Down More Than 30%: 2 ‘Strong Buy’ Stocks at Steep Discounts
Looking for a market bargain? Most investors are. The real challenge, however, lies in recognizing what’s a bargain and what’s just cheap.
Stock prices can fall for all sorts of reasons, ranging from a fundamental unsoundness in the shares to overarching market conditions. The key to success in bargain hunting is learning how to spot the stocks that are trading low for the wrong reasons, to avoid them, and to do your homework on the rest.
Against this backdrop, we used the TipRanks database to find two stocks that feature an unbeatable combination of attributes to attract bargain-hungry investors: Strong Buy consensus ratings from the Street along with steep discounts. These are stocks that are down more than 30% from the peaks they hit earlier this year – but that also show solid upside potential for the coming year.
Silicon Motion (SIMO)
We’ll start with Silicon Motion, one of the small players in the semiconductor chip industry. Silicon Motion is a specialist in memory chips, and is an important designer and producer of NAND flash controllers in the solid state storage market. The company is also a leading supplier of SSD controllers for servers, PCs, and client devices. In addition, Silicon Motion has its hands in the supply chain for the eMMC and UFS embedded storage controllers that are vital components of smartphones and IoT devices. In short, even though Silicon Motion is a relatively small chip company – it has a market cap of $1.70 billion – it has an important role in an essential industry.
Silicon Motion’s most recent financial report, released last month for 3Q24, showed sound results. The company’s top line hit $212.4 million, for an impressive 23% year-over-year gain and beating the forecast by $1.6 million. At the bottom line, the company’s EPS, by non-GAAP measures, came in at 92 cents per share, or 7 cents better than had been anticipated.
However, the outlook failed to meet Street expectations, and the stock has been trending south since. In fact, since peaking in June, the shares are down by 39%.
Nevertheless, B. Riley’s Craig Ellis, rated by TipRanks among the top 3% of the Street’s stock experts, sees plenty to like here. He writes of this chip maker, “We really like SIMO’s confident ongoing PC and smartphone CY25 controller share gain expression, its first-ever high-end PC controller market entry/SAM expansion for high-value C2H25 growth plus increased confidence now-brewing enterprise and auto SSD ramps can jump to 10% of CY26/7 sales to compliment growth… While not precisely quantifying CY25’s growth potential until 4Q24’s results post in late-Jan/early Feb, we believe mid-to-high single+ is a solid base case, with high single digits possible with any material macro help long-absent in consumer applications, albeit in more back-end fashion given new SIMO and downstream customer product release timing…”
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