Investing

3 Stocks Under $5 That Wall Street Thinks Will Grow 20%

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Many investors, especially more aggressive traders, look at lower-priced stocks with growth prospects as a way not only to make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner. Then you can always sell half and keep half.

We screened our 24/7 Wall St. equity research database, looking for companies with inexpensive stocks as well as projected per-share earnings growth of 20% or more in the next three to five years. We found three that fit the bill perfectly.

Blend Labs

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Cloud-based financial services
  • Stock: Blend Labs Inc. (NYSE: BLND)
  • Recent closing share price: $2.86
  • 3-5 year expected EPS growth rate: 20%

This is a San Francisco-based provider of cloud-based software solutions for financial services firms in the United States. For instance, its soft credit pull feature enables lenders to reduce the costs associated with the early stages of the mortgage origination process, and Blend Labs announced last month that it now supports Fannie Mae’s Desktop Underwriter.

Since the company’s third-quarter report back in November, Blend Labs shares have risen about 97%. The S&P 500 has gained about 15% in that time. The stock is up almost 14% year to date. Note though that the stock has overrun the analysts’ consensus price target, and the company’s founder and chief executive has been selling shares for the past three months.

IHS

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Communications infrastructure for the developing world
  • Stock: IHS Holding Ltd. (NYSE: IHS)
  • Recent closing share price: $3.39
  • 3-5 year expected EPS growth rate: 23.5%

This London-based company is one of the largest telecommunications infrastructure providers in Africa, Latin America, and the Middle East. The company recently announced that it will boost broadband connectivity in Nigeria, as well as steps it will take to enhance its own corporate governance. The current board includes former Florida Governor Jeb Bush and former Xerox CEO Ursula Burns.

The share price is more than 26% lower year to date, though it has recovered a bit from a post-IPO low of $2.46 seen earlier this month. Analysts see plenty of room for the stock to run, though. Hitting their consensus price target of $11.45 would be a gain of around 238% in the next 12 months. Their consensus recommendation is to buy shares.

Ribbon Communications

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Providing IP and networking solutions
  • Stock: Ribbon Communications Inc. (NYSE: RBBN)
  • Recent closing share price: $3.14
  • 3-5 year expected EPS growth rate: 20%

This Texas-based telecommunications services provider was founded in 2017 following a merger. It was named last year by Newsweek as one of America’s most responsible companies. And Ribbon recently announced agreements to provide services to American Electric Power and to BroadSource.

The stock is up more than 8% since the beginning of the year, but note that it has a fairly wide 52-week trading range of $1.78 to $4.84 per share. In fact, it is almost 11% lower year over year. However, the $5.50 consensus price target indicates that analysts on average anticipate over 75% upside in the coming year. They recommend buying shares, with half of the analysts having Strong Buy equivalent ratings.

 

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