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3 “Strong Buy” Stocks That Are Too Cheap to Ignore

igor m



Going into the second half of the year, the market sentiment is growing clearer. First, there is a sense that the 1H collapse may be bottoming out – or at least falling to a plateau and a pause before further drops. Second, there is a growing consensus that a recession is in the offing, on a one-year time frame or possibly less. A minority opinion holds that a true downturn is already on us; but we won’t know for certain until the Q2 growth numbers are released later this month.

What does this mean for investors? In the view of MKM Partners’ chief economist Michael Darda, the gloomy sentiment may have some upside. Darda sees it as an indicator that hard times are already getting baked into current conditions – he estimates that current prices are already two-thirds of the way to taking a recession into account.

Putting his view into advice for investors, Darda says, “Our point here is that markets have already priced in a significant risk of recession/earnings declines and there may not be a recession this year. Even if there is a recession, markets move first and investors are highly unlikely to be able to time the bottom.”

With this in mind, we used TipRanks database to pinpoint 3 stocks that are too cheap to ignore. Essentially, we looked for 1) stocks with a ‘Strong Buy’ analyst consensus; 2) solid upside potential (i.e. over 30%). And on top of this, each one of these stocks is trading at low valuations. Let’s take a closer look.

Capri Holdings (CPRI)

First up is Capri Holdings, a fashion holding and retail company with a multinational reach. Capri has over 1,200 retail locations, including both stand-along stores and in-store boutiques. The company carries and sells a wide range of high-end branded items, including apparel, shoes, and accessories, under the well-known names of Versace, Jimmy Choo, and Michael Kors.

Capri has shown strong sales growth in recent months, and in the company’s financial report for Q4 of fiscal year 202 – the quarter ending on April 2 – it showed a top line result of $1.49 billion. This was up about 24% year-over-year, and per management was a company record. Gross margins also hit a company record, at 64.1%. Capri’s adjusted net income for the quarter was $152 million, or a $1.02 in diluted EPS. This was more than 2.5x higher than the year-ago result.

At the end of fiscal 2022, Capri held more than $1.09 billion in inventory, an increase of almost 49% year-over-year, and in-line with the company’s stated goals of both holding more core inventory on a regular basis and receiving seasonal inventory earlier in the cycle.

Capri has an active share repurchase program, and the company bought back some 5.1 million shares during the quarter, spending some $300 million to do so. The company Board has since revamped the repurchase program, replacing the remaining $500 million authorization with a new authorization of $1 billion over the next two year.

Despite all of this, Capri’s share price has been falling. The stock has lost approximately 34% so far this year.

These steep losses have left the luxury retailer with a relatively low share price, and put it in a position that drew the attention of 5-star analyst Robert Drbul.

In his note for Guggenheim, Drbul wrote, “While the company is facing numerous near-term macro and global headwinds, we continue to see an opportunity for CPRI for generate $7 billion in revenue and a 20% operating margin over the long term. Trading at just 7.1x our new FY23 EPS estimate, we believe CPRI offers one of the cheapest and most attractive ways to invest in the ongoing (but nonlinear) reopening of the global economy with an expectation for higher demand of occasion-based categories of handbags, footwear and apparel for social events, travel and return to office.”

Drbul follows up these comments with a Buy rating and a $90 price target on the stock, showing his confidence in an upside of 109% this year. (To watch Drbul’s track record, click here)

This is hardly the only upbeat take on Capri from Wall Street, as is clear from the breakdown in the stock’s 14 recent analyst reviews. These include 12 Buys against just 2 Holds, for a Strong Buy consensus rating. The shares are selling for $43.04; with an average price target of $73.21, they have a 70% for the year ahead. (See CPRI stock forecast on TipRanks)

ArcBest Corporation (ARCB)

With the second stock on our list, we’ll shift gears into the transportation sector. ArcBest is another holding company, but this time in the transportation industry; its subsidiaries are trucking firms, working in the less-than-truckload (LTL) segment, a vital part of the shipping business. LTL companies move freight loads that are too big for parcel shipping but not big enough to completely fill a semi-trailer, and they move them on the full range of routes, from long-haul interstate to urban last-mile.

