Generally speaking, earnings losers represent exactly that – companies that failed to deliver against established targets. Just like in sports, you don’t get points for missing the shot or not going over the endzone. However, in the case of stocks to buy, sometimes contrarianism may serve you well amid poor financial disclosures.
Again, to reiterate, earnings losers by themselves are not causes for celebration; otherwise, we’d end up in an upside-down moral code that would be extremely difficult to navigate. However, in rare cases, Wall Street may be reacting too harshly to certain misses. In such circumstances, it’s best to consider the bigger picture before making a final decision.
Also, targeting earnings losers for ideas for intriguing stocks to buy may yield robust discounts. This year, several entities – particularly in the technology space – already enjoyed mercurial returns. However, lightning might not strike twice. Instead, a value-centric approach might be shrewdly effective.
Obviously, it’s always possible that red-stained stocks can print even darker shades of crimson. However, if you’re looking for a discount, these earnings losers might be your ticket.
Berry (BRY)
A relatively unknown enterprise outside of dedicated energy sector investors, Berry (NASDAQ:BRY) primarily engages in hydrocarbon exploration. Per its public profile, the company focuses on projects located in California, the Uintah Basin, and the Piceance Basin. As an upstream (exploration and production) player, Berry should be relevant. However, since the start of the year, it sits a hair below parity.
Much of the red ink stems from Berry unfortunately being one of the earnings losers. Per Investing.com, the company posted a loss of 60 cents per share in the third quarter. Unfortunately, this tally clashed heavily with analysts’ expectations of earnings per share of 26 cents. Also, revenue came in at $118.81 million, well below the consensus target of $194.83 million.
Obviously, it’s not a great look. However, with geopolitical tensions and flashpoints likely to apply pressure on hydrocarbon supplies, a big need exists for upstream specialists. That could make BRY one of the stocks to buy for speculators. Still, only one analyst covers BRY and it’s a hold so it’s a high-risk proposition.
Bristow (VTOL)
Another entity among earnings losers that doesn’t get much coverage, Bristow (NYSE:VTOL) bills itself as the leader in global vertical flight solutions. Per its website, it offers offshore energy transportation and search and rescue (SAR) services to civil and government organizations. Looking at its revenue breakdown by end market, offshore energy projects represent 64% of the total.
Why’s that important? Despite some market choppiness, VTOL may rise higher on the long run due to the aforementioned upstream needs. Basically, the present geopolitical situation suggests that we really can’t rely on others for energy production. Therefore, I anticipate greater offshore energy project volume. In turn, this framework should lift Bristow.
Under this context, I’m not particularly concerned about the company’s recent earnings miss. According to data from Seeking Alpha, Bristow posted EPS of 15 cents. However, this tally conspicuously missed the target by 19 cents. Also, the revenue tally fell a bit short too.
Still, investors don’t seem that worried, with VTOL gaining over 7% in the trailing five days.
Casella Waste Systems (CWST)
A waste management company, Casella Waste Systems (NASDAQ:CWST) would ordinarily make a case for stocks to buy. Founded in 1975, the company provides resource management expertise and services to residential, commercial, municipal and industrial customers. Primarily, its business focuses on solid waste collection and disposal. It’s a dirty job, yes, but someone has to do it.
Unfortunately, Casella also ranks among the earnings losers. According to data from TipRanks, analysts anticipated that EPS would land at 39 cents. Instead, the company could only post earnings of 35 cents per share. In addition, Casella printed revenue of $352.7 million, conspicuously missing the consensus estimate of $361.71 million.
Again, it’s not a great look. However, CWST represents an entity that deserves a big-picture perspective. Basically, people and organizations will continue to consume and that invariably leads to waste products. It’s one of the few permanently relevant enterprises available.
Unsurprisingly, analysts rate CWST a unanimous strong buy with a $98 target, implying almost 25% upside.
Marcus (MCS)
One of the riskier but enticing opportunities for stocks to buy among earnings losers, Marcus (NYSE:MCS) operates two principal divisions: Marcus Theatres and Marcus Hotels and Resorts. Admittedly, with rising evidence that revenge travel sentiments may be fading, the latter unit faces significant questions. That’s where the risk comes in. However, the upside prospect lies in the former unit.
