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When stocks appreciate notably in a relatively short period of time, it makes sense to ask ourselves why did it happened. For all you know, this will help you stumble upon opportunity that your normal screening activity didn’t pull up. That’s what had me taking a closer look at Bluegreen Vacations Holding Corporation , Inspired Entertainment, Inc. (INSE - Free Report) and VirTra, Inc. (VTSI - Free Report) .
BVH’s share price jumped 5.8% during the course of the past week, INSE jumped 5.9% while VTSI did the best of the lot, with a markup of 7.0%.
As the next step, I wanted to check out what brokers think about these companies. Because brokers often have field knowledge/experience and prepare advanced models that help them understand the fundamentals of a company and calculate/project the performance of its stock, consulting broker opinions is always a good idea. And so, I discovered that the average broker rating on all three stocks is 1, which translates into a Strong Buy rating. Hurray. That means brokers are thrilled with these stocks.
If brokers are rooting for these stocks, in all probability, they will be raising their estimates on them. Most of us who have been following the markets for some time have figured out that it is these estimate revisions that tend to push up share prices. Even if it doesn’t happen immediately – in fact in many cases it doesn’t happen immediately – share prices definitely do ride up higher in response to positive estimate revisions. Here too I wasn’t disappointed. In just a period of 30 days, 2023 estimates for Bluegreen, Inspired Entertainment and Virtra have climbed a respective 2.5%, 14.6% and 95.7%. Virtra estimates for 2024 are only just available now, but Bluegreen and Inspired estimates are showing increases of 3.3% and 11.9%, respectively. Alright, VTSI looks most attractive from this perspective and BVH the least. But they’re all still worth considering.
For additional drivers, I decided to check the industries to which these companies belong. As most of us already know, there are certain factors within an industry that tend to lift all players, or at the very least, these factors make a difference in the company’s overall operation. They could make life easier or tougher for the players.
Bluegreen for example, belongs to the Leisure and Recreation Services industry. This is the summer and everyone is going on vacation. Need I say more! But here at Zacks, there’s also a system of rating industries. And Zacks says this industry deserves to be in the top 23% of the 250 odd industries that it classifies.
Again, Inspired Entertainment belongs to the Technology Services industry, which Zacks has placed in the top 43%. While still in the upper hemisphere, this position is obviously not as exciting as the first. But we can take heart from the fact that historically, it has been seen that the bottom half underperforms the top half by approximately 1:2.
That brings us to Virtra, which is placed in the Electronics – Military industry, which is the cream of the cream (top 1%).
No prizes for guessing the winner here!
Finally, let’s turn to valuation. Because no matter how great a stock is, this may not be the best time to buy it. It’s best to always pick stocks that are appreciating although still undervalued (which means that they are trading below their potential). There are a number of ways to check a stock’s valuation, some more complicated than others. But we’ll stick to the simplest method, i.e. price-to-earnings ratio (P/E). So let’s get down to it:
Bluegreen’s 7.79X P/E trades at a 69.0% discount to the industry’s 25.11X P/E and a 59.0% discount to the S&P’s 18.98X. While trading at a 17.5% premium to their median value, the shares should not be considered overvalued because this is well below the annual high, especially given that the company’s prospects continue to improve.
As far as Inspire Entertainment is concerned, its not surprising that its P/E of 12.59X hugely trails the industry’s 46.0X because the industry valuation appears very high. Therefore, it’s encouraging that the shares also trade at a 33.7% discount to the S&P 500. They also happen to be trading somewhere between their median and high points over the past year, indicating that upside potential cannot be ruled out.
Virtra shares trade at 16.18X P/E, a 14.8% discount to the S&P 500 and a 1.3% discount to the industry’s 16.39X. They’re also trading at a discount of 17.5% to their own 12.59X median value over the past year. Therefore, the shares are definitely undervalued.
Finally, all three carry a Zacks Rank #1, which is a Strong Buy rating from Zacks. Therefore, there’s only one way to conclude this piece and that is by recommending you go for these stocks.
One-Month Price Performance
Image Source: Zacks Investment Research
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What's Common Between BVH, INSE and VTSI?