A quick look at some numbers tells us just how important the niche ArcBest fills. The company has over 80,000 active freight carriers, 14,000 employees, and brought in more than $4 billion in revenue in 2021. Of that, the company invested some $150 million into tech and innovation, especially focused on strategic projects.

It all set ArcBest up for a solid start to 2022, with Q1 revenues of $1.34 billion, a gain of 61% year-over-year. The high revenues pushed earnings up, too. Net income for 1Q22 reached $79.8 million, for a diluted EPS of $3.08. Both the total revenue and the diluted EPS were the best in more than two years, and ArcBest’s gains were broad based, reflected in all of the company’s operating segments.

Even so, ArcBest stock has lost 36% this year. What this comes down to, is a stock that investors need to pay more attention to – in the view of Credit Suisse analyst Ariel Rosa.

“ARCB is the cheapest stock in our coverage… It has an attractive 12% free cash flow yield (the highest in our coverage). The company has demonstrated strong performance over the past few years, yet its current multiple reflects significant skepticism as to the sustainability of those results, in our view… If it can sustain these results as demand normalizes, particularly an LTL operating ratio below 90%, it could see considerable upside to its share price,” Rosa opined.

To this end, Rosa rates ARCB an Outperform (i.e. Buy), unsurprisingly in light of his comments, and sets a $102 price target that suggests a 33% one-year upside for the stock. (To watch Rosa’s track record, click here)

Overall, the unanimous Strong Buy consensus rating on this stock, supported by 4 recent analyst reviews, makes it clear that Rosa is not alone in his bullish view. The average price target here, $129.50, is even more optimistic, suggesting an upside of ~70% from the current trading price of $76.23. (See ARCB stock forecast on TipRanks)

Open Lending Corporation (LPRO)

In recent years, the automotive sector has found important support from customer financing, which has driven both new and used car sales as prices have increased. Looking forward, that support is only going to become more important – but also more complicated as interest rates rise. Our next stock, Open Lending, dwells in this sector.

The Texas-based company provides a range of services for financial institutions and lenders, particularly automated loan analytics, risk-based pricing and risk modeling, and automated decision technology for automotive lenders. Open Lending operates throughout the US, and has been in business since 2013. The company went public in 2020.

Since entering the public markets, Open Lending’s shares rose fast to peak above $40. The stock stayed at or near that level through most of 2021, but in September of last year began to slip. Year-to-date, LPRO shares are down 57%.

A look at the numbers may help to explain Open Lending’s share decline. The company is facing headwinds due to inflation and higher interest rates, both of which make it more expensive for customers to purchase vehicles. Yet, the most recent quarter, 1Q22, showed a top line of $50.1 million, which was up 13% year-over-year. Business remained strong in Q1, with the company certifying 43,944 loans compared to 33,318 in the year-ago quarter – for a gain of almost 32%. Net income also rose from $12.9 million to $23.2 million, or more than 79% y/y.

In his note on Open Lending, JMP analyst David Scharf, who holds a 5-star rating, writes: “The company delivered a very strong first quarter, with both top- and bottom-line upside, as well as better-than-forecast loan certification volumes (certs). Furthermore, our belief is that the reiteration of full-year revenue, EBITDA, and cert guidance will be viewed positively in light of investor sentiment that was painting a more dire portrait of auto loan demand during 2022… We believe that the unprecedented supply chain headwinds that have weighed on dealer inventory and lending volumes, as well as the effects of credit normalization on carrier profit-sharing, are priced into LPRO shares.”

Standing squarely in the bull camp, Scharf rates LPRO an Outperform (i.e. Buy), and his $28 price target implies a robust upside of 189% for the next 12 months. (To watch Scharf’s track record, click here)

All in all, out of 9 analysts who have weighed in on LPRO shares recently, 7 have rated it a Buy, while only 2 rated it a Hold, giving the stock its Strong Buy consensus rating. The average price target of $26.22 suggests ~171% upside from the current share price of $9.69. (See LPRO stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


American Weed Stocks Are Cheap. They’re About to Get a Sales Bump.

igor m



However bad the year has been for most stocks, it has been especially harsh for state-licensed cannabis sellers.

