As always, there have been hits and misses in the last earnings season. Irrespective of long-term fundamentals, markets tend to react to quarterly results. For medium-term investors, the results provide an opportunity for quick gains by trading in stocks that have delivered positive surprises. There are also cases where the rally is on the back of the revised guidance rather than the actual numbers. This column discusses stocks to buy for 100% upside after strong quarterly results.
I must add here the stocks discussed represent companies that have the potential to create value beyond three to six months. Of course, these are good near-term trading bets as the stock is re-rated. It’s worth noting the stocks discussed have already witnessed a decent rally for the year-to-date. However, considering the fundamentals, the upside momentum is likely to sustain. I would bet on 100% upside for these stocks over a time horizon of one or two quarters.
Let’s discuss the reasons to be bullish.
Electric vehicle (EV) charging stocks have been depressed with concerns related to cash burn and intense competition. However, the last quarter results for EVgo (NASDAQ:EVGO) have been stellar. The numbers underscore the point that there is significant growth potential in an underpenetrated market. I expect EVGO stock to surge higher from current levels. With short interest at 20% of the free float, EVGO stock seems like a short-squeeze rally candidate.
For Q2 2023, EVgo reported revenue growth of 457% on a year-over-year (YoY) basis to $50.6 million. Further, during the quarter, the company added 210 new stalls to the EVgo network. With 3,200 DC fast-charging stalls in operation or under construction, revenue growth will likely remain robust.
Another important financial development is the narrowing of EBITDA level losses to $10.6 million. Given the growth trajectory, it’s likely that EVgo will reach EBITDA break-even in the next few quarters. This is a key stock upside catalyst.
Miniso Group (MNSO)
Miniso Group (NYSE:MNSO) stock has witnessed a massive rally of 213% in the last 12 months from deeply oversold levels. At a forward price-earnings ratio of 24.8, MNSO stock remains attractive.
In terms of stock upside triggers, there are two points to note. First, Miniso announced its dividend policy last month. The company is targeting an “annual dividend no less than 50% of its annual adjusted net profit.” The potential announcement of dividends in the coming quarters will result in a stock re-rating.
Further, the company is due to report quarterly results on August 22. The announcement of a dividend policy ahead of the results indicates potentially strong numbers. For Q2 2023, the company reported a revenue and earnings beat. I expect the trend to sustain, making the stock worth buying before Q3 earnings.
It’s worth noting that Miniso is on a high-growth trajectory. For Q2 2023, the company opened 74 new stores. International expansion coupled with new products contributed to healthy gross margin expansion. With key metrics being strong, MNSO stock is positioned for further upside.
Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) reported a revenue and earnings beat in the last week of July. TLRY stock is higher by 56% in the last month. The rally is not entirely on the back of strong quarterly results. However, I believe the stock can double in quick time from current levels, with valuations looking attractive.
A key point to note is that besides the earnings beat, Tilray has optimistic guidance for the financial year 2024. An important point about Q4 of the company’s 2023 fiscal year is the fact that revenue growth was healthy at 20% on a year-on-year basis. Furthermore, EBITDA growth was 93% for the same period, which means the company’s cost-cutting initiatives have delivered results.
For FY2024, Tilray expects EBITDA in the range of $68 to $78 million. Additionally, the company expects to generate positive adjusted free cash flows. With potentially higher financial flexibility, Tilray will be positioned for accelerated growth. Of course, the recent acquisition of eight beer and beverage brands from Anheuser-Busch (NYSE:BUD) will contribute to the growth momentum.
On the date of publication, Faisal Humayun did not hold (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.