Competing Against Multiple Offers on a House

For every piece of property on the real estate market, there could be anywhere from zero to infinite buyers who are hoping to call it home. OK, “infinite” is a stretch, but multiple-offer scenarios can be common when the race is on to purchase a new home.

Which house hunter comes out with keys in hand, however, depends on many circumstances.

Whether it’s a hot seller’s market or a slowly simmering buyer’s market, knowing how to handle a multiple-offer situation can help homebuyers beat out the competition.

Multiple Offers in a Seller’s Market

A seller’s market means the demand for houses is greater than the supply for sale, causing home prices to increase and often giving sellers a serious advantage.

It can get pretty competitive for those who need to buy a house, and multiple offers on a house become the new norm.

Seller’s markets and their state of multiple offers can happen for a few reasons:

•   More houses typically go up for sale during peak homebuying season in the summer, so seller’s markets are more common in the winter when inventory is low.
•   Cities that see steady population growth and increased job opportunities often experience a higher demand for housing, leading to multiple interested buyers making offers on limited inventory.
•   A decrease in interest rates could mean more people are able to qualify for mortgages, causing an uptick in homebuyers that might work to the seller’s advantage. More interested parties can mean more negotiation power.

Multiple Offers in a Buyer’s Market

In a buyer’s market, there’s a greater number of houses than buyers demanding them. In this case, homebuyers can be more selective about their terms, and sellers might have to compete with one another to be the most sought-after house on the block.

In a buyer’s market, house hunters typically have more negotiating power. The number of offers on the table is usually lower than in a seller’s market, and the winning bid is often lower than the listing price.

Are Buyers’ Agents Aware of Other Offers?

Unless house hunters are buying a house without an agent, there are certain cases where the buyer’s agent could be tipped off to other offers on the house.

A lot of it depends on the strategy of the sellers’ agent and whether it’s designed to stir up a bidding war with obscurity or transparency. Either way, the sellers and their agent could choose to:

•   Not disclose whether or not other buyers have made offers on the property.
•   Disclose the fact that there are other offers, but give no further transparency about how many or how much they’re offering.
•   Disclose the number of competing offers and their exact terms and/or amounts.

It’s up to the sellers and their agent to decide which strategy works best for their situation and, according to the National Association of Realtors® 2020 Code of Ethics & Standards of Practice, only with seller approval can an agent disclose the existence of other offers to potential buyers.

How Do Multiple Offers Affect a Home Appraisal?

After all that energy is expended trying to beat out other buyers, what happens in the event of an all-out bidding war? Some buyers may be tempted to keep increasing their offer to one-up the competition. Unfortunately, this could lead to drastically overpaying for the house.

In these cases, buyers can add an appraisal contingency to their offer, asserting that the appraised value of the property must meet or exceed the price they agreed to pay for it or they can walk away from the deal without losing their deposit.

But what about in competitive seller’s markets when making contingencies could mean losing the deal? In those cases, buyers might have to put down extra money to bridge the gap between what their lender is willing to give and what they offered.

How Can Buyers Beat Other Offers on a House?

There are a few things homebuyers can do to improve their odds of winning when there are multiple offers on a house, though certain tactics may vary based on the local real estate market or specific circumstances.

A Sizable Earnest Money Deposit

Earnest money is a deposit made to the sellers that serves as the buyers’ good faith gesture to purchase the house, typically while they work on getting their full financing in order.

The amount of the earnest money deposit generally ranges between 1% and 2% of the purchase price, but in hot housing markets, it could go up to 5% to 10% of the home’s sale price.

By offering on the higher end of the spectrum, homebuyers can beat out contenders who offer less attractive earnest money deposits.

Best and Final Offer

Going into a multiple-offer situation and expecting a negotiation can be tricky. It’s typically suggested that buyers go in with their strongest offer, one they can still live with if they lose to a contender—aka they know they gave it their all.

In some cases, sellers deliberately list the home for less than comparable sales in the area in an attempt to stir up a bidding war. By going in with their highest offers, buyers could end up paying what the house is actually worth while still winning the deal.

All-Cash Offer

By offering to pay cash upfront for the property, homebuyers effectively eliminate the need for third party (lender) involvement in the transaction.

This can be appealing to sellers who are looking to streamline the sale.

Waived Contingencies

Whether it’s offering the sellers extra time to move out, waiving the home inspection, or ensuring that their current residence is sold before making an offer, potential homebuyers can gain wiggle room when they start to waive contingencies.

Contingencies are conditions that must be met in order to close on a house. If they’re not met, the buyers can back out of the deal without losing their earnest money deposit.