First, the movie theater business may seem irrelevant amid various entertainment options. However, under the context of bang-for-the-buck social experiences, it’s difficult to beat the cineplex. And as I pointed out in a TipRanks analysis, options traders have been placing bullish bets on dating app Bumble (NASDAQ:BMBL). That might imply an anticipation of cheaper ideas for date nights.
Second, Marcus leads in major markets in the Midwest. With millennials moving to the region due to higher costs of living, MCS could be a contrarian idea among earnings losers. Plus, it was a small miss on earnings but a beat on revenue. Enticingly, analysts peg MCS a unanimous strong buy with a $21 target, implying 37% growth.
Sturm Ruger (RGR)
If you’re ready for controversy in your stocks to buy based on earnings losers, Sturm Ruger (NYSE:RGR) has you covered. So, to be clear, I’m not going to get into the politics underlying Ruger. Obviously, with the U.S. suffering a massive gun violence crisis, it’s difficult to paint firearms manufacturing in a heartening light. Nevertheless, it’s important not to paint all gun owners with a broad brush.
Part of the uncomfortable truth behind the above statement is that the firearms community is much more diverse than one might assume. Per National Shooting Sports Foundation executive Mark Oliva, “[t]he idea that gun owners are only old, male and pale isn’t holding true.” In other words, gun ownership is becoming more representative of America.
With that, investors should view Ruger’s Q3 earnings miss with caution. Yes, the company’s EPS of 42 cents badly fell short of the 87-cent target. Also, revenue fell 13.3% to $120.89 million, which is problematic. However, with the shift in owner demographics, RGR may be offering a long-term discount.
Also, Lake Street rates shares a moderate buy with a $64 target, projecting nearly 41% upside.
Albemarle (ALB)
Given the myriad challenges facing the electric vehicle industry, it’s no surprise that Albemarle (NYSE:ALB) has been struggling. As a specialty chemicals manufacturing firm, Albemarle features three divisions: bromine specialties, catalysts and lithium. Of course, it’s the latter that has been the bread and butter of ALB’s rise from the Covid-19 doldrums. Sadly, this narrative has taken an ugly turn.
Since the start of the year, shares gave up nearly 42% of equity value. In the past 365 days, the market value plunged almost 55%. Compounding matters, Albemarle ranks among the earnings losers. In Q3, the company posted EPS of $2.74 from sales of $2.3 billion. However, according to Barron’s, the Street forecasted EPS of $3.77 and $2.5 billion in revenue.
It’s a terrible miss, demonstrating the power of the EV headwinds. However, the question you’ve got to ask is, how much do you believe in EVs? If you feel this is a temporary slip, adding a little bit of ALB now might not be bad speculative wager.
Interestingly, many analysts reiterated their bullish assessment of ALB following the disclosure. I’ll let you decide if it should be one of the stocks to buy.
INmune Bio (INMB)
Based in Boca Raton, Florida, INmune Bio (NASDAQ:INMB) is a clinical stage immuno-oncology company. Per its website, the company focuses on harnessing the patient’s immune system to treat cancer. Its lead product, INKmune, primes the patient’s natural killer (NK) cells to kill cancer. Notably, the biotech is targeting residual disease, meaning cancerous cells that survive initial treatment regimens that return to cause relapse.
With a market capitalization of less than $123 million at time of writing, INMB represents a speculative wager. Sure, it’s “only” down 14% since the company’s public market debut (early 2019), meaning that it could lull some prospective investors into making a heavy wager. But given the wild choppiness of shares, you must approach the opportunity with caution.
Sure enough, INMB is among the earnings losers, posting a Q3 loss of 48 cents per share. However, analysts estimated that the loss would amount to 40 cents. Also, revenue of $43,000 fell short of the consensus target of $46,000.
Here’s the thing: analysts believe it’s one of the stocks to buy, rating it a unanimous bullish opportunity. Also, the $17.33 price target implies nearly 155% upside potential.
On the date of publication, Josh Enomoto 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.
