15 Feb Figs, Snowflake and Dole among unprofitable and underperforming stocks that could surprise investors like Palantir
There’s nothing like a formerly unprofitable company surprising investors with good news. That was the case earlier this week when software company Palantir reported earnings and said it was profitable for the first time . Now investors may be searching for the next turnaround story. In Palantir’s case, the company’s first ever positive quarter of net income on a GAAP basis helped the stock rally 21% Tuesday. The stock went public in September 2020. “In an environment where what they’re working on is seemingly front and center in everybody’s lexicon — I think Palantir for the first time in a long time, is actually tradeable,” Private Advisor Group’s Guy Adami said after the earnings release Monday on CNBC’s “Fast Money.” With that in mind, CNBC Pro looked for other relatively new, unprofitable and underperforming stocks that are either now turning a profit, or are about to. To find those names, we looked at those that had their initial public offerings after 2019 and had negative net income in their prior fiscal years. They are also underperforming, down more than 20% in the past 12 months. But the key is they are expected by Wall Street to turn a profit in the latest fiscal year. Here is a list of those names. Certara , which went public in December 2020, had a net income loss of $13.3 million in fiscal year 2021, but is expected to post a net income gain of $69.7 million for 2022 when it reports earnings March 1, according to FactSet. The health-care tech company has an average analyst rating of overweight and 12.7% upside to the average analyst price target. The stock has lost nearly 26% over the past year. Dole also made the list, down more than 21% in the last 12 months. The food company had a $7 million net income loss in the 2021 fiscal year. However, it’s expecting to show a $87.5 million gain for 2022. Dole announced on Jan. 31 that it was selling its fresh vegetables division to Chiquita Holding’s Fresh Express for approximately $293 million in cash. The company said the net proceeds from the sale would be used primarily to pay down debt. Dole returned to the public market in July 2021, opening at $15 per share. The stock has since lost 25% from that opening price, as of Tuesday’s close. Meanwhile, Figs , which became a publicly traded company in May 2021, has lost 50.1% over the past 12 months. The healthcare-apparel retailer had a $9.6 million net income loss in its prior fiscal year but is expected to pull in $21.6 million in net income in its latest fiscal year. Billionaire investor Ron Baron owns Figs shares and has called the company the ” Lululemon of health care ,” referring to one of the fastest growing apparel stocks of the past decade. Oppenheimer also named the stock one of its favorites in January, citing solid spending and moderating supply chain disruptions as tailwinds. On Wednesday, advance retail sales for January came in better than expected as consumers continued to spend despite inflation pressures. Lastly, Snowflake saw a huge net income loss of $679.9 million in 2021, but is expecting to post a $75.9 million net income gain in 2022. The cloud company, which went public in December 2020, is expected to report fourth-quarter earnings on March 2. The cloud stock, which is down 41.3% over the past year, was named a top pick earlier this year by Citi. Wells Fargo also initiated coverage of the stock in January with an overweight rating. “While we acknowledge tough sledding for many in the current environment, our work suggests SNOW is better built to weather this storm given the company’s mission-critical technology, strong expansion dynamics inherent to this model (DBNE > 160% MRQ) and impressively well-balanced financial profile (on pace for 60+% growth, 20%+ FCF margin in FY23), which we view as deserving of a premium,” analyst Michael Turrin wrote in a note. — CNBC’s Michael Bloom contributed reporting.