The stock market's been blasting through its all-time highs left and right lately. If a soaring stock market has you thinking all the good stocks out there are overpriced, I've got good news from Wall Street.
All three of these high-growth stocks have consensus price targets on them that suggest they're undervalued by 30% or more. Here's why the investment bank analysts who get paid to understand these businesses say their stock prices are way too low right now.
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1. Redfin
Redfin (RDFN 2.48%) shares have tumbled a frightening 48% from their peak this February. Wall Street analysts are expecting the real estate stock to bounce back stronger than ever, though. The consensus price target on Redfin at the moment is 30% higher than where it sits now.
The stock has given up much of 2020's gains thanks to a housing market that's been more difficult than usual. While investors cheered for Redfin's profits last year, they're extremely nervous about the losses it's posting in 2021.
The current housing shortage has led to such a tight market that it makes Redfin's lucrative iBuyer service unappealing. The situation has dragged on longer than expected, but the shortage is temporary. Investors can rest easily knowing there's plenty of cash on the balance sheet to see the company through this tough time.
Redfin's laying down some rubber to support a high-growth strategy, but it isn't spinning its wheels. In the first half of 2021, the company reported a gross profit that rose 186% year over year to a level that was significantly higher than operating expenses recorded in the previous year period. It's probably just a matter of time before this fast-growing company begins producing a strong and sustainable profit.
2. Renalytix
Renalytix (RNLX -6.30%) shares are up around 69% since the beginning of the year. Analysts on Wall Street and beyond think it can go a whole lot higher, too. The consensus price target for Renalytix suggests a 30% gain over recent prices.
Shares of Renalytix have been soaring because it looks as if its chronic-kidney-disease test, KidneyIntelX, can rapidly expand into its healthcare niche. The test employs machine learning techniques to predict which chronic-kidney-disease patients are most likely to progress.
Pricy treatment can prevent bad kidneys from getting worse, but not everyone needs costly intervention to keep off a transplant waiting list. Renalytix recently published results of a budget impact analysis that suggests healthcare plan sponsors can save around $220 per chronic-kidney-disease patient per year by monitoring patients with KidneyIntelX instead of just standard kidney failure detection methods.
According to the CDC, around 37 million Americans have chronic kidney disease. With hard data that proves it can lower America's enormous healthcare bills, a large portion of this group could end up receiving KidneyIntelX tests on a regular basis.
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3. Inari Medical
Inari Medical (NARI -2.16%) shares are down around 34% since they peaked in April. Wall Street analysts appear fairly confident that a swift rebound is in the cards. The consensus price target for Inari Medical represents a 47% premium over its price at the moment.
Inari Medical sells a proprietary new clot-removal device. Sales are growing fast, but not quite as quickly as investors had expected. Despite the recent drop in share price, the stock still trades at a high price-to-sales multiple of 21.5 times trailing revenue.
The company reported an 11% sequential gain in the second quarter that suggests a slowdown when you consider sales grew 150% year over year. Severe COVID-19 patients are a significant source of revenue for Inari Medical right now, but this well is rapidly drying up.
I think the recent loss is a bargain purchase opportunity. Clot removal procedures performed with Inari Medical's devices are changing the way hospitals treat dangerous blood clots. Getting patients out of beds quickly, and safely, helps hospitals' bottom lines immensely. With this in mind, we can reasonably expect Inari Medical to grow into its seemingly high valuation and then some.
