In July, stocks delivered their best monthly performance since 2020 following an ugly first half of the year. After such a sharp move up, investors are on the lookout for stocks with more upside potential. While uncovering these investments may be a bit trickier than it was a month ago, it’s possible if you do your homework.
First, look at the company’s financial statements to see if there is room for growth. Then, research the company’s history to see if it has been able to rebound from tough times in the past. Finally, watch for news stories or analyst reports that suggest the stock could be ready to take off.
Stocks with strong fundamentals and positive earnings reports tend to have more upside potential. Similarly, stocks that have been beaten down recently may offer investors an opportunity to make money as they rebound.
Below is a list of four quality stocks trading at less than $10 per share that have the potential for double-digit returns over the next year.
|CPG||Crescent Point Energy||$7.24|
|ASTL||Algoma Steel Group||$9.34|
|TNEYF||Tamarack Valley Energy||$3.06|
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) is a digital financial services company that offers its customers a range of products and services to help them save money, pay off debt and manage their investments.
SoFi is a well-established company with a strong financial foundation. It was granted a bank charter in January, which is a gamechanger. The next month, SoFi acquired California-based community bank Golden Pacific Bancorp. The bank charter allows SoFi to hold deposits, fund loans and add additional products to its lineup. It also brings regulatory clarity, which is needed if SoFi wants to take on bigger financial service providers.
In March, SoFi announced it had completed its purchase of Technisys, a “leading cloud-native, digital multi-product core banking platform,” in a deal valued at $1.1 billion. The acquisition allows SoFi to provide its customers with a wider range of products and services and will help it in its goal of building the “[Amazon Web Services] of fintech.”
SOFI stock is down more than 50% year to date but is up 26% in the past month. The 12-month consensus price target is $9.23, according to TipRanks, implying 18.2% upside potential.
Crescent Point Energy (CPG)
Crescent Point (NYSE:CPG) is a Canadian independent oil and gas exploration and production company. Due to the big jump in oil prices this year, energy stocks have been one of the few bright spots in a beleaguered market.
Crescent Point Energy has been taking advantage of rising profits and cash flow to pay down debt. This has given the company the freedom to give back to shareholders.
During the second quarter, it returned around 30% of excess cash flow, or $108 million, to shareholders through dividends and share repurchases. In the third quarter, management said it will boost that percentage to 50%, returning discretionary excess cash flow to shareholders through stock buybacks and special dividends. Assuming oil stays around $100 a barrel, the company projects it will generate around $1.4 billion in excess cash flow this year.
CPG stock is up more than 35% in 2022, compared with a loss of 11.7% for the S&P 500. Yet, with a 12-month consensus price target of $12.32, according to TipRanks, analysts are predicting shares have 70% more upside in store.
Algoma Steel Group (ASTL)
North American steel producer Algoma Steel Group (NASDAQ:ASTL) produces a wide range of steel products that are used in various industries, such as construction, transportation, packaging, agriculture, energy and mining.
Last year, the company announced it would build two new electric-arc-furnaces to replace its current blast furnace and basic oxygen steelmaking operations. The new furnaces will produce cleaner steel, cutting the company’s carbon emissions by around 70%, while also boosting productivity.
In its most recently reported quarter, Algoma saw an 18.4% year-over-year jump in revenue to $934.1 million. Adjusted net income of $301.4 million was 48% higher than a year ago. Its strong performance has allowed management to reward shareholders, repurchasing nearly 28% of shares issued and outstanding as of July 27. The company also pays a 5-cent quarterly dividend for a forward annual yield of 2.2.%.
ASTL stock is down around 12% year to date but is up 2.2% over the past month. The 12-month consensus price target is $9.23, according to TipRanks, which is 35% above the current price.
Tamarack Valley Energy (TNEYF)
Calgary, Canada-based Tamarack Valley Energy (OTCMKTS:TNEYF), operates in the crude oil, natural gas and natural gas liquids industry. It was formerly known as Tango Energy.
The company posted record-breaking financial results in 2021, reversing a $311 million loss in 2020. Net income reached $390.5 million in 2021 on the back of a more than threefold jump in annual revenue. This strength has continued in 2022, helped by rising commodity prices. In the first half of the year, revenue was up more than 150% year over year.
Looking ahead, the G7’s decision to sanction Russian energy companies may help Tamarack explore new markets, especially in Europe. Additionally, Tamarack completed its $46.5 million acquisition of oil producer Rolling Hills Energy. Tamarack expects an additional $65 million annualized operating netback from the newly acquired assets.
Tamarack pays a dividend of 1 cent Canadian, but it does so monthly, meaning means investors receive a consistent stream of income. With a forward annual yield of 3.1.%, it’s an excellent pick for income-seeking investors.
TNEYF stock is up around 2% for the year after falling 40% from its June high. With a 12-month consensus price target of $5.61, according to TipRanks, analysts see 83.7% upside potential.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.