Even the best companies in the world can have a bad quarter, or in some cases are just reporting for the first time and not everybody is pleased. Every quarter, good companies get absolutely crushed if they come in under expectations, especially if they have been a hot stock the momentum traders have been on.

In a new research report, SunTrust Robinson Humphrey has three just such companies. Quality stocks that got pummeled and may be offering investors the best entry point in some time. All three are rated Buy and could have big upside for patient investors.

NXP Semiconductors

This is considered a top play for investors looking for a chip stock with Internet of Things exposure. NXP Semiconductors N.V.’s (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analyst believe the merger can transform the company into a powerhouse. The merger will make NXP the fourth largest in the semiconductor industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers.

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The company reported very mixed third-quarter results, and the forward guidance was way below what Wall Street was looking for. SunTrust maintains that if management can successfully convince investors that its long-term growth targets, which are 10% sales growth and 20% earnings per share growth, are still viable and intact, the huge sell-off could wind up looking like an outstanding buying opportunity.

The SunTrust price target for the stock is $125, and the Thomson/First Call consensus target is $123.86. The stock closed Thursday at $73, down almost 20%.
PayPal

This company was spun-off from eBay recently and many on Wall Street think the real growth is in the payment sector. PayPal Holdings Inc. (NASDAQ: PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. It enables businesses of various sizes to accept payments from merchant websites, mobile devices and applications, as well as at offline retail locations through a range of payment solutions across company’s payments platform, including PayPal, PayPal Credit, Venmo and Braintree products. The company’s platform allows customers to pay and get paid, withdraw funds to their bank accounts and hold balances in their PayPal accounts in various currencies.

The SunTrust team thinks that solid revenue growth over the next five years is possible, and the scarcity value, or lack of competition, could help drive the multiple for the company. Some Wall Street analysts have pointed to the new acquisitions PayPal has made, like Venmo and Paydiant, that are leveragable with the combination of Paydiant. Many also think that the eBay separation is likely to help the company’s positioning with large merchants.

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SunTrust noted that while the company only reported in-line numbers and guidance its first time out, the strong secular growth in the payments industry and improved operating margins make the stock a solid buy

SunTrust has a large $45 price target. The consensus target is $42.27. Shares closed Thursday at $35.91.

Verisk Analytics

This high-rolling stock was absolutely mauled after reporting third-quarter earnings. Verisk Analytics Inc. (NASDAQ: VRSK) is a leading data analytics provider serving customers in insurance, energy, health care, financial services, government and risk management. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on vast industry expertise and unique proprietary data sets to provide predictive analytics and decision support solutions in fraud prevention, actuarial science, insurance coverages, fire protection, catastrophe and weather risk, data management and many other fields.

The reported earnings were above expectations but revenues came in way below estimates. The company also announced that it is exploring strategic alternatives for its health care data analytics business, Verisk Health. SunTrust remains very positive on the long-term prospects for the company, and the current trading level could be a very solid entry point.

SunTrust lowered its price target to $93 from $98, while the consensus target is $86.36. The stock closed most recently at $70.26, down another almost 4%.

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These stocks have been hit and hit good. While the “catching the falling knife” trade can be hard, and is only suitable for very aggressive accounts, it could pay-off big time for investors taking a shot at the current trading levels.

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