By waiving certain contingencies, buyers show that they’re willing to take on a level of risk to close the deal. This can be appealing to some sellers.

Signs of Sincerity and Respect

Because many sellers have nostalgia for their home, buyers who show sincerity, respect, and sentiment may score extra points.

By writing a letter that lays out what they love about the home and engaging in positive interactions with the sellers and their agent, buyers can put themselves in a more favorable light that could lead to winning in a multiple-offer situation.

An Offer of Extra Time to Move

In some cases, sellers might appreciate (or even require) a bit of a buffer between the closing date and when they formally move out of the house.

By offering them a few extra days post-closing without asking for compensation, flexible buyers can get ahead of contenders who might have stricter buyer possession policies.

A Mortgage Pre-Approval Letter

Most offers are submitted with a lender-drafted letter that indicates the purchasers are pre-qualified for a loan.

A pre-approval letter can take it a step further by showing that the buyers are able to procure borrowed funds after deep financial, background, and credit history screening.

Pre-approval signifies to some sellers that the buyers can put their money where their mouth is, lessening the possibility of future financing falling through.

Kick-Starting the Homebuying Process

One way for house hunters to get a leg up in the homebuying process is by ensuring that their home loans are secured in advance.

With competitive rates, exclusive discounts, and help when you need it, SoFi mortgage loans make the first part of competing against multiple offers a whole lot easier.

Get a leg up and find your rate in two minutes.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

SOHL20045

Source: sofi.com

5 Reasons to Buy a Home This Fall

The days may be getting shorter, but the list of home-shopping benefits is getting longer.

Real estate markets ebb and flow, just like the seasons. The spring market blooms right along with the flowers, but the fall market often dwindles with the leaves — and this slower pace could be good for buyers.

If you’re in the market for a home, here are five reasons why fall can be a great time to buy.

1. Old inventory may mean deals

Sellers tend to put their homes on the market in the spring, often listing their homes too high right out of the gate. This could result in price reductions throughout the spring and summer months.

These sellers have fewer chances to capture buyers after Labor Day. By October, you are likely to find desperate sellers and prices below a home’s market value.

2. Fewer buyers are competing

Families who want to be in a new home by the beginning of the school season are no longer shopping at this point. That translates into less competition and more opportunities for buyers.

You’ll likely notice fewer buyers at open houses, which could signal a great opportunity to make an offer.

3. Sellers want to close by the end of the year

While a home is where an owner lives and makes memories, it is also an investment — one with tax consequences.

A home seller may want to take advantage of a gain or loss during this tax year, so you might find homeowners looking to make deals so they can close before December 31.

Ask why the seller is selling, and look for listings that offer incentives to close before the end of the year.

4. The holidays motivate sellers

As the holidays approach, sellers are eager to close so they can move on to planning their parties and events.

If a home has not sold by November, the seller is likely motivated to be done with the disruptions caused by listing a home for sale.

5. Harsher weather shows more flaws

The dreary fall and winter months tend to reveal flaws, making them a great time to see a home’s true colors.

It’s better to see the home’s flaws before making the offer, instead of being surprised months after you close. In fact, the best time to do a property inspection is in the rain and snow, because any major issues are more likely to be exposed.

Top photo from Shutterstock.

Related:

Originally published October 2015.

Source: zillow.com

In the Market? Here’s What You Should Know About Contingencies

Home contingencies are aspects of home purchase contracts that protect buyers or sellers by establishing conditions that must be met before the purchase can be completed. There are a variety of contingencies that can be included in a contract; some required by third parties, and others potentially created by the buyer. While sellers in the current market prefer to have little to no contingencies, the vast majority of purchase contracts do include them, so here’s a primer to help you navigate any that come your way!

Financing Contingency

The most common type of contingency in a real estate contract is the financing contingency. While the number of homes that sold for cash more than doubled over the last 10 years, the majority of home purchases — 87% of them, in fact— are still financed through mortgage loans.

Why is this important? Because most real estate contracts provide a contingency clause that states the contract is binding only if the buyer is approved for the loan. If a contract is written as cash, in most cases, the financing contingency is removed.

contingenciescontingencies

Why Does The Financing Contingency Exist?

This contingency exists to protect the buyer. If a buyer submits a winning offer, but can’t get approved for a loan to follow through with the purchase, this clause can protect the buyer from potential legal or financial ramifications.

Tip: Homeowners can, and should, request to see a buyer’s prequalification letter before accepting their offer.

