Every Tuesday, I write about Barchart.com’s Top and Bottom 100 Stocks to Buy.
34 companies' weighted alpha was higher than the 52-week change in Monday's trading. That typically means its near-term returns are higher than its 52-week performance, which often means the stock is ready to make another move higher.
Interestingly, three of the 34 names stood out because they don’t have a 52-week return, which means they went public less than a year ago.
Here’s why the three names are worth putting on your stock watchlist.
Solowin Holdings
Solowin Holdings (SWIN) has a weighted alpha of 142.91, which puts it in the 35th spot.
Solowin is a Hong Kong-based online securities brokerage firm specializing in high net worth (HNW) investors. It went public in September 2023, selling two million shares of its stock at $4, at the bottom of its pre-IPO pricing. It also sold 500,000 shares less than anticipated.
The company’s business has grown rapidly since 2021 through its Solomon Win online trading platform operated by its Solomon JFZ subsidiary. Its IPO prospectus stated that it had 15,400 clients who had opened trading accounts with Solomon JFZ. Of those clients, more than 1,500 had assets in their trading accounts. Its clients included Chinese investors in Asia and institutional clients from Hong Kong, Australia, and New Zealand.
It reported its results for the first six months of fiscal 2024 through Sept. 30, 2023, in March. On the top line, its revenue was $2.64 million, up 126.4% from $1.17 million in the same period a year earlier. Meanwhile, its operating income was $1.34 million, compared to a $250,000 loss a year earlier.
Investment advisory fees, asset management income, and referral fees were the company’s three most significant revenue generators, accounting for 59%, 18%, and 21% of its total revenue.
In March, the company launched Solomon Private Wealth Limited in Hong Kong. It will provide private wealth management services to family offices and HNW investors.
Based on its earnings, I would say that this is only a stock for very aggressive, risk-tolerant investors.
WK Kellogg
WK Kellogg (KLG) has a weighted alpha of 115.89, which puts it in the 49th spot.
WK Kellogg is the cereal business that was spun off last October from the former Kellogg, which is now known as Kellanova (K). It owns brands such as Pringles, Cheez-It, and Morningstar Farms, its plant-based business.
Kellogg shareholders got one share of WK Kellogg for every share held in the parent, now known as Kellanova. Kellanova had intended to spin off Morningstar Farms but a slowdown in the plant-based food industry caused It, to shelve those plans.
The cereal business, which includes brands such as Fruit Loops, Frosted Flakes, Mini Wheats, and Corn Flakes, is a stable but slow-growing business, while the snack unit is where the growth is.
That said, the company reported its Q1 2024 results on Tuesday morning, and they were better than expected. Revenue was $707 million, down 1.9% from a year ago but ahead of Wall Street’s estimate of $698 million. On the bottom line, it earned 37 cents a share, 32% higher than Q1 2023, even with the consensus estimate.
In 2024, it expects revenue to be flat from a year ago, with adjusted EBITDA of $267.5 million at the midpoint of its guidance, 4% higher than in 2023.
If you’re a dividend investor, the annual dividend payment of $0.64, which currently yields a healthy 2.8%, should be on your watchlist for dividend stocks with healthy future risk-adjusted returns.
Cava Group
Cava Group (CAVA) has a weighted alpha of 110.22, which puts it in the 46th spot.
The Mediterranean fast-casual restaurant chain has 325 locations across 25 states and the District of Columbia. It just opened its first location in the Chicago area in April. It expects to have 1,000 restaurants open by 2032. It opened 72 net new restaurants in 2023, growing that to 83 in 2024 and 2025.
The company listed its stock in June 2023 at $22 a share, above its pre-IPO pricing range of $19 to $22, raising approximately $318 million. It will use the proceeds to grow the number of locations open.
All the stores are company-owned, with the average location generating revenue of $2.6 million and a restaurant-level profit margin of 24.8%, which is on par with Chipotle Mexican Grill (CMG), one of America’s most iconic and successful restaurant chains.
If you think you’ve missed out on the significant gains in its share price -- up 99% on the first day of trading and 238% from its IPO price -- it got double-digit same-store sales growth to go along with its new store openings to keep the top line revenue moving higher.
Oh, and it doesn’t hurt that it’s got adjusted EBITDA margins over 10%.
Of the three Top 100 stocks to buy, CAVA is definitely the growth option.
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.