In just the past month, the

AdvisorShares Pure US Cannabis

exchange-traded fund (ticker: MSOS), which tracks America’s multistate operators—or MSOs—fell 25%, while the

S&P 500

dropped 7%.

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How Do Mega Backdoor Roths Work?

igor m



A mega backdoor Roth is a unique 401(k) rollover strategy that’s designed for people whose incomes would ordinarily keep them from saving in a Roth Individual Retirement Account. The advantage of using a Roth IRA to save for retirement is being able to make tax-free qualified withdrawals. But not everyone can contribute to these accounts; higher-income earners are excluded. That’s where the mega backdoor Roth comes into play. If you have a 401(k) you’d like to roll over, you could use this strategy to enjoy the tax benefits of a Roth IRA without having income be an obstacle.

Make sure you’re taking advantage of every opportunity to maximize your retirement assets by working with a financial advisor.

Roth Account Basics

Before diving into the specifics of a mega backdoor Roth, there are a few things to know about Roth accounts, including Roth IRAs and Roth 401(k)s.

First, these accounts are both funded with after-tax dollars. That means when you make qualified withdrawals later, you won’t pay income tax on the money since you already paid it upfront. This is the key characteristic of Roth accounts and what makes them so appealing to investors who anticipate being in a higher tax bracket at retirement.

Next, your ability to contribute to a Roth 401(k) is not restricted by your income. But it is for a Roth IRA. For the 2021 tax year, you must be within these modified adjusted gross income limits to make a full Roth IRA contribution:

  • Single filers: MAGI of $125,000 or less

  • Married filing jointly: MAGI of $198,000 or less

  • Head of household: MAGI of $125,000 or less

You can make partial contributions above those income limits. But your ability to contribute phases out completely once your MAGI hits $140,000 (if you file single or head of household) or $208,000 if you’re married and file a joint return. For 2021, the full contribution allowed is $6,000 with a $1,000 catch-up contribution for savers aged 50 and older.

Finally, Roth 401(k) accounts are subject to required minimum distribution rules just like traditional 401(k) accounts. This rule requires you to begin taking money from your 401(k) starting at age 72. A Roth IRA, on the other hand, is not subject to RMD rules.

What Is a Backdoor Roth?

A backdoor Roth offers a work-around for people whose incomes are above the limits set by the IRS. When you execute a backdoor Roth, you roll money over from a traditional IRA to a Roth account. This way, you won’t have to pay taxes on your retirement savings in the Roth IRA when it’s time to make withdrawals. And you’re not subject to required minimum distribution rules either.

But there is a catch. You have to pay income tax on the money you roll over to a Roth account. So while you could save money on taxes in retirement, you’re not escaping the tax liability of a traditional IRA altogether.

How a Mega Backdoor Roth Works

A mega backdoor Roth is a backdoor Roth that’s designed specifically for people who have a 401(k) plan at work. This type of backdoor Roth allows you to contribute up to $38,500 to a Roth IRA or a Roth 401(k) in 2021. This is in addition to the regular annual contribution limits the IRS allows for these types of accounts. To execute a mega backdoor Roth, two conditions have to be met. Your 401(k) plan needs to allow the following:

You can ask your plan administrator whether your 401(k) meets these criteria. And if your plan doesn’t allow for in-service withdrawals or distributions, you could still attempt a mega backdoor Roth if you plan to leave your job in the near future.

If your plan meets the criteria, then you can take the next steps to execute a mega backdoor Roth. This is typically a two-step process that involves maxing out after-tax 401(k) contributions, then withdrawing the after-tax portion of your account to a Roth IRA.

Again, whether you can follow through on the second step depends on whether your plan allows in-service withdrawals. If it doesn’t, you’ll have to wait until you separate from your employer to roll over any after-tax money in your 401(k) into a Roth IRA.

You also need to watch out for the pro rata rule. This IRS rule says you can’t only withdraw pre- or post-tax contributions from a traditional 401(k). So if you’re completing a mega backdoor Roth, you couldn’t just withdraw post-tax contributions if your account holds both pre- and post-tax funds. In that case, you may have to roll over the entire balance to a Roth IRA.