Home Sale Contingency

For many repeat homebuyers, they must sell a property in order to afford a new home. Whether they’re relocating for work, moving to a larger home, or moving to a more rural area, 38% of home buyers in a recent survey reported using funds from a previous home to purchase a new one. This is where a home sale contingency comes into play; this clause states that the buyer must first sell their current home before they can proceed with purchasing a new one.

Why Does This Contingency Exist?

This is another contingency that exists to protect the buyer. If their current home sale doesn’t close, this clause can protect the buyer from being forced to purchase the new home. In other words, they can back out of the new home contract without consequence. Keep in mind that in a seller’s market, this type of contingency offer is less desirable to sellers; in fact,  they may rule out your offer completely if this is included.

TIP: In many situations, homeowners can negotiate escape clauses for the home sale which would allow them to solicit other offers and potentially bump the current buyer out of the picture.

Home Inspection Contingency

Not only is it common, it’s also wise to include a home inspection contingency in any offer. Whether it’s a new home or an existing home, there is no such thing as a flawless house. Home inspections can uncover hidden problems, detect deferred maintenance issues that may be costly down the road, or make the home less desirable to purchase completely. A home inspection contingency essentially states that the purchase of a home is dependent on the results from the home inspection.

contingenciescontingencies

Why Does This Contingency Exist?

Whether it’s a roof in need of replacement or an unsafe fireplace, homebuyers need to know the maintenance and safety issues of the properties they’re interested in purchasing. If a home inspection report reveals significant (or scary!) findings, this protects the buyer from the financial burden that repairs would require. This is why agents will tell you it’s never a good idea for a home to be purchased without a home inspection contingency.

TIP: The findings from the report can usually be used to negotiate repairs or financial concessions from the seller.

Sight-Unseen Contingency

Especially during sellers markets, it’s not uncommon for a home to have dozens of showings within the first couple of days of listing. This breakneck pace can create a scenario in which homebuyers may not be able to coordinate their schedules to get a timely showing appointment. To help prevent missing out on the chance to buy a home, buyers in this situation will sometimes make offers on the home, sight unseen.

contingenciescontingencies

There’s no sugarcoating it…this is a high-risk strategy with ample opportunity for negative consequences. However, if this strategy is used, many real estate agents will add a sight- unseen contingency to their offer. This contingency states that the offer for purchase is dependent on the buyer’s viewing of, and satisfaction with, the property.

Why Does This Contingency Exist?

In a market with shrinking inventory, desperate buyers want a fighting chance at a hot property; in some cases, that can only exist by submitting an offer before they can see it in person.

TIP: Sight unseen offers are also high risk to the seller. If you include this contingency in your offer, try to keep other seller requests to a minimum. 

Why Contingencies Can Be Positive

In a seller’s market, buyers may feel the pressure to remove as many contingencies as possible in order to compete. But, it’s important to remember that contingencies are actually safeguards in place to prevent buyer remorse, expensive future repairs, or financial calamity. It’s always crucial for buyers to hire a seasoned real estate agent who can advocate for their best interests, negotiate and strategize in safe and competitive ways, and advises them of the risks of each decision.

Looking to Buy? Don’t Go it Alone!

The homebuying process is a complex one, but that doesn’t mean you’re left with all the heavy lifting. Find your dream home and a local agent on Homes.com, then visit our “How to Buy” section for all the step-by-step insights for a smooth process.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Are the Low Mortgage Rates a Home Buyer Trap?

Despite a slight uptick this week, mortgage rates are still pretty much rock bottom, and unarguably at ridiculously low levels.

This has sparked yet another refinance boom, with mortgage application volume rising to its highest point since May 2009, per the latest data dump from the Mortgage Bankers Association.

This is great news for existing homeowners with plenty of home equity looking to refinance to a lower rate. It’s also working out nicely for those who don’t have equity thanks to programs like HARP 2.0.

All in all, it’s a gift to these borrowers who are experiencing some serious monthly mortgage payment relief.

But what about new and prospective home buyers?

Are People Buying Because of the Low Rates?

With rates this low, you have to wonder if it’s all a big trap (whether intentional or not) to lure would-be buyers off the sidelines and into the game.

If you’ve followed the housing market lately, at least in certain regions of the country, such as Los Angeles, homes are speeding into pending status just days after being listed.

In fact, many are pending just one or two days after being listed. It’s looking like a serious seller’s market, though obviously a very unconventional one.

The low rates have increased affordability so much that a new pool of buyers has essentially been created, which has facilitated both standard and short sales.

Again, great news for those who have waited very patiently to sell their homes; many can finally do so!

