Editorial StaffThe stock market is often an exercise in reverse psychology. When a stock goes up, investors instinctively want to get a piece of the action. Likewise, when a stock drifts to the bottom, the natural inclination is to run away.
But any investor worth their salt knows they need to battle against those natural impulses as the bottom is often the most appealing starting point; because it is from there that the real gains are made.
Of course, not any stock lying in the doldrums is worth picking up, the key is finding those with sound fundamentals that for one reason or another have been through the wringer and represent a huge opportunity.
This is where Wall Street’s cadre of experts come in handy. Some Street analysts have pinpointed two names which have suffered at the hands of Mr. Market but are now primed to jump higher, on the order of 100% or better. With the help of the tools on offer at TipRanks we can get a fuller picture regarding these wildly oversold stocks. Let’s take a look at the finer details.
TG Therapeutics (TGTX)
We’ll start off with TG Therapeutics, a biotech company focused on the development of novel, non-chemotherapy therapies for patients with B-cell malignancies and autoimmune diseases. Shares of this biotech were already on the backfoot throughout 2021, when in late January, the company released some news which accelerated the slide.
The company disclosed that the FDA had put a partial clinical hold on the studies of U2 – a combination of UKONIQ (umbralisib) and ublituximab – being tested as a treatment for chronic lymphocytic leukemia (CLL) and non-Hodgkin’s lymphoma (NHL). TGTX stressed that the hold was not due to new information which came to light but on previous worries which will be addressed at an Oncologic Drugs Advisory Committee gathering in March or April.
“To be clear,” chimed in J.P. Morgan’s Eric Joseph, “We do not believe the partial hold bears incremental weight on the direction of the ODAC panel itself and should resolve favorably in the event U2 is approved.”
Joseph also thinks that due to the setback, expectations have been lowered regarding the opportunity of ublituximab in RMS (relapsing forms of multiple sclerosis), which is set for a PDUFA date later in the year. But the analyst thinks the downbeat sentiment is unmerited and believes that “little if any of the agency’s concern over U2 reads through to RMS.”
And with the shares accumulating losses of 79% over the past 12 months, the scene is set for the stock to push higher.
“As such,” says the analyst, “Notwithstanding the added negative sentiment from the update and growing investor frustration, we continue to view TGTX shares as oversold for RMS commercial potential alone into the 9/28 PDUFA date, with current levels regarded as an attractive entry point.”
To this end, Joseph rates TGTX shares an Overweight (i.e. Buy) along with a $59 price target, leaving room for huge upside of 491%.
Fathom Holdings (FTHM)
The next stock will look is Fathom Holdings, a tech company operating in the real estate industry. The company offers cloud-based real estate brokerage services and operates intelliAgent, a real estate technology platform. This product boasts brokerage and agent level tools, offers business intelligence and reporting, training and customer relationship management, amongst other features.
Agents are keen on working with Fathom, given its focus on sharing a bigger chunk of the transaction commission and receiving a flat fee per transaction. The company has a footprint in 23 states and claims to be the US’ 9th largest independent brokerage.
So, basically, Fathom is a real estate industry disruptor and growing at a fast pace, as evidenced by the company’s latest quarterly report, for 3Q21. The company generated revenue of $100.94 million, amounting to an 80.7% year-over-year uptick, while beating the Street’s $86.85 million call. EPS of -$0.24, also came in ahead of the consensus estimate of -$0.30.
However, growth stocks have been out of favor for the past year and with the company not turning a profit yet and the market in risk-off mode, the shares have lost 74% of their value over the period.
That said, Roth Capital analyst Darren Aftahi likes the current set up and notes the shares “continue to look oversold given growth opportunities.”
“The risk of rising rates and its capital raise have seen shares weaken, but that said, we continue to believe FTHM remains very attractive now with the overhang removed and a solidified balance sheet,” the 5-star analyst explained. “We believe ancillary services should continue to aid the topline mix and thus incremental gross margins. A housing slowdown could see FTHM show its true colors in agent acquisition, all while capturing more ‘wallet share’ per transaction, the latter a core pillar to our positive outlook.”
Aftahi, therefore, rates Fathom a Buy and has a $40 price target for the shares. What does this mean for investors? Upside of a hefty 187%.
Source: Yahoo Finance