Benefits of a Mega Backdoor Roth

There are three key benefits associated with executing a mega backdoor Roth. First, you can contribute significantly more to a Roth IRA upfront this way. For 2021, the contribution limit is $38,500 on top of the regular annual contribution limit and any catch-up contribution limits that may apply.

You’ll need to know the maximum amount you’re allowed to contribute to the after-tax portion of your 401(k). So for 2021, the IRS allows a maximum contribution of $58,000 or $64,500 if you’re 50 or older. You’d subtract your 401(k) contributions and anything your employer adds in matching contributions to figure out how much you could add to the after-tax portion.

Next, you can enjoy tax-free withdrawals in retirement. This is a benefit you may otherwise not being able to get if your income is too high to contribute to a Roth IRA. By reducing your tax liability in retirement, you can help your investment dollars go further. And you may have a larger legacy of wealth to pass on to future generations.

Finally, a mega backdoor Roth IRA would allow you to sidestep required minimum distribution rules. This means that you could retain control over when you choose to take distributions from a Roth IRA.

So who is a mega backdoor Roth right for? You may consider this move if you:

  • Have an eligible 401(k) plan at work

  • Have maxed out traditional 401(k) contributions

  • Are not eligible to contribute to a Roth IRA because of your income

  • Have additional money that you want to invest for retirement

  • Want to leverage the higher Roth IRA contribution limits allowed by a mega backdoor rollover

Talking to your financial advisor can help you decide if a mega backdoor Roth makes sense. And your 401(k) plan administrator should be able to tell you if it’s possible, based on your plan’s guidelines.

Mega Backdoor Roth Alternatives

If you can’t execute a mega backdoor Roth because your plan doesn’t allow it, there are other ways to increase your retirement savings. For example, you could try a regular backdoor Roth instead. This might be something to consider if you still want to enjoy the tax benefits of a Roth IRA but your plan doesn’t fit the criteria for a mega rollover. You could also elect to make Roth 401(k) contributions to your retirement plan at work. This way, you still get the benefit of contributing after-tax dollars and making tax-free withdrawals. You’d be subject to the regular contribution limits and you’d still have to take the required minimum distribution. But that may outweigh the value of tax savings in retirement.

Investing in a Health Savings Account (HSA) is another option. While these accounts are not specifically designed for retirement, they can yield multiple tax benefits. Contributions are tax-deductible and grow tax-deferred. Withdrawals are tax-free when used for eligible healthcare expenses. And at 65, you can take money out of an HSA for any reason without a tax penalty. You’ll just owe ordinary income tax on any withdrawals that are not used for healthcare expenses.

Finally, you could open a taxable brokerage account to invest. This doesn’t necessarily save you money on taxes since you’ll owe capital gains tax when you sell investments at a profit. But it could help you to diversify your investments and there are no limits on how much you can invest in a brokerage account annually.

Bottom Line

A mega backdoor Roth strategy could work well for higher-income earners who want to take advantage of Roth account benefits. There are certain rules that need to be followed to make it work, however, so you may want to talk to your plan administrator or a tax professional before going ahead. Keep in mind also that even if you can’t complete a mega backdoor Roth rollover, you still have other options for growing retirement savings.

Tips for Retirement Planning

  • If you’re saving for retirement in a 401(k) or IRA, pay attention to the fees you’re paying. For instance, check the expense ratios for each fund you’re invested in to understand how much you pay to own that fund on an annual basis. You can then compare that to the fund’s performance to determine whether the fees are justified. Also, consider any administrative fees you might be paying and how those affect your net returns.

  • Consider talking to your financial advisor about a mega backdoor Roth and whether it could be right for you. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. You can get your personalized recommendations in minutes just by answering a few simple questions. If you’re ready, get started now.

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Alibaba Is Tumbling. Chinese Tech Stocks Have a New Headache.

igor m



Chinese tech stocks were tumbling on Monday as two of the embattled sector’s leading players faced fresh fines from market regulators over disclosure rules.

China’s State Administration for Market Regulation announced Sunday a wave of penalties for improperly reporting past deals, in breach of competition law.


(ticker: BABA) and


(0700.H.K.) were among the companies fined as a result.

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