And perhaps even better for the housing/mortgage market, with seemingly bad loans being replaced with better ones.

Heck, I’m even seeing a ton of flips that are actually selling for a tidy profit. I thought flips were dead?

Reminder of the Homebuyer Tax Credit

But it all seems reminiscent of the boost seen with the now infamous homebuyer tax credit.

That “free money” created a short-lived, yet steep run-up in home prices as first-time home buyers came out in droves.

Just a short time later, it became clear that those who purchased a home did so at a premium, and their tax credit was quickly eclipsed by a larger loss in home value.

If you take a look at this home price chart, you’ll see how the homebuyer tax credit stoked demand, but its effect was clearly fleeting.

In fact, those who purchased before the tax credit expiration were actually worse off compared to those who bought later on.

To bring it all together, home prices were pumped up as a result, similar to what we may be seeing with the record low mortgage rates.

With rates so low, homeowners and their clever real estate agents probably feel they can list their homes for more than they could have six months ago.

And the whole “it’s never been a better time to buy” adage is back.

Economy Still in Disarray

The big problem is that the economy is still a huge mess, with the European crisis hanging over our heads, and domestic unemployment still far from unresolved.

Then there are the millions of homes in the process of foreclosure, or knocking at its door.

So is this artificial stimulus actually going to help the real estate market long-term, or is it just another quick fix with no staying power?

My gut tells me that this recent run-up in prices and virtual 180 in consumer sentiment is bad news.

Getting into a bidding war over a house just months after no one was interested seems really fishy.

Additionally, all these calls of a “housing bottom” are concerning as well. You always have to wonder when every single media outlet (including your local news channel) is claiming that the worst is behind us.

Of course, the low rates have led to lower mortgage payments, even with the recent home price increases factored in.

So there’s some serious power behind those rates. The question is will you be able to buy a home next year at an even better price with a similar (or even lower) interest rate?

Read more: Home prices vs. mortgage rates.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Stock Analyst Accuracy – Why Ratings Can Be Wrong & When to Listen

The stock market is a complex machine made up of intricate technologies, financial experts, and investors.

Some of the most highly-regarded experts on Wall Street are the research analysts who spend their days looking into opportunities in the stock market. These analysts make their money by sharing their opinions about what they believe will happen in the future.

Knowing that successful investing is born in research, many beginner investors make the decision to blindly follow the opinions of analysts rather than doing their own research when making investment decisions.

This is a very dangerous activity. Here’s why.

What Do Stock Market Research Analysts Do?

Research analysts — also called investment analysts, securities analysts, equity analysts, sell-side analysts, or financial analysts — are financial professionals charged with analyzing the financial stability and potential for growth of publicly traded companies.

Research analysts look into company metrics like historic revenue growth and earnings growth. They also dive into market conditions.

For example, if the company being analyzed is in the computer gaming industry, the analyst researches how large that industry is, how fast it’s growing, and what percentage of the industry the company has tapped into.

Once their research is complete, research analysts make predictions, including:

  • Earnings Per Share (EPS). Stock market analysts will attempt to predict the earnings per share (EPS) that companies they follow will produce. EPS divides the total net income generated in any given period by the number of shares of the company in existence.
  • Revenue. Research analysts also take a stab at predicting how much revenue the company will generate over the next year. Investors pay close attention to revenue because when revenue grows, it shows that sales are increasing, helps to increase profit margins, and ultimately leads to increased profitability for the company.
  • Share Price. Finally, research analysts make an attempt to predict what the price of the stock will become over the next year. This statistic is known as the price target.

Stock market analysts also make recommendations and providing ratings, generally including:

  • Buy. A buy rating, sometimes called an Outperform or Overweight rating, insinuates that buying the stock at the current share price is a good deal. This rating means the analyst believes that the stock has the potential to produce gains that outperform the overall stock market’s returns in the next 12 months.
  • Hold. A hold rating, sometimes called a Market Perform or Equal Weight rating, suggests the stock is likely to perform in line with the overall stock market. Analysts don’t believe that you’re going to earn returns any larger than the average across the market but believe that growth is still likely ahead.
  • Sell. The sell rating, also called the Underperform or Underweight rating, is a recommendation that investors avoid the stock if they don’t already own it and sell it if they do. This rating means that the analyst believes the stock’s performance will lag compared to the stock market as a whole, and purchasing of the stock could lead to losses.

Why You Shouldn’t Blindly Follow the Opinions of Research Analysts

With predictions surrounding earnings per share, revenue, and share price, coupled with ratings from research analysts, many newcomers believe the research legwork has been done for them, deciding to dive into any stock analysts deem to be a strong investment opportunity.

