Last Friday’s U.S. jobs report showed that just 194,000 nonfarm payrolls were created in September, compared to 500,000 estimated by Dow Jones. Nevertheless, the S&P 500 managed to advance during the week as optimism about the U.S. debt ceiling increased, with Washington reaching a deal to raise the debt ceiling through December.
In addition, promising results from Merck & Co., Inc.’s (MRK) oral COVID-19 treatment have provided some support. Furthermore, according to a Factset report, more S&P 500 companies have issued positive EPS guidance for the third quarter. Given this backdrop, several low-priced stocks with strong growth potential could be solid bets now.
Wall Street analysts expect shares of Arcos Dorados Holdings Inc. (ARCO), Adecoagro S.A. (AGRO), and Cidara Therapeutics, Inc. (CDTX), which are trading at less than $10 but have solid growth potential, to rally 50% or more in price in the near term.
Arcos Dorados Holdings Inc. (ARCO)
Based in Montevideo, Uruguay, ARCO operates 2,236 franchised McDonald’s Corporation’s (MCD) restaurants. The company has the exclusive right to own, operate, and grant franchises of MCD restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, and Chile.
On August 11, 2021, Marcelo Rabach, ARCO CEO,said, “The opportunity for growth in our main markets remains robust, both organically with the emergence of new sales segments, such as our record-setting McDelivery, and inorganically through new, free-standing unit openings. We will focus on the factors we can control to capture these local growth opportunities while continuing to provide our guests with the best restaurant experience in Latin America and the Caribbean.”
ARCO’s total revenues surged 102.6% year-over-year to $592.70 million in the second quarter, ended June 30, 2021. The company’s adjusted EBITDA came in at $47.20 million compared to a$42.90 million loss in the prior-year period. Its net income was $4.90 million, compared to a $89.50 million loss in the year-ago period. Also, its EPS came in at $0.02, compared to a $0.43 loss per share in the prior year’s quarter.
ARCO’s EPS is expected to increase 350% year-over-year to $0.27 in its fiscal year 2022. In addition, the company’s revenue is expected to increase 29.7% year-over-year to $2.57 billion in fiscal 2021. The stock has soared 23.7% in price over the past year to close yesterday’s trading session at $5.17. Wall Street analysts expect the stock to hit $8 in the near term, which indicates a potential 54.7% upside.
It is no surprise that ARCO has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Sentiment, Momentum, and Value. Click here to see ARCO’s ratings for Quality and Stability as well. ARCO is ranked #21 of 46 stocks in the A-rated Restaurants industry.
Adecoagro S.A. (AGRO)
Luxembourg-based agro-industrial company AGRO farms crops and other agricultural products, manages dairy operations, land transformation activities, sugar, ethanol, and energy production activities. The company owns 220,186 hectares of land, including 18 farms in Argentina, eight in Brazil, one in Uruguay, and 241 megawatts of installed cogeneration capacity.
AGRO’s net sales surged 54% year-over-year to $278.80 million in the second quarter, ended June 30, 2021. The company’s adjusted EBITDA in the Sugar, Ethanol & Energy segment grew 62.1% year-over-year to $73.6 million. Its net income came in at $15.70 million, compared to a $12.10 million loss in the year-ago period.
Analysts expect AGRO’s EPS and revenue to increase 35.1% and 31.5%, respectively, year-over-year to $1.51 and $1.08 billion in its fiscal year 2021. Over the past year, the stock has soared 86.1% in price to close yesterday’s trading session at $8.84. Wall Street analysts expect the stock to hit $13.26 in the near term, which indicates a potential 50% upside.
AGRO’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The stock has an A grade for Growth, and a B grade for Value.
Cidara Therapeutics, Inc. (CDTX)
Biotechnology company CDTX in San Diego, Calif., focuses on discovering, developing, and commercializing novel long-acting anti-infectives to treat and prevent diseases in the United States. The company’s lead product candidate is rezafungin acetate, a novel molecule in the echinocandin class of antifungals to treat and prevent serious invasive fungal infections.
On August 17, 2021, CDTX and Mundipharma completed recruitment of the pivotal Phase 3 ReSTORE trial to evaluate the efficacy and safety of rezafungin as a potential first-line treatment for candidemia and invasive candidiasis. Jeffrey Stein, the President and CEO of CDTX, said, “With the completion of enrollment of ReSTORE, we remain on track to announce top-line data by the end of this year.”
CDTX’s total revenues surged 868.8% year-over-year to $32.86 million in its fiscal second quarter, ended June 30, 2021. The company’s net income came in at $10.71 million compared to a $18.31 million loss in the prior-year period. Also, its EPS was $0.18, compared to a $0.45 loss per share in the previous year quarter.
For fiscal 2021, analysts expect CDTX’s EPS and revenue to increase 49.4% and 236.5% year-over-year, respectively. Over the past three months, the stock has gained 1.6% in price to close yesterday’s trading session at $1.87. Wall Street analysts expect the stock to hit $6.31 in the near term, which indicates a potential 237.4% upside.
CDTX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has an A grade for Sentiment, and a B grade for Growth, Value, and Quality. Click here to access CDTX’s ratings for Stability and Momentum as well. CDTX is ranked # #22 of 502 stocks in the Biotech industry.
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ARCO shares were unchanged in premarket trading Monday. Year-to-date, ARCO has declined -0.80%, versus a 17.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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