Even the best investors like to get advice sometimes; the question is, who to turn to? Wall Street’s stock analysts make a logical choice. These are the professionals who make a living – and a reputation – watching the markets, analyzing the stocks, and selecting those that are likely to bring in returns for investors. Naturally, investors want to get advice from the best analysts out there.
Right now, that means Needham’s Quinn Bolton. Based on his overall record – the number of stock recommendation he’s made, the accuracy of his picks, and the average return his calls would generate – Bolton stands at the top of the pyramid, the best among his Wall Street peers.
In recent weeks, Bolton has picked out two stocks that he believes are primed for gains. According to TipRanks data, these are Strong Buy stocks, with plenty of upside potential; Bolton sees them gaining well over 40% in the coming months. Here are the details.
Rockley Photonics (RKLY)
We’ll start with a company in the high tech field, with a bent toward the healthcare industry – Rockley Photonics. This company produces integrated optical chips and related modules, for use in the healthcare imaging industry, wearable digital devices, and machine vision. Rockley products are found in devices ranging from wearable biophysical sensors to data center server stacks.
While Rockley has been around since 2013, the company is new to the public trading markets. Rockley’s stock entered the NYSE just this past August, through a SPAC combination with SC Health Corporation. The combination brought $167.8 million in gross proceeds to Rockley, and the RKLY ticker started trading on August 12.
Rockley released its financial results for 2Q21 just a few days after the SPAC merger finalized. The company reported a net loss for the quarter of $30.6 million, which was an improvement over the year-ago quarter’s net loss of $64.8 million. Revenues came in at a $2.2 million, while the company’s backlog, that is, orders placed but not fulfilled, was up to $23 million.
Among the bulls is Quinn Bolton, who sees the stock as a quality investment for the long term.
“We believe Rockley is positioned to become a leading global provider of sensing products comprised of integrated optical modules with supporting firmware, software, application algorithms, and AI platforms for high-volume applications in multiple dynamic and high-growth markets, beginning with its first target markets of consumer wearables and smartphones and extending into medical devices over time. With engagements at leading smartwatch and smartphone OEMs already underway, we expect initial customer platforms to be introduced in late 2022 and forecast a strong revenue ramp in 2023 and 2024," Bolton opined.
In line with this upbeat outlook, Bolton rates RKLY stock a Buy and his $15 price target suggests an upside of 83% in the next 12 months. (To watch Bolton’s track record, click here)
Bolton may be bullish here, but it’s clear from the unanimous 4 positive reviews that he is not the only one. Wall Street’s consensus view on RKLY is a Strong Buy, and the average target of $16.75 implies a robust 85% one-year upside from the trading price of $8.2. (See RKLY stock analysis on TipRanks)
Ultra Clean Holdings (UCTT)
The second stock we’re looking at here is a support company in the semiconductor chip industry. It’s not too much to say that our digital world runs on silicon chips, and Ultra Clean develops, builds, and supplies the components and subsystems needed in semiconductor chip production. The company has two divisions, Products and Services, which together offer high-precision manufacturing as well as parts cleaning and coating for tools, among other critical services. Ultra Clean’s product line has found use in chip foundries, as well as in the production of other high-tech staples, including LCD screens.
In the second quarter of this year, UCTT reported $515.2 million at the top line, with EPS of 39 cents. This compares well to the year-ago revenue of $417.6 million, but EPS was down 46% year-over-year. Looking forward, management is guiding toward Q3 revenue of $520 million to $560 million, with EPS between 68 and 85 cents. It’s important to note here that the company’s top line revenue has been increasing steadily for the past two years.
Silicon chips have been in high demand – in fact, there is a shortage of them causing disruptions in global supply chains – and Ultra Clean has benefited from that demand. The company’s shares have shown an impressing 115% gain over the past 12 months.
These gains came mostly after the company completed its acquisition of Ham-Let Group earlier this year. Ham-Let is a major producer of industrial flow control systems for high pressure and high temperature transmissions using both gas and liquids, and the acquisition added substantially to Ultra Clean’s capabilities. The deal was worth approximately $351 million, and included Ultra Clean’s assumption of $67 million in net debt.
Quinn Bolton has been covering Ultra Clean for over a year, and remains bullish on the company, writing: “[Ultra Clean's] subsystems business is driven by deposition and etch equipment demand for the memory, foundry/logic, and display equipment markets and is expected to outperform WFE. In addition, the service business provides highly technical parts cleaning and analytical services to wafer fabs and contributes a steady high margin revenue stream that mitigates volatility through cycles. As such, UCTT is one of our favorite derivative names of Lam Research and Applied Materials."
To this end, Bolton sets a Buy rating on UCTT shares, along with a $66 price target that implies one-year appreciation of ~47%.
Overall, there are 4 recent analyst reviews on record for UCTT, and they all agree that this is a buying proposition – making the consensus rating a Strong Buy. The shares are priced at $45 and their average price target of $71.75 gives them an impressive 12-month upside potential of ~60%. (See UCTT stock analysis 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.