After all, isn’t that the analysts’ job? Why put the time into researching something that the professionals have already analyzed?

There are plenty of reasons to research your own investment opportunities rather than blindly following analysts. While research analysts are highly paid experts that have a knack for making decisions in the stock market, their opinions often can’t be trusted as the basis for objective investing decisions, as you’ll see below.

1. A Vested Interest

Research analysts don’t make predictions on stocks for the pure joy of helping investors. They have to make their six-figure salaries somewhere. As a result, these analysts often work for:

  • Brokerages. Although regulatory authorities are supposed to keep sell-side analyst opinions as far away from brokerages as possible in order to maintain objectivity in the investing process, that doesn’t seem to be happening. Brokerages often make investment recommendations based on the research provided by their analysts. This often creates a bias, with analysts recommending stocks that are best for their employers rather than the investors their employers serve.
  • Mutual Funds, ETFs, and Index Funds. Analyst opinions have the ability to move the market. A positive opinion about a company can send a stock soaring while a negative opinion can cause sharp declines. Mutual funds and many exchange-traded funds (ETFs) employ research analysts, which gives the analyst a vested interest in forming an opinion about a stock that’s in the best interest of the fund’s portfolio, and not always an unbiased depiction of what to expect from the stock.
  • Hedge Funds. The Big Short Squeeze involving GameStop, AMC, and several other stocks outlined the battle between hedge funds and retail investors. However, some of the research analysts most trusted by retail investors happen to work for the hedge funds that bet against them. Again, the analysts’ employment at hedge funds creates a potential bias when making predictions about trending tickers.

The bottom line is that research analysts aren’t working for you. Who they work for can create biases that make their work unreliable at best; the average retail investor simply shouldn’t trust them.

2. Analysts Are Highly Inaccurate

You would think financial professionals who spend their lives analyzing opportunities in the stock market would be pretty good at what they do. You might be surprised to learn that the average stock market analyst isn’t nearly as accurate as you may think.

Here are the stats analysts don’t want you to know, courtesy of FactSet.com:

  • Historic Performance: The majority of publicly traded companies listed on the S&P 500 beat analyst expectations when reporting financial results, and this percentage is growing quickly.
  • EPS Surprise: In the fourth quarter of 2020, 81% of companies listed on the S&P 500 reported a positive EPS surprise, meaning that these companies beat analyst expectations. That’s a huge miss on a key valuation metric used by most investors.
  • Revenue: In the fourth quarter of 2020, 79% of companies listed on the S&P 500 beat analyst expectations in terms of revenue.

Those are staggering statistics that show the highly paid research analysts who are expected to be pretty accurate had up to an 81% failure rate. If your investment advisor admitted to being wrong 81% of the time, would you continue to pay them to manage your investment portfolio?

3. Misleading Predictions Artificially Inflate Success Rates

Unfortunately, Wall Street doesn’t gauge the success of Wall Street analysts based on the accuracy of their EPS, revenue, or share price predictions. Research analyst success is gauged solely on their ratings system. What percentage of buy-rated stocks grew, and what percentage of sell-rated stocks fell?

Analysts use this incomplete view to their advantage, artificially inflating their success rate.

For example, say an analyst has a buy rating on a stock and expects earnings per share will come in at $0.50 on revenue of $50 million for the quarter. They know that when companies beat analyst expectations, investors react in positive ways.

So the analyst may make a public prediction that the company will report earnings of $0.45 per share on $47 million in revenue. These publicly stated estimates leave room for error and then some.

When the company reports its financial results, it is more likely to beat expectations than it would be if the analyst had shared their true opinion.

Moreover, as a result of the beat expectations, the stock is more likely to climb, making the analyst’s buy rating more likely to be placed in the books as an accurate one.

4. Stock Price Predictions Are Only Good for One Year

Building wealth in the stock market is a long-term process. Most successful investors invest with a time horizon measured in decades.

However, research analysts only follow 12-month time frames. A stock with a great outlook in the short term may be a horrible long-term investment.

Moreover, short-term predictions in the stock market are exposed to the short-term volatility that’s become the norm, making them highly unreliable. After all, stock market analysts can’t predict major events that may cause short-term volatility.

One of the best examples of this is the COVID-19 pandemic.

An analyst may have seen great promise in a well-run and profitable travel company in May of 2019, with no sign that a pandemic was coming that would grind most travel to a halt. The analyst may have expected strong revenues and earnings over the next year, coupled with incredible share price growth.

