Every successful stock portfolio starts with the right stock choices, but how can investors find those? There are thousands of firms traded on the public markets, tens of thousands of traders hawking those shares, and multiple millions of daily transactions on Wall Street’s trading floors. The sheer volume of data presents a solid barrier to most investors.
But that’s what data sorting tools were invented for – tools like the Smart Score. This is a sophisticated algorithm, using AI and natural language processing to collect, collate, and analyze the reams of data put out by the stock markets – and to present it in a form that’s readily intelligible to the retail investor. The Smart Score algorithm measures every stock against a set of factors that have been proven to correlate with future share gains – and then it boils that down to a single score to show what direction each stock is likely to take.
The Smart Score is presented as a simple number, on a scale of 1 to 10, and the highest score, the ‘Perfect 10,’ indicates a stock that has ticked all – or most – of the boxes, and deserves a closer look from investors. These Perfect 10s are where tomorrow’s market opportunities are brewing.
Now we’ll take a look at 2 stocks that boast the ‘Perfect 10’ score – and also bring ‘Strong Buy’ ratings from the analyst consensus and solid upside potential for the coming months. These are top-rated stocks; here are the details, from the TipRanks database, along with comments from the Street’s analysts.
Burford Capital (BUR)
The first stock on our list, Burford Capital, was founded in 2009 to target a unique niche in the financial services world: legal financing. It’s no secret that high-level litigation can cost a fortune, as good lawyers are famous for high billings, and other services, such as private investigation or forensic analysis, also come with high price tags. Burford offers a combination of financial and legal expertise to work with its clients in developing a litigation budget, and to assess financing issues at all stages of the litigation.
Burford offers a number of other services, besides litigation financing. These include advisory activities, asset recovery, and risk management – all important facets of both financial services and litigation. The company has a global footprint, with offices in New York, Chicago, DC, London, Singapore, Sydney, Dubai, and Hong Kong and its portfolio includes over 1,000 financed matters, in both commercial litigation and arbitration. Burford has a record of success, as 91% of the cases it has financed were resolved successfully for its clients, and the company wrote $928 million worth of checks last year on behalf of its client base.
In its last reported quarter, 2Q23, Burford saw realized gains of $59 million, an impressive 254% increase from 2Q22’s $17 million, while the company touted its strongest ever set of six-month financial results. These showed net income attributable to shareholders of almost $240 million and 6-month tangible book value per share growth of 12%.
BUR shares have outperformed this year, delivering returns of 59% year-to-date. There’s more on the way, according to Berenberg analyst Alexander Bowers, who lays out several reasons for feeling optimistic about this stock.
“Having operated for over a decade, Burford has a strong track record of investment returns, generating a high ROIC from past cases,” Bowers said. “In addition, Burford’s investment case has simplified over the course of this year, in our view. Firstly, the September YPF judgment now gives investors a quantified value for a potential award which can be used to estimate a potential settlement (in a court case, Burford – and plaintiffs Petersen and Eton Park – won against Argentina as it was deemed to be guilty of expropriating YPF in 2012). Secondly, Burford has revised its accounting policy for valuing legal finance assets, which was developed working alongside SEC. The company have highlighted that this new accounting approach could become the industry standard, which should put to bed historical debates on how legal assets should be valued.”
For Bowers, this adds up to a Buy rating, and his price target, set at $20 (GBp1,600) implies a 51% upside potential for the coming year. (To watch Bowers’ track record, click here.)
The Strong Buy consensus rating on this stock is unanimous, based on 4 recent positive analyst reviews. Shares in BUR are trading for $13.23 and have a $22.55 average price target; this combination points toward a 70% one-year increase. (See Burford Capital’s stock forecast.)
Next up is Ecovyst, a company in the green tech world. Ecovyst works to make cleaner fuels, better emission controls, and improved waste reduction a reality, using advanced chemistry to develop the new catalyst technologies needed to bring green dreams to reality. The company works closely with its customers, to create the right catalysts at the right time, so that Ecovyst’s products always meet the client’s specifications.
Ecovyst develops catalysts that meet the needs of numerous industries, including polyolefin catalysts that are used in the plastics industry for the polymerization of ethylene into polyethylene; in anti-blocking silicas; in advanced ion exchange materials that are used in mining, metal processing, and waste treatment applications; and in fuel technology, where catalysts are used in producing renewable fuels and in helping existing fuels meet emissions standards. The company’s products are also used in the production of various custom materials.
Ecovyst recently released earnings results for 3Q23. At the top line, the company brought in $173.3 million, for a drop of 25.5% year-over-year – and missing the forecast by $10.5 million. The firm’s bottom line came to 19 cents per share in non-GAAP measures, a result that was 2 cents below expectations. In large part, these lower results – especially the large y/y drop in revenue – reflected the pass-through of lower sulfur costs.
Along with this earnings miss, Ecovyst management reduced its outlook for full-year 2023 revenues, by $10 million at the midpoint. The new revenue guidance, of $675 million to $705 million, was below the consensus expectation of $706.81 million.
Nevertheless, analyst John McNulty, of BMO Capital, still takes an optimistic view of Ecovyst. Writing just after the Q3 results were released, and calling them ‘solid,’ McNulty goes on to say, “ECVT has been soft over the past few months following their 2Q miss on the Dominguez plant outage. In-line results in a weak macro should help investors gain comfort in the stability of the business while the snap back in EBITDA ($70mn in 4Q vs. $54mn in 3Q) despite the early turnaround should show they are back on track with their outage behind them. So, while the 4Q outlook is below consensus, with more than half tied to an early turnaround and part also tied to weakness around UAW-related demand, we think investors should largely look through it.”
Looking ahead, the analyst gives ECVT shares an Outperform (Buy) rating, with a $14 price target indicating his confidence in a 49% upside for the next 12 months. (To watch McNulty’s track record, click here.)
Overall, Ecovyst has impressed Wall Street – a fact made clear by the unanimous Strong Buy consensus rating supported by 4 positive analyst reviews. The shares have a trading price of $9.42 and the $13.38 average target implies a 42% increase from that level. (See Ecovyst’s stock forecast.)
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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.