With August and the back-to-school season upon us, a large share of the outstanding second-quarter earnings results have been posted, and analysts and investors on Wall Street are very satisfied with the results. While plenty of investors remain very nervous, especially given the continuing big rally off the market lows and the lack of a 5% correction in almost a year, the “buy the dip” crowd continues to hold serve, at least for now.
[in-text-ad]
In a series of new reports, Goldman Sachs has adjusted the price targets on some companies that may offer aggressive growth investors some parabolic upside potential. Given where they are currently trading, they probably offer far less downsized risk than many current trade ideas. It is important though to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Array Technologies

This company sometimes is confused with a biotech with a similar name that Pfizer bought in 2019. Array Technologies Inc. (NASDAQ: ARRY) provides solar tracking solutions and services for utility-scale projects. Its products include DuraTrack HZ v3, a single-axis solar tracking system, and SmarTrack, a machine learning software that automatically adjusts module angles in response to weather and site conditions.

This stock had a red-hot initial public offering last fall. Shares charged out of the gate, as the first trade was 34% above where the upsized IPO was priced. A total of 47.5 million shares were sold in the offering, as the maker of ground-mounting systems used in solar energy projects sold 7 million shares to raise $154 million and a selling shareholder sold 40.5 million shares.

Since then it has been a nightmare for investors, but Goldman Sachs thinks the bottom has been found and noted this about the stock’s potential:

Array Technologies posted weak 2Q21 results as expected given higher steel and freight costs which forced the company to withdraw guidance and re-engage with customers on a multitude of open contracts last quarter. Encouragingly, the company has not seen any cancellations to date, and appears to have executed through the challenging cost environment with demand intact, prompting a reinstatement of guidance metrics for 2021, as well as acknowledgment that 3Q21 will mark a trough for margins.

Looking ahead, backlog trends plus some amount of project pushouts bode well for a strong 2022 top-line, in our view, while on margins ARRY cited that new orders since May have been booking at low-20% gross margins, in line with pre-inflationary levels. Though execution remains key, we believe the risk-reward continues to remain favorable for investors willing to exercise some amount of patience on the pace of the recovery trade in Array shares. We remain Buy rated and highlight our key takeaways in more detail within.

Goldman Sachs lowered the $28 price target to $24, while the Wall Street consensus target is $27.70. Thursday’s close at $17.30 a share was up almost 13% on the day to the Goldman Sachs commentary. Hitting the firm’s price target would be a huge 39% gain.

Grocery Outlet

This is a great trade for growth investors with a somewhat lower risk tolerance. Grocery Outlet Holdings Corp. (NYSE: GO) owns and operates a network of independently operated stores in the United States. The company’s stores offer products in various categories, such as dairy and deli, produce, floral and fresh meat and seafood products, as well as grocery, general merchandise, health and beauty care, frozen foods, and beer and wine. As of June 24, 2021, it had 400 stores in California, Washington, Oregon, Pennsylvania, Idaho and Nevada.
Grocery Outlet shares have been chopped in half almost and gapped down this week after reporting results that were basically in line with expectations. The revenues of $775.54 million for the quarter ended June 2021 surpassed the consensus estimate and compare to year-ago revenues of $803.43 million. The company has topped consensus revenue estimates three times over the past four quarters.
[in-text-ad]
The analysts said this about the opportunities ahead:

We are Buy-rated on the stock given its differentiated model focused on value and treasure hunt experience, which should become more relevant to customers as they increase shopping locations post-pandemic, along with on-track unit growth story. The stock is currently trading at approx. 10%/25% discount to its 1/2 year average relative P/E, suggesting an attractive entry point.

The $40 Goldman Sachs price target was lowered to $36. The consensus target is $40.21, and Thursday’s closing print was $27.625. So, trading to the firm’s target would be a 30% gain.

Vinci Partners

Goldman Sachs thinks this stock can explode higher. Vinci Partners Investments Ltd. (NASDAQ: VINP) operates as an asset management platform in Brazil. Its portfolio of investment products and solutions covers private equity, infrastructures, real estate, credit, public equities, hedge funds and investment products and solutions to institutional and high net worth individual clients.

The company also offers financial and strategic advisory services, focusing primarily on IPO advisory and mergers and acquisition transactions on the sell-side or the buy-side to entrepreneurs, corporate management teams and boards of directors. The company was founded in 2009 and is headquartered in Rio de Janeiro.

The analyst still has very high expectations:

The stock has recovered 26% in the last three months, but is still down 21% since its IPO (+10% Ibovespa). We think valuation is still attractive at 13.3x 2022 estimated price/distributable earnings and 13.2x price/fee related earnings, compared to global peers at 29.4x and 33.6x, respectively. We make modest reductions to our estimates of 8-13% from 2021-2023, given continued weakness in public equities partly offset by continued strength in IP&S, which has lower management and performance fees. We lowered our price target by 10% which still implies a potential upside of 165%. Maintain Buy.

The Goldman Sachs price target was lowered to $35 from $39. The consensus target is just $26.35, and the stock closed at $13.17 on Thursday.

These three stocks have all backed up big-time from their IPO highs, have very positive earnings potential and have probably shaken out most of the weak holders and short sellers. Given the low current trading levels, all three can probably be bought now.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.