By the end of the 12-month time frame, the analyst would have been way off. In May of 2020, travel stocks were having a horrible time. Almost nobody could expect a travel stock to have a great year when half the country is locked down.

Many of these stocks saw a strong recovery as 2020 came to a close and travel restrictions eased, but the research analyst’s view doesn’t go any farther than the 12-month mark.

So was the analyst right or wrong for liking the travel stock in May 2019? This example demonstrates why the short-term nature of analysts’ predictions makes them pretty unreliable.

5. Research Analysts Are More Likely to Rate a Stock a Buy Than a Sell

The vested interest research analysts often have in the stocks they cover clearly comes out when you look into the statistics of the ratings they provide.

According to FactSet, there were 11,147 analyst ratings on S&P 500 companies as of December 31, 2017. Here’s how the total universe of analyst ratings broke down:

  • Buy Ratings: 49.5%
  • Hold Ratings: 45.3%
  • Sell Ratings: 5.2%

Sure, it’s true that more publicly traded companies do well than fail. However, you’d be right to question whether 94.8% of stocks are worth buying or holding.

Moreover, it’s impossible for 49.5% of stocks to outperform the market, 45.3% of stocks to trade in line with market performance, and just 5.2% of stocks to underperform the market. The numbers just don’t add up.


Wall Street Analysts Have Their Place

Although it’s never a good idea to blindly follow anyone into an investment, including research analysts, these analysts do have their place. For all their shortcomings, here’s how research analysts can provide valuable insights to everyday retail investors:

1. As a Source of Validation for Your Own Research

Hopefully, by now, you know that you should do your own due diligence before you invest in a company. However, it’s nice to have some way to validate your research.

Analyst opinions are a great way to do that.

Sure, analyst predictions aren’t always accurate, but if you’ve done your own research and believe that a stock is going to rise in value, it’s a good idea to look into what percentage of analysts rate the stock a buy.

If the overwhelming opinion among analysts is a buy rating, chances are you’re on the right track with your research.

TipRanks is a free way to go about seeing how many analysts cover a stock and what their overall opinion on the stock is.

2. As a Clear Red Flag on Stocks In Trouble

Analysts generally have a bias when it comes to stocks they cover, and they tend to rate stocks in a positive way. As such, if the vast majority of analysts that cover a particular stock rate it a sell, that acts as a big red flag that something is wrong with the company.

Sure, you don’t want to blindly follow analysts into a fire, but you also shouldn’t ignore blatant warnings that a stock is likely to fall. If lots of analysts are heading for the exits, they might be smelling smoke.

3. As a Gauge of Popularity Among Investors

Analysts don’t tend to waste their time researching stocks that nobody’s interested in. Instead, they want their research to be read and their name to be seen.

As a result, you can use the number of analysts that cover a stock to gauge that stock’s popularity. After all, the more popular a stock is, the more liquid an investment in it becomes.

For example, consider the following:

  • Amazon.com (AMZN). Amazon.com has 31 analysts covering the stock, all of which rate it a Buy. This suggests that an investment in Amazon.com would be a highly liquid one — there are lots of buyers for it on the market — because the stock has garnered quite a bit of positive coverage.
  • Tesla (TSLA). 29 analysts are weighing in on Tesla stock, with seven Buy ratings, seven Sell ratings, and 15 hold ratings. Once again, the high level of analyst coverage suggests that an investment in Tesla would be highly liquid.
  • Gevo (GEVO). Gevo, on the other hand, has two analysts covering it, both of whom rate it a Buy. Although the ratings and opinions are positive, the lack of widespread analyst coverage suggests that the stock is less popular than Amazon.com or Tesla, and thus, less liquid. That means you may have a harder time finding a buyer to pay your asking price if you decide you want to sell your shares.

The simple fact is that it takes investors to move the stock market. If nobody’s buying or selling, prices aren’t going up or down.

As such, the popularity of a stock you’re considering investing in should play into your decision to invest.


Final Word

This article admittedly has been critical of stock market analysts. The fact is, professional analysts are human beings who make their best efforts to succeed in their careers, just like you. They’re not bad people, but their interests aren’t always aligned with yours.

Interests among two conflicting parties rarely align; that’s why nothing gets done in Congress. Nonetheless, each party plays an important role, with analysts and retail investors essentially representing separate parties in the case in the stock market.

The bottom line is that nobody is going to hold your best interest as highly as you will. As such, you shouldn’t trust anyone’s opinion more than your own when it comes to your money. Instead, do your own research and look to experts to validate your own educated opinions.

