force developed its famous stealth fighters, it built a technology called terrain-following, which allows attack aircraft to fly at a constant low altitude – and avoid detection by staying ‘under the radar’ of the enemy.
Flying under the radar remains an effective tactic for non-stealth aircraft to evade an enemy’s defenses. But it also works in the stock market, where there are plenty of high-quality stocks that just aren’t picking up a lot of analyst attention, even though they offer investors an array of attractive features.
Sometimes, however, Wall Street does notice – and some high-rated analysts have been tapping under-the-radar stocks with Buy ratings recently. We used TipRanks database to pinpoint two such stocks. These tickers have shown truly monster growth in the past year, on the order 180% or better. Let’s take a dive into the details.
Bluelinx Holding (BXC)
We will start with BlueLinx, a distributor of building and industrial products. The company offers over 50,000 unique SKUed items, both branded and private label, through distribution centers in 40 states. Products include lumber, weatherization, roofing, and siding and trim. The big story for this company has not been the COVID pandemic – rather, BlueLinx has been dealing with integration issues since its 2018 merger with competitor Cedar Creek. That merger doubled the size of the company, and with greater scale came greater problems – combining the corporate governance, managing new vendors, streamlining the product offers.
That BlueLinx has successfully handled these organization issues is clear. The stock has grown 187% over the past 12 months, with the pace of growth accelerating in the last six months as the economy begins to reopen and the building industry starts to get back on track. Revenues have grown steadily since bottoming out in 4Q19 (before corona hit), and the Q3 top line of $871 million was the best in over two years. EPS also jumped that quarter, hitting $5.72 per share, and beating consensus estimates of $0.5.
Among the bulls is Craig-Hallum analyst Greg Palm who writes, “The company reported record Q3 results and $133M in FCF over the last two quarters, allowing the company to materially lower leverage and transform the balance sheet. Looking ahead, a positive housing backdrop and continued lumber inflation should benefit near term results. Longer term, we see potential for bolt-on M&A opportunities to expand growth in a very fragmented market.”
Unsurprisingly, Palm rates BXC a Buy and sets a price target of $51, suggesting that the stock will grow 37% in the year ahead. (To watch Palm’s track record, click here)
Some stocks fly under the radar, and BXC is one of those. Palm’s is the only recent analyst review of this company, and it is decidedly positive. (See BXC stock analysis on TipRanks)
AudioEye, Inc. (AEYE)
We live in a litigious age, and companies look to protect themselves from a wide range of actions. Customer access is one key point – laws and regulations stipulate that information and services must be accessible to everyone. In the brick-and-mortar world, that can mean sidewalk cutouts and ramps for wheelchairs; online, it can mean accessibility software installations on websites. AudioEye offers platforms and tools for alternative text, keyboard input, closed captioning, subtitling, warnings, and content organization – a long list of assistive technologies to make websites accessible to people with disabilities. For the site providers, AudioEye also offers legal protections, including certification that assistive software is installed and the site now meets legal requirements.
In short, AudioEye helps businesses protect their money – and business will pay handsomely for that service. The company’s revenues rose steadily for several years, only flattening out in Q2 and Q3 of 2020. The most recent report, for 3Q20, showed $5.34 million, up 92% year-over-year. The share price has shown even stronger growth – AEYE is up 361% over the course of the past 12 months.
B. Riley analyst Zach Cummins, rated 5-stars by TipRanks, sees a clear path ahead for AudioEye’s continued growth.
“[We] get the sense that customer churn is improving, sales cycles are beginning to normalize, and the vertical partner channel has regained momentum, with the total customer count projected to reach ~32k at year-end (~45% Q/Q growth) … We expect the vertical partner channel, which also includes digital agencies, will continue to serve as the key driver for customer acquisition and revenue growth in FY21… Furthermore, we believe that AEYE stands to benefit from pandemic-driven shift toward digital channels and the increasing focus on web accessibility from the incoming Biden Administrationm” Cummins opined.
In line with those comments, Cummins puts a Buy rating on this stock, along with a $32 price target suggesting ~29% upside in the year ahead. (To watch Cummins’ track record, click here.)
AEYE has slipped under most analysts’ radar; Cummins is the only bull in the picture right now- with the stock displaying a Moderate Buy analyst consensus. (See AEYE stock analysis on TipRanks)
To find good ideas for growth stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
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.