Uncovering Hidden Gems: Two Stocks with Significant Upside Potential
Investors are always on the lookout for market bargains, but distinguishing between undervalued stocks and those that are simply cheap can be a daunting task. Stock prices can plummet due to various reasons, including fundamental issues or market conditions. To succeed in bargain hunting, it’s essential to identify stocks that are trading low for the wrong reasons and do your due diligence on the rest.
Silicon Motion: A Small but Mighty Player in the Semiconductor Industry
With a market cap of $1.70 billion, Silicon Motion may be a relatively small player in the semiconductor chip industry, but it plays a vital role in the essential solid state storage market. As a specialist in memory chips, Silicon Motion designs and produces NAND flash controllers, SSD controllers for servers, PCs, and client devices, as well as eMMC and UFS embedded storage controllers for smartphones and IoT devices.
The company’s recent financial report showed impressive results, with a 23% year-over-year gain in revenue and an EPS of 92 cents per share, beating expectations. However, the outlook failed to meet Street expectations, causing the stock to trend downward. Since peaking in June, the shares have fallen by 39%. Nevertheless, top-rated analyst Craig Ellis of B. Riley sees plenty of upside potential, citing the company’s confident ongoing PC and smartphone controller share gain expression, high-end PC controller market entry, and increased confidence in enterprise and auto SSD ramps.
AES Corporation: A Powerhouse in Greener Power Generation
AES Corporation, a Virginia-based power company, operates globally, focusing on developing greener power generation capacity, carbon-free electricity, smart grid technology, and digital solutions for the electric utility business. With a $9.7 billion market cap and over $12 billion in revenues last year, AES has a solid foundation.
In the last reported quarter, the company announced progress on multiple important expansion projects, including 2.2 gigawatts of new power supply contracts and 900 megawatts of new power load growth in AES Ohio. AES is on track to complete 3.6 gigawatts of new projects this year and has continued to progress on $3.5 billion worth of assets sales.
Despite the company’s solid numbers, the stock has shed 36% of its value since hitting a peak in May. However, Evercore analyst Durgesh Chopra sees an opportunity here, citing AES’ size and scale positioning it to benefit from exponentially growing electricity demand.
Both Stocks Offer Significant Upside Potential
Both Silicon Motion and AES Corporation have received Strong Buy consensus ratings from the Street, with significant upside potential. Silicon Motion’s stock is priced at $51.13, with an average price target of $78.22, suggesting a gain of 53% over the next 12 months. AES shares are currently trading at $13.45, with an average price target of $22.57, implying a gain of 68% over the same period.
Remember, it’s essential to do your own analysis before making any investment. To find more attractive stock ideas, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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