Source: moneycrashers.com

Interview with a Car Broker

Buying a car with bad credit is possible—it’s just going to cost you. You’ll probably have a higher interest rate and require a bigger down payment, and you may have a much smaller selection to choose from than someone with a better credit history.

Here’s how to go about buying a car with bad credit and what you’ll need to be aware of to avoid being overcharged.

/*Chat Animation*/ #animation-wrapper max-width: 450px; margin: 0 auto; margin-bottom: 50px; width: auto; #animation-wrapper .box background-color: rgb(44, 74, 94);color: #fff;text-align: center;font-family: “ProximaNova-Regular”, Arial, sans-serif;height: 153px;padding-top: 10px; .content .box p margin: 0px 0px; .box .btn-primary color: #fff;background-color: #ff7f00;margin: 10px 0px; .chat ul margin: 0px;padding: 0px;list-style: none; .message-left .message-time display: block;font-size: 12px;text-align: left;padding-left: 30px;padding-top: 4px;color: #ccc;font-family: Courier; .message-right .message-time display: block;font-size: 12px;text-align: right;padding-right: 20px;padding-top: 4px;color: #ccc;font-family: Courier; .message-left text-align: left;margin-bottom: 16px; .message-left .message-text max-width: 80%;display: inline-block;background: #e5e6ea;padding: 13px;font-size: 14px;color: #000;border-radius: 30px;font-weight: 100;line-height: 1.5em; .message-right text-align: right;margin-bottom: 16px; .message-right .message-text line-height: 1.5em;display: inline-block;background: #5ca6fa;padding: 13px;font-size: 14px;color: #fff;border-radius: 30px;line-height: 1.5em;font-weight: 100;text-align: left; .chat background: #fff; margin: 0; border-radius: 0; .chat-container height: 450px;padding: 5px 15px;overflow: hidden; .spinme-right display: inline-block;padding: 15px 20px;font-size: 14px;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinme-left display: inline-block;padding: 15px 20px;font-size: 14px;color: #ccc;border-radius: 30px;line-height: 1.25em;font-weight: 100;opacity: 0.2; .spinner margin: 0;width: 30px;text-align: center; .spinner > div width: 10px;height: 10px;border-radius: 100%;display: inline-block;-webkit-animation: sk-bouncedelay 1.4s infinite ease-in-out both;animation: sk-bouncedelay 1.4s infinite ease-in-out both;background: rgba(0,0,0,1); .spinner .bounce1 -webkit-animation-delay: -0.32s;animation-delay: -0.32s; .spinner .bounce2 -webkit-animation-delay: -0.16s;animation-delay: -0.16s;@-webkit-keyframes sk-bouncedelay 0%,80%,100%-webkit-transform: scale(0)40%-webkit-transform: scale(1.0)@keyframes sk-bouncedelay0%,80%,100%-webkit-transform: scale(0);transform: scale(0);40%-webkit-transform: scale(1.0);transform: scale(1.0); /*Text Ad*/ .ad-container padding: 15px 30px;background-color: #FFFFFF;max-width: 690px;box-shadow: 1px 1px 4px #888888;margin: 20px auto; .ad padding: 10px 6px;max-width: 630px; .ad-title font-size: 20px;color: #0077BB;line-height: 22px;margin-bottom: 6px;letter-spacing: -0.32px; .ad-link line-height: 18px;padding-left: 26px;position: relative; .ad-link::before content: ‘Ad’;color: #006621;font-size: 10px;width: 21px;line-height: 12px;padding: 2px 0;text-align: center;border: 1px solid #006621;border-radius: 4px;box-sizing: border-box;display: inline-block;position: absolute;left: 0; .ad-link a color: #006621;text-decoration: none;font-size: 14px;line-height: 14px; .ad-copy color: #000000;font-size: 14px;line-height: 18px;letter-spacing: -0.34px;margin-top: 6px;display: inline-block; .ad .breaker font-size: 0px; #ad-4 font-family: Arial, sans-serif;background-color: #FFFFFF; #ad-4 .ad-titlecolor: #2130AB; #animation-wrapper .cta-lexcolor: #FFFFFF; width: 80%; #animation-wrapper .lex-logodisplay: inline-block; @media (max-width: 500px) .ad padding: 20px 18px;max-width: 630px;

1. Check Your Credit
2. Improve Your Score
3. Fix Credit Errors
4. Know What You Can Pay
5. Make a Bigger Down Payment
6. Get a Shorter Loan
7. Work with a Bad Credit Car Dealer
8. Get Preapproved
9. Get a Co-signer
10. Comparison Shop
11. Read the Fine Print
12. Refinance

Buying a Car With Bad Credit

If you have poor or bad credit, buying a vehicle requires some common steps that people with good credit don’t necessarily need to worry about. Consider taking these steps when buying a car with bad credit.

