Investors are rotating out of overvalued pandemic winners and into either undervalued turnaround stocks or potential post-pandemic growth stocks in anticipation of a fast-paced economic recovery. While technology and stay-at-home stocks dominated the markets for more than a year, shares of companies that are well-positioned to thrive in a recovering economy are expected to dominate the market in the near future.
On the economic recovery front, if things progress as expected by most analysts and investors, more growth investing opportunities may present themselves compared to what the market offered last year. However, it could be more rewarding to bet on lesser-known names before the market recognizes their growth potential. We think the key consideration here is solid growth in revenues and earnings.
Riley Financial, Inc. (RILY), Mitek Systems, Inc. (MITK), and Educational Development Corporation (EDUC) possess solid growth attributes and have the potential to gain big in the coming months.
Riley Financial, Inc. (RILY)
RILY is involved in providing corporate finance, sales, and research services. The company caters primarily to high net-worth individuals, corporations, and institutions. RILY has gained 285.4% over the past year to close yesterday’s trading session at $56.35.
RILY recently completed the acquisition of National Holdings Corporation. The company has also added a Compliance, Risk, and Resilience practice to its financial consulting division.
RILY’s trailing-12-month revenue has grown at a CAGR of 48.1% over the past five years. Its trailing-12-month ebitda grew at a CAGR of 151.4% year-over-year.
RILY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
RILY also has a Growth rating of A along with Value and Quality ratings of B. In the Asset Management industry, it is ranked #1 of 58 stocks.
In total, we rate RILY on eight different levels. Beyond what we stated above we also have given RILY grades for Momentum, Sentiment, and Stability. Get all the RILY ratings here.
Mitek Systems, Inc. (MITK)
MITK develops and markets mobile capture and identity verification services. The company has worldwide operations. MITK has returned 118% over the past year to close yesterday’s trading session at $14.31.
The company’s trailing-12-month revenue has increased at a CAGR of 30.9% over the past five years. Its trailing-12-month ebitda increased at a CAGR of 64.6% over the past three years.
MITK is expected to see a revenue growth of 14.2% in 2021. The company’s EPS is estimated to grow 7.7% for the quarter ended March 31, 2021 and 15% per annum over the next five years.
MITK recently launched a new single-point NFC solution to help with quicker and more accurate identity verification. The company has also partnered with Nova Credit to help immigrants establish a U.S. credit score in minutes.
It’s no surprise that MITK has an overall rating of B, which equates to Buy in our POWR Ratings system. MITK has a Quality grade of an A, and Growth and Value grades of a B. In the Software – Application industry, it is ranked #13 of 115 stocks.
Click here to see the additional POWR Ratings for MITK (Sentiment, Momentum, and Stability).
Educational Development Corporation (EDUC)
EDUC is a publishing company that specializes in children’s educational books. The company has operations in the United States primarily.
EDUC’s trailing-12-month revenue has expanded at a CAGR of 27.7% over the past five years. Its trailing-12-month ebitda has expanded at a CAGR of 14.9% over the past three years.
EDUC’s stock price has increased 387.1% over the past year and its last closing price was $17.34. The company generated record revenues of $13 million in February. It also saw record revenues for its fiscal fourth quarter. The POWR Ratings are also high on EDUC; it has an Overall Rating of A, which translates to a Strong Buy. EDUC also has an A grade for Value and Quality, and a B for Growth and Sentiment. In the A-rated Entertainment - Publishing industry, it is ranked #1 of 15 stocks.
Beyond what we stated above we also have given EDUC grades for Momentum, and Stability. Get all the EDUC ratings here.
The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
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RILY shares were trading at $57.25 per share on Wednesday morning, up $0.90 (+1.60%). Year-to-date, RILY has gained 37.66%, versus a 5.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.
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