As we’ve probably been told at least sometimes during our investment careers, there are opportunities in every market. The million-dollar question is what those opportunities are. Given the number of stocks available out there, the sea of red (or green) that greets us every morning, and all the noise around recessions/soft landings, inflation, geopolitics, oil prices, onshoring, earnings! -- the list goes on -- landing the right pick can be a big deal.

And if, by chance you can navigate through all that and pick your favs, there’s the question of timing: when is the right time to get in and how long to hang on. Plus, your personal situation of the cash you have available, risk appetite, etc. Really, there’s no shortcut to success in stock picking. You really do need to do your homework. Except for one thing...

If there’s one thing you can rely on in all this, it’s expert opinion. Then again, who are these experts? And why does their opinion count? As it turns out, there’s a certain rhythm in this whole system. And it stems from estimates and estimate revisions. It has been seen historically that when brokers revise their estimates, there is an effect on share prices. At Zacks, we’ve captured these movements in proprietary technology called the Zacks Rank.   

The Zacks Rank is an important tool that helps you shortlist stocks. You can match that with broker ratings on the stock you’re selecting. But make sure that there are a decent number of brokers covering the stock, otherwise you won’t have much of a consensus. Then check for growth rates. In the uncertain volatile market that we’re in today, and the increasing risk to company outlooks, it’s a big thumbs up if brokers agree on strong growth rates. Once you’ve shortlisted stocks in this way, you’ll have a list of attractive picks. Let’s take a look at three such stocks and consider why brokers are so excited about them:

Piedmont Lithium Inc. (PLL Quick QuotePLL - Free Report)

Belmont, NC-based Piedmont Lithium is a development stage company, engaged in the exploration and development of resource projects in the U.S. The company primarily holds a 100% interest in the Carolina Lithium Project that includes an area of approximately 3,245 acres located within the Carolina Tin-Spodumene Belt situated to the northwest of Charlotte. It also owns approximately 5 acres in Bessemer City, NC and 61 acres in Kings Mountain, NC. It has some big customers like Tesla and LG Chem.

CEO Keith Phillips has said that the US currently refines around 20,000 tons of lithium hydroxide. But that need is likely to expand 35X to 700,000 tons by the second half of this decade.

Last week, management announced the completion of a Definitive Feasibility Study ("DFS") in McMinn County, TN. The study of the 30,000 metric ton per year ("tpy") lithium hydroxide refining plant featuring the innovative and waste-reducing Metso:Outotec conversion technology affirms the potential.

The 30-year project is expected to yield average annual steady state EBITDA and after-tax cash flow increase of $376 and $317 million, respectively with a positive impact from America’s pro-EV policies (IRA and a DoE grant of $141.7 million against project capital costs). Additional advantages include a development-ready site in an industrial zone (reducing number of permits/approvals to commence construction) with infrastructure, workforce, customer proximity and a cooperative government.

Elon Musk has recently said that EVs are reaching a choking point because while lithium is widely available across the world, including in the U.S., lithium refining capacity is far behind the requirement. With the US racing to meet various green initiatives, the demand for lithium is going to increase manifold.

Therefore, Piedmont Lithium is very well positioned to capitalize on this.   

PLL shares carry a Zacks Rank #1 (Strong Buy). That is a consensus of five brokers, so we can definitely go with this. The average broker rating is 1.20, which also translates to a Strong Buy. Additionally, 100% of brokers have a Buy rating on the stock.

The Zacks rank is supported by solid estimate revisions: 112.37% increase in current year estimates in the last 30 days and 38.7% increase in estimates for the following year.

Brokers also rate the relevant industry #17, which means that there are positive drivers for the industry as a whole and this too is a potential positive for the stock.

The company is expected to see EPS growth of 588.99% this year.

Golar LNG Ltd. (GLNG Quick QuoteGLNG - Free Report)

Hamilton, Bermuda-based Golar LNG designs, owns and operates marine infrastructure for the liquefaction of natural gas. The company operates through three segments: FLNG, Corporate and Other, and Shipping. It also engages in the regasification, storage, and offloading of liquefied natural gas (LNG); operation of floating liquefaction natural gas (FLNG) vessels; operation of LNG transportation carriers; and vessel management.