1. Check Your Credit

If your credit is poor, you may be stuck paying a higher interest rate until you can improve your credit scores. Your credit score is a huge factor when it comes to the interest rate and credit financing you will receive for your auto loan—or if you’ll be approved at all. You’ll want to go into this process knowing what your score is and what your options are.

Check your credit from all three major credit bureaus several months before you begin your car shopping journey so you have time to rebuild your credit if possible. Track your credit history to determine the areas where you can most improve before applying for a car loan.

2. Improve Your Score

There is no official minimum credit score you need to buy a car, but a higher score will open up more options and better rates. According to Experian, the average credit score for used car purchases at the end of 2018 was 659.

If your score is below 660, look for ways to improve your score before applying for a car loan. Your free Credit Report Card from Credit.com will help you determine the most efficient ways to improve your score: paying off debt, clearing up errors or taking care of old collection accounts could bump you over that coveted 700 threshold. Delaying the car finance process to improve your poor credit score and rebuild your credit can save you money in the long run.

3. Fix Credit Errors

If you find mistakes on your credit reports, fixing those errors could bring your score up quite a bit. If possible, give yourself at least 30 days to dispute credit report mistakes before you start car shopping and looking for an auto finance company or submit a loan application. If you think this is your best option, you can try DIY credit repair, or work with a credit repair service such as those from Lexington Law.

4. Know What You Can Pay

Whether or not you’re able to improve your credit score, you should know what you can afford to pay before you start shopping—and stay committed to your budget. Auto loan calculators are helpful tools to use when you are trying to determine how much car you can afford. These calculators can also provide you with an estimate of what you will be paying for the entire term of the auto loan, interest included.

〉 Try it now: Auto Loan Calculator

5. Make a Bigger Down Payment

If your score is still on the low side and you don’t have more time to rebuild your credit before purchasing a car, be prepared to put a large chunk of money down. If you’re able to put down more money, you can borrow less money—which will usually mean more savings overall. How much you have to put down on a car with bad credit depends on how low your score is (and why) as well as the price of the car and the dealer you’re working with. In general, at least $1,000 or 10% of the purchase price is recommended.

If you’re unable to put any money down, your options will be severely limited. You may be able to buy a car from a private seller who is willing to take payments, but this scenario is unlikely.

6. Get a Shorter Loan

Longer loans are generally considered a higher risk: there’s more time for you to potentially default on the loan, so the interest rates tend to be higher. The monthly payments will be higher for shorter loans, however, so make sure you are able to fit this into your budget with some room to spare.

7. Work with a Bad Credit Car Dealer

If you need a car now and have a credit score that falls below the 600 range, you may need to go to bad credit car dealerships that specialize in no-credit or poor-credit buyers. These dealerships will work with your credit history to get approval, but interest rates will likely be high and terms may be unfavorable.

8. Get Preapproved

Getting preapproval for auto financing from a bank or credit union could better prepare you for the car shopping process. This preapproval process analyzes your income, expenses, credit score and credit report and determines if you qualify for an auto loan from the lender and how much the lender would be willing to lend. Submitting your paperwork early and learning what obstacles you face could spare you a lot of headaches later when going through the loan approval process.

9. Get a Co-signer

If you have a poor credit score, it may be helpful to get a co-signer for your loan application. Not all lenders offer this option, so consider this carefully before moving forward.

10. Comparison Shop

Always shop around for your loan. You never know what options are available until you look. Look for the best possible terms and make sure that you can actually afford the payments so you don’t end up negatively affecting your credit even more. It’s also a good idea to compare rates from other lenders like banks or credit unions before settling on a loan straight from the dealership.

11. Read the Fine Print

The fine print can make a big difference in the overall purchase price of the vehicle, especially if your credit means a high interest rate. Make sure there’s no prepayment penalty so you’re not fined for paying off a loan quicker than agreed, and avoid pricey add-ons that increase the sales price.

12. Refinance

Auto loan refinancing could help lower your auto loan rates and your monthly payment, which could end up saving you hundreds over the life of the loan. For loan refinancing, you typically want a strong history of making on-time payments for at least 12 months. However, keep in mind that the loan refinancing will also take your credit history and current credit scores into account as well. So, as always, continue working diligently to improve and rebuild your credit rating.

Key Takeaways

Whether or not you can get a car loan with bad credit depends on many factors. If you follow these tips, you may be able to get an