When stocks appreciate notably in a relatively short period of time, it makes sense to ask ourselves why did it happened. For all you know, this will help you stumble upon opportunity that your normal screening activity didn’t pull up. That’s what had me taking a closer look at Bluegreen Vacations Holding Corporation , Inspired Entertainment, Inc. (INSE - Free Report) and VirTra, Inc. (VTSI - Free Report) .
BVH’s share price jumped 5.8% during the course of the past week, INSE jumped 5.9% while VTSI did the best of the lot, with a markup of 7.0%.
As the next step, I wanted to check out what brokers think about these companies. Because brokers often have field knowledge/experience and prepare advanced models that help them understand the fundamentals of a company and calculate/project the performance of its stock, consulting broker opinions is always a good idea. And so, I discovered that the average broker rating on all three stocks is 1, which translates into a Strong Buy rating. Hurray. That means brokers are thrilled with these stocks.
If brokers are rooting for these stocks, in all probability, they will be raising their estimates on them. Most of us who have been following the markets for some time have figured out that it is these estimate revisions that tend to push up share prices. Even if it doesn’t happen immediately – in fact in many cases it doesn’t happen immediately – share prices definitely do ride up higher in response to positive estimate revisions. Here too I wasn’t disappointed. In just a period of 30 days, 2023 estimates for Bluegreen, Inspired Entertainment and Virtra have climbed a respective 2.5%, 14.6% and 95.7%. Virtra estimates for 2024 are only just available now, but Bluegreen and Inspired estimates are showing increases of 3.3% and 11.9%, respectively. Alright, VTSI looks most attractive from this perspective and BVH the least. But they’re all still worth considering.
For additional drivers, I decided to check the industries to which these companies belong. As most of us already know, there are certain factors within an industry that tend to lift all players, or at the very least, these factors make a difference in the company’s overall operation. They could make life easier or tougher for the players.
Bluegreen for example, belongs to the Leisure and Recreation Services industry. This is the summer and everyone is going on vacation. Need I say more! But here at Zacks, there’s also a system of rating industries. And Zacks says this industry deserves to be in the top 23% of the 250 odd industries that it classifies.
Again, Inspired Entertainment belongs to the Technology Services industry, which Zacks has placed in the top 43%. While still in the upper hemisphere, this position is obviously not as exciting as the first. But we can take heart from the fact that historically, it has been seen that the bottom half underperforms the top half by approximately 1:2.
That brings us to Virtra, which is placed in the Electronics – Military industry, which is the cream of the cream (top 1%).
No prizes for guessing the winner here!
Finally, let’s turn to valuation. Because no matter how great a stock is, this may not be the best time to buy it. It’s best to always pick stocks that are appreciating although still undervalued (which means that they are trading below their potential). There are a number of ways to check a stock’s valuation, some more complicated than others. But we’ll stick to the simplest method, i.e. price-to-earnings ratio (P/E). So let’s get down to it:
Bluegreen’s 7.79X P/E trades at a 69.0% discount to the industry’s 25.11X P/E and a 59.0% discount to the S&P’s 18.98X. While trading at a 17.5% premium to their median value, the shares should not be considered overvalued because this is well below the annual high, especially given that the company’s prospects continue to improve.
As far as Inspire Entertainment is concerned, its not surprising that its P/E of 12.59X hugely trails the industry’s 46.0X because the industry valuation appears very high. Therefore, it’s encouraging that the shares also trade at a 33.7% discount to the S&P 500. They also happen to be trading somewhere between their median and high points over the past year, indicating that upside potential cannot be ruled out.
Virtra shares trade at 16.18X P/E, a 14.8% discount to the S&P 500 and a 1.3% discount to the industry’s 16.39X. They’re also trading at a discount of 17.5% to their own 12.59X median value over the past year. Therefore, the shares are definitely undervalued.
Finally, all three carry a Zacks Rank #1, which is a Strong Buy rating from Zacks. Therefore, there’s only one way to conclude this piece and that is by recommending you go for these stocks.
One-Month Price Performance
Image Source: Zacks Investment Research