For the past couple of months or so, the markets have mostly been trending upwards. However, such has been the strength of 2022’s inflation-driven/interest-rate-hiking environment that all the major indexes are still showing year-to date losses.
As a result, most portfolios are painted some shade of red. But not all have been tarnished with the same stock market brush. As is always the case, some have gone against the grain and have managed to completely sidestep the bear and exhibit some very robust growth in 2022.
With this in mind, we’ve opened the TipRanks database and pulled out 3 names which have delivered some monster growth for investors over the past year (north of 300%, at least) – the sort of behavior completely at odds with the overall market trends. Interestingly, however, they also look to have gone mostly unnoticed by the Street’s analyst community and appear to still be flying under the majority of experts’ noses.
Yet, even after notching outsized gains, some of those keeping a tab on their progress see more upside from here. Let’s see why.
Target Hospitality (TH)
With year-to-date gains of 306%, you could say it’s been a pretty good year for Target Hospitality stock. The company is the U.S.’s largest provider of specialty rental remote accommodation. That is, it offers workforce lodging, hotels for extended stays and mobile crew camps. These are used by anything from government agencies to oil, gas and mining operations, to disaster relief operations and large-scale events. Accommodation aside, the company also offers the full spectrum of on-site services such as ongoing maintenance, housekeeping, catering, security, and transportation.
These big stock market gains are the result of strong quarterly reports, the most robust of which was the 2Q22 print, when the company significantly boosted its FY22 outlook.
While the latest Q3 report was a more mixed affair, there was still a lot to like. Revenue increased by 79% year-over-year to $159.57 million, beating the Street’s call by $1.37 million. The company also notched record quarterly adj. EBITDA of $84.4 million, a 125% uptick compared to the same period a year ago. However, TH did miss on the bottom-line, with EPS of $0.20 falling some way short of the $0.55 anticipated by the analysts.
With the Government segment representing more than 77% of the company’s total revenue in Q3 (up from 52% a year ago), Stifel analyst Stephen Gengaro thinks it is imperative for it to make sure that revenue stream keeps on flowing, and the signs here appear promising.
“We believe the key to the TH story going forward is the execution of its recent contract extension and expansion for the Government through late 2023, and a potential long-term contract extension that would create visibility and remove the concern that a change in DC will impact TH. Based on comments on the conference call, we believe management is confident a long-term deal is likely,” Gengaro noted.
As such, Gengaro rates TH shares a Buy while his $20 price target makes room for additional one-year gains of 38%. (To watch Gengaro’s track record, click here)
Only two other analysts have chimed in with TH reviews, but they are also positive, making the consensus view here a Strong Buy. Going by the $20.67 average target, the shares are expected to add ~43% over the course of the next 12 months. (See TH stock forecast on TipRanks)
Nine Energy Service (NINE)
It is unlikely many have delivered as strong returns this year as the next pick. It also won’t come as much of a surprise to learn that Nine Energy Service operates in the energy segment, one of the few to have made hay in 2022. However, while the major energy index – the XLE – is up 69% year-to-date, NINE shares have dwarfed that return, skyrocketing 950% this year.
So, what does NINE do? It provides completion services for the “unconventional” oil and gas industry – i.e., oil and gas that is acquired through procedures different than those of typical vertical well extraction – with a strong focus on the cementing and completion tools sections.
While the company provides services overseas, most of the revenues are derived from the U.S. and Nine’s client list includes ConocoPhillips, Chesapeake Energy and Pioneer Natural Resources, amongst others.
The quarterly top-line haul has been steadily rising for a while now, as was the case in the most recent quarter – for 3Q22. Revenue clocked in at $167.43 million, amounting to an 80% year-over-year increase, while coming in $13.23 million above the consensus estimate and some distance above the company’s revenue guidance for the range between $145 and $155 million. Likewise for the bottom-line, Nine delivered EPS of $0.39, far higher than the $0.16 expected on Wall Street.
It’s the sort of performance that EF Hutton analyst Ben Piggott calls “exceptional.”
“Continued free cash flow generation, top line growth, and margin expansion positions the company well to manage its maturing debt, and we continue to trust management’s concentrated capital allocation philosophy as a key part of our bullish thesis,” the analyst went on to say. “CEO Anne Fox has led the company through multiple tumultuous periods (including 2015, 2016 and 2021), all while repositioning Nine as a safer, better growth potential, and better cash flow generating company.”
Accordingly, Piggott rates NINE shares a Buy, along with a $15.5 price target. Even after 2022’s huge gains, the figure suggests further upside of ~48% is in the cards. (To watch Piggott’s track record, click here)
Despite those gains, the company remains under Wall Street’s radar; Piggott is still the sole analyst tracking Nine’s progress. (See NINE stock forecast on TipRanks)
KLX Energy Services Holdings (KLXE)
We’ll stay in the energy sector for the next market-beating stock. KLX Energy Services provides onshore oilfield services, covering drilling, completion, production, and intervention activities for wells considered the most technically challenging. The business activities are split into three divisions according to location: Rocky Mountains Region, the Southwest Region, and the Northeast/Mid-Con Region. Initially founded in 2013-2014 via the combination of seven oilfield service companies, the latest iteration follows a 2020 merger with Quintana.
The stock is up 409% this year but almost all of those gains have been generated over the past couple of months. More specifically, since the company raised its Q3 revenue and adjusted EBITDA margin projections and announced a one-year extension of the maturity date of its asset-based credit agreement (to September 15, 2024).
All told, the Q3 revenue haul showed $221.6 million, amounting to a 59% uptick from the same period a year ago, and coming in $6.6 million above the prognosticators’ target. Adjusted EBITDA saw a 113% increase to $37.1 million, although the company failed to meet expectations on the bottom-line, delivering EPS of $0.96 against the Street’s $1.22 forecast.
For the full year, the company called for 2022 revenue to come in the range between $780 million to $790 million compared to consensus at just $765 million.
We’ll check in again with EF Hutton’s Ben Piggott, who recently started covering this name, and sees plenty to be upbeat about.
“We remain bullish on North American service activity and believe management’s history of strong capital allocation and successful acquisitions well-positions the company to benefit from strong price momentum in the underlying commodity,” Piggott explained. “Additionally, we believe that underdevelopment clouds the current regional landscape and expect current activity impetus to continue. We like KLXE’s exposure across all major basins in the continental US and expect the company to capitalize on the quickening treadmill beneath it.”
An upbeat stance like that should naturally come with an upbeat forecast. Piggott rates KLXE shares a Buy with a $35 price target, implying an upside of ~122% for the coming year.
Only one other analyst has been keeping a tab on KLXE’s development and they remain on the sidelines for now, providing the stock with a Moderate Buy consensus rating. The average target stands at $27, making room for 12-month gains of ~71%. (See KLXE stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.