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Looking for Value? These 3 Stocks Are Deemed Undervalued by Top Wall Street Analysts

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Professional analysts aren’t always correct about which stocks to buy or how high those stocks could go. But when there’s a strong consensus among them, it’s worth paying attention.

These analysts have become professionals due to their deep understanding of businesses and the stock market. If they widely agree about something, it’s notable.

Several tools are publicly available to track analysts’ opinions, such as TipRanks. For this article, I’ve identified three stocks that most analysts believe investors should buy and that could have at least a 25% upside from their current trading levels. These stocks are Academy Sports and Outdoors (ASO 1.84%), Celsius Holdings (CELH 8.32%), and Nice (NICE -0.24%). Here’s what investors should know about each one.

Academy Sports

Of the 16 analysts tracked by TipRanks who cover Academy Sports, 12 recommend buying the stock, while the other four recommend holding. Their average price target is about $66 per share, or 25% higher than where the stock trades currently. Analysts typically set price targets based on where they predict the stock will trade about 12 months later.

Academy Sports’ strategy involves operating large sporting goods stores capable of high sales volume per location, similar to Dick’s Sporting Goods. The company currently has a little over 280 locations but plans to open between 160 and 180 new stores over the next five years.

This expansion plan should significantly boost sales for Academy Sports in the coming years. Additionally, management aims to increase its profit margin to 10%, up from just under 6% in the first quarter of 2024.

Given its strong plans to increase sales and profits, it’s no wonder most analysts who cover Academy Sports stock believe it’s worth buying.

Celsius Holdings

Of the 10 prominent analysts who track Celsius, eight recommend buying and two recommend holding. These analysts generally believe its upside is much higher than that of Academy Sports. Their consensus price target is nearly $91 per share, about 47% higher than where the stock trades currently.

Celsius’ beverages have rapidly grown in popularity in recent years, propelling it to the third-highest market share in the energy drinks sector, behind Red Bull and Monster. However, one analyst noted that recent sales data suggested its market share had slipped from 12.4% to 12.2%, leading to a more than 30% sell-off in the stock.

Analysts may adjust their price targets for Celsius based on recent sales data, but this slight decline in market share should be seen in context. The company has gained significant market share in recent years, and its recent slip is minor.

Furthermore, Celsius generated 95% of its sales from North America in the first quarter. It’s just beginning to ramp up its international growth, presenting a multiyear growth opportunity. If Celsius achieves comparable market share internationally to what it has domestically, the upside for investors could be substantial.

Nice

There are 16 prominent analysts tracking Nice, and they all recommend buying the stock. Their average price target is $274 per share, implying a 57% upside.

Artificial intelligence (AI) is a hot trend in investing, and Nice is a key player in this space, providing AI-powered customer service software. Despite being publicly traded for almost 30 years, Nice is still relatively under the radar.

Nice faces significant competition in its niche, including from tech giants. However, the company already serves 85 of the Fortune 100, demonstrating its ability to compete effectively.

Management views the AI trend as a tailwind for Nice’s business. Consequently, it expects 14% to 15% revenue growth this year, compared to just 9% growth in 2023. It also anticipates growing its full-year free cash flow by at least 26% to $600 million. These are strong projections for a stock that has dropped by more than 35% from its 12-month high.

Is there a clear winner?

Academy Sports, Celsius, and Nice all have substantial upsides according to Wall Street analysts, suggesting they are relatively good bargains right now.

However, investors shouldn’t rely solely on analysts’ opinions. They can often be wrong, so individuals need to conduct their own research.

I believe Academy Sports stock is the best value of these three today. It’s already profitable and trades at a low valuation of just 8 times its trailing earnings. Moreover, while nothing is guaranteed, it has credible plans to grow its profits and revenues substantially by opening new stores and improving operations.

These plans should provide a clear path for Academy Sports stock to rise. While analysts see about 25% upside potential over the next year, I believe its upside could be 100% or more when extending the time horizon to three to five years.

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