When transported over long distances, natural gas is generally liquified to take advantage of the compression this enables (the liquid form is 600X lower in volume). However, this also means that it must be regasified before its consumption either as cooking fuel, heating, power generation or any other purpose.

This regasification process takes place either at the large terminals where the gas is delivered, or further transported before regasification closer to the consumer. A floating storage and regasification unit (FSRU) does as the name implies, although separate vessels for storage and regasification are sometimes used.

Of late, there is a growing preference for the offshore model for a number of reasons: First, building the onshore facility is capital intensive and would only make sense if continued supply of LNG was ascertained. Second, the whole process from final investment decision to utilization of FSRUs takes less time. Third, the cost doesn’t need to be capitalized because floating vessels can be time chartered. For these reasons, FSRUs are being increasingly preferred today, despite their capacity limitations and relatively lower lifespans.

Therefore, Golar’s focus on FLNG positions the company to take advantage of the most profitable segment of the LNG value chain. The recently announced Hilli transaction, the upcoming commencement of the 20-year Gimi contract, and cash flows locked in through the TTF hedges secure strong growth in free cash flow from operations. A strong balance sheet position, low leverage and strong cash flow from operations allow for expansion of the FLNG business and return of value to shareholders. As a result, the board and management are exploring alternatives to commence a dividend and/or a new share buyback program.

As far as Golar’s numbers are concerned, the Zacks Rank #1 stock is supported by solid 30-day estimate revisions of +20.88% for the current year’s earnings and +15.34% for next year’s earnings.

The five brokers providing a 1.00 or Strong Buy rating on the shares are in consensus. Moreover, they’ve ranked the industry 34, which means that they’re also positive about its growth prospects.  Additionally, the current year’s estimates represent 62.1% growth in earnings this year.

Bragg Gaming Group Inc. (BRAG Quick QuoteBRAG - Free Report)

Toronto, Canada-based Bragg Gaming Group is a fast-growing, vertically integrated, global business-to-business online gaming and content technology supplier. Its products and services collectively represent a full turnkey solution, including everything required to set up and operate online and omni-channel casino, sportsbook and lottery brands.

It also offers a state-of-the-art player account management (PAM) platform with payments, compliance and CRM functionality, licensing and certification, a deep portfolio of iGaming content (through its own studios, as well as content distribution partnerships with select third-party studios) and sportsbook options, advanced promotional and data tools, and fully-managed operations and marketing services.

Bragg is seeing substantial momentum as it continues to successfully diversify its operations from a primarily central-European iGaming focus to a global, content-led, iGaming focus with extensive distribution across North America and Europe. This led to record 2022 results, as revenue, gross profit and adjusted EBITDA grew 45.3%, 59.2% and 64.0%, respectively, over 2021.

The integration of its Wild Streak Gaming and Spin Games acquisitions and consistent growth in the output from its four game development studios have laid the foundation for its global expansion. In addition to this proprietary original content (20 player-popular games in 2022), it is also distributing exclusive third-party content from leasing studios (23 games in 2022) to six operators in three U.S. markets, as well as in multiple other global iGaming markets.

Management said that the performance tail for these games is significantly longer than similar games and expressed confidence that they would bring share gains in both existing and new markets, particularly in North America. Additionally, the development and introduction of proprietary games will accelerate in 2023, bringing further expansion of margins.

Its PAM and state-of-the art FUZE game-optimization technology are expected to drive higher player engagement, increasing both revenue and lifetime player value for iGaming operators.

As a result, its outlook for 2023 revenue and adjusted EBITDA represent year-over-year growth of 12% and 28%, respectively.

Zacks has a #2 (Buy) rating on this stock, supported by 650% increase in the current-year earnings estimate in the last 30 days. Next year’s earnings estimate increased 27.78% in the same period of time.

The six contributing brokers have a 1.17 average rating on the shares. Therefore, it stands to reason that they all have at least a Buy rating on the shares. They’ve allotted an industry rank of 44, which again implies positive dynamics in the market in which the company operates.

Finally, the earnings estimate for the current year represents 129.41% growth this year.  

Year-to-Date Price Performance

Image Source: Zacks Investment Research