Every Tuesday I write about Barchart’s Top or Bottom 100 Stocks to Buy. The idea is to find good businesses whose shares are either on a roll (top 100) or getting hammered (bottom 100) but worthy of investor consideration.
This morning, as I looked over the top 100, I realized that 23 of the companies on the list had a share price less than $10. That’s a large enough cohort that I’m sure I could come up with three worth owning for the long haul.
The trick with momentum stocks is figuring out whether there is gas left in the tank or are you buying at the absolute top. It’s not an easy task.
That’s why I’m here. I’ll provide you with three names that look primed for more gains in 2024 and beyond, all for the low, low price of $15 combined.
D-Market Electronic Services & Trading
D-Market Electronic Services & Trading (HEPS) is a Turkish e-commerce platform that sells both electronics and non-electronics. It operates as Hepsiburada.
In 2023, it generated revenue of 35.6 billion Turkish lira ($1.09 billion), with an operating loss of 725 million Turkish lira ($22.1 million). Revenues were 34% higher year-over-year while its operating loss was 86% less than a year earlier.
In Q1 2024, its revenue increased 45% to 11.31 billion Turkish lira ($340 million) on higher orders and order frequency. It finished the quarter with 12.1 million active customers. While it had a net loss in the quarter, it managed to generate positive free cash flow of 1.03 billion Turkish lira ($31.4 million).
Is this the Turkish version of MercadoLibre (MELI)? I wouldn’t go that far, but trading at $3.09, it would be nice to find out over the next 3-5 years that it is.
HEPS stock showed up Tuesday as a new entrant on the Top 100 Stocks to Buy in 68th spot. Its weighted alpha is 117.26, higher than its 52-week gain of 77.6%, an indication that recent momentum -- it reported those good Q1 2024 results on June 13 -- is accelerating.
Management continues to work to improve user experience.
During the quarter, we continued our initiatives to improve user experience by leveraging advancing technology and strengthening our appealing value proposition through diverse affordability and lending solutions,” its Q1 2024 press release stated.
“These have resulted in competitive NPS metrics, marking Hepsiburada as the most recommended e-commerce brand in Türkiye once again.”
Is it risk-free? Absolutely not. However, up 44% in the past month, it’s clear the stock has taken flight with more potential gains around the corner as profitability is reached in late 2024 or early 2025.
BRF
BRF (BRF) would best be described as the Tyson Foods (TSN) of South America although in addition to the production and sale of chicken, pork, and processed food products, it also has a big dairy products operation.
The company generates 49% of its revenue in Brazil, 47% internationally, and 4% from other businesses it owns. In Q1 2024, revenue was 13.38 billion Brazilian real ($2.45 billion) with adjusted EBITDA of 2.12 billion Brazilian real ($388 million), 3.5x higher than Q1 2023.
BRF’s two major brands: Perdigão and Sadia have been around for 90 and 80 years, respectively. In the past year, the company has undergone a turnaround that will enable it to leverage its competitive advantages.
Part of this turnaround involved improving the company’s capital structure. It did that by attracting a new majority owner, Marfrig Global Foods (MRRTY), Brazil’s other big meat processor, who upped their ownership to 50.06% in late December. Marfrig first acquired 24.2% of BRF in May 2021.
BRF stock is up over 62% in the past six months. That’s due to better financial results and the ongoing talks between the two companies to complete a full merger, something that’s been a possibility for years.
Should a merger happen, BRF would own 85% of the combined entity, with Marfrig shareholders owning 15%. Together, they would be a world leader in the protein market.
At $4.14 per ADR, it is 54th on the list of the Top 100 Stocks to Buy, down from 82nd on Monday.
Mama’s Creations
Mama’s Creations (MAMA) is the smallest of the three companies with a market cap of $277 million. Its share price of $7.44 brings the total outlay for the trio to $14.67, 33 cents under my $15 target. Its weighted alpha is 118.95, above its 52-week gain of 95.3%.
Mama’s Creations manufactures fresh deli prepared foods that are sold at 8,400 grocery, mass, club and convenience stores across the U.S. Its brands include MamaMancini’s, Creative Salads, and The Olive Branch.
Founded by Dan Dougherty and Dan Mancini in 2009 as Mama Mancini’s, they started the business with their grandmother, Anna Mancini’s recipes. In Auigust 2023, the company changed its name to Mama’s Creations to reflect its desire to become a leader in the deli aisle.
“This bold new brand embraces our leadership in fresh, clean and easy to prepare meals, while allowing our identity to expand into a broader array of new, in-demand international and differentiated deli foods products for grocers nationwide,” stated CEO Adam Michaels in the August 2023 press release.
Prior to joining Mama’s Creations in September 2022, Michaels spent nine years at Mondelez International (MDLZ), most recently as Vice President, Head of Commercial and M&A, North American Ventures.
Its trailing 12-month revenue as of April 30 is $110 million with an adjusted EBITDA margin of nearly 11%.
It reminds me of a smaller version of J&J Snack Foods (JJSF), which happens to also be based in New Jersey. I see more acquisitions in Mama’s Creations' future.
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.
