Barchart’s Top 100 Stocks to Buy had 64 stocks moving up at least 20 spots in Monday’s trading. Of those, 43 were new entrants to the list.
Although many companies that aren’t new names on the list are investments worth considering, I’ve chosen to focus on the 43 new entrants. The trio of stocks come with varying levels of risk. They aren’t everyone’s cup of tea.
Here are my three picks from most positions gained to least.
SkyWest
SkyWest (SKYW) entered the Top 100 Stocks to Buy in the 28th spot, 72 positions higher than previously. Its stock is up 58% year-to-date and 146% over the past year.
SkyWest is a holding company with two businesses: SkyWest Airlines, a regional airline based in Utah, and SkyWest Leasing, which leases aircraft to other airlines and customers. The company has been around since 1972. In 2023, its 475 Bombardier (BDRBF) and Embraer (ERJ) aircraft carried 38.6 million passengers.
In the three months ended March 31, it generated $803.6 million, 16% higher than a year earlier. That’s impressive when you consider its operating expenses increased by 1% year-over-year. Its expense control is a big deal. On the bottom line, it earned $60.3 million in the quarter, up from a $22.1 million loss.
SkyWest has been busy buying back its stock. In the five quarters from Q1 2023 through Q1 2024, it repurchased 10.7 million shares (21% of its share count) at an average price of $27.77. Based on its current share price of $83.74, this is a 202% return on its $298 million investment.
SkyWest has contracts with four airlines: United Airlines (UAL) (182 planes), Delta Air Lines (DAL) (125), American Airlines (AAL) (97), and Alaska Air (ALK) (42).
The positive of such an arrangement is it generates stable revenue. The downside is that it lives and dies with the success or failure of these airlines, which means the volatility of its share price can be significant.
I like the commitment to share repurchases. It’s one way to invest in its business beyond its contractual relationships with its airline partners.
High Tide
High Tide (HITI) entered the Top 100 Stocks to Buy in the 54th spot, 46 positions higher than previously. Its stock is up 41% year-to-date and 96% over the past year. Of course, that’s from a starting point below $1.50.
High Tide is based in Calgary, Alberta. It’s been a long time since I’ve thought about the Canadian cannabis bricks-and-mortar retailer. Founded in 2009, it is the second-largest cannabis retailer in North America, with 171 Canna Cabana stores in five Canadian provinces.
The company’s revenue in the last four quarters was approximately 500 million Canadian dollars ($366 million), with Q1 2024 revenue up 8.5% from a year ago. High Tide’s average store in Canada is between 2 and 3 times more productive in terms of revenue generation than its competitors.
High Tide is targeting 300 stores in Canada over the long haul. To reach this target, it would have to add 10 stores annually over the next decade.
On June 3, the company announced the opening of its 172nd store in Huntsville, Ontario (63rd in Ontario). I’m from Toronto. I’m very familiar with the area, which is cottage country for many people living in Southern Ontario. It should do well in the summer season.
An option to consider to lower risk is the Jan. 17/2025 $5 call with a $0.30 ask price. That’s a down payment of 6%, a reasonable amount to risk relative to the potential reward.
Boot Barn Holdings
Boot Barn Holdings (BOOT) entered the Top 100 Stocks to Buy in the 58th spot, 42 positions higher than previously. Its stock is up 68% year-to-date and 80% over the past year.
The other retailer on my list sells cowboy boots and other western wear from its headquarters in Irvine, California. It has 406 locations in 46 states, up from 86 stores in eight in 2012. By the end of fiscal 2025 (March year-end), it intends to have 460 stores open. It believes it can hit 900 by 2030.
Boot Barn stores are getting a new, much more modern store format, which should continue to drive revenues.
When Boot Barn went public in October 2014, its stores were smaller at 10,000 sq. feet versus 12,000 in 2025. They generated lower sales of $1.7 million compared to $3.0 million today and took twice as long for 100% payback on the investment.
While same-store sales continue to fall -- it expects a 2.6% decline in fiscal 2025 at the midpoint of its guidance, with an operating margin of 11.0%, 90 basis points less than in 2024.
It can’t control the consumer’s desire to spend on certain items or lack thereof, but it can position its business for growth when the consumer feels more confident about spending.
The risk here is that the rebound doesn’t come as quickly as anticipated. That would create a situation where its share price is overvalued based on its near-term prospects.
Of the 13 analysts who cover its stock, 11 rate it a Strong Buy, although the target price is $115.91, about $10 below where it’s currently trading.
I’d look for an entry point closer to $100.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
