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Tale of the Tape

Zacks Equity Research

Why NewStar Financial (NEWS) Could Shock the Market Soon
November 14, 2016

NEWS

Trades from $3

It can be very difficult to find companies that are both flying under the radar, and still might have potential for gains. Many times, stocks are off investors’ radar screens for a reason, though there are some hidden gems that could be worth uncovering by those with a high risk tolerance.   

One way to find these underappreciated stocks is by looking at companies that haven’t seen their share prices move higher lately, but have observed analysts raising earnings estimates for their stock. This trend could signal that investors haven’t quite embraced the rising estimate story yet, but that the potential for a big move higher is definitely there.

One such company that looks well positioned for a solid gain, but has been overlooked by investors lately, is NewStar Financial, Inc. (NEWS - Free Report) . This Finance-Small Business Investment Company & Commercial industry stock has actually seen estimates rise over the past month for the current fiscal year by about 18.6%. But that is not yet reflected in its price, as the stock lost 1.7 % over the same time frame.

NEWSTAR FIN INC Price and Consensus

NEWSTAR FIN INC Price and Consensus | NEWSTAR FIN INC Quote

You should not be concerned about the price remaining muted going forward. This year’s expected earnings growth over the prior year is 27.5%, which should ultimately translate into price appreciation.

And if this isn’t enough, NEWS currently carries a Zacks Rank #2 (Buy) which further underscores the potential for its outperformance (See the performance of Zacks' portfolios and strategies here: About Zacks Performance). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So if you are looking for a stock flying under-the-radar that is well-equipped to bounce down the road, make sure to consider NewStar Financial. Solid estimate revisions and an impressive Zacks Rank suggest that better days may be ahead for NEWS and that now might be an interesting buying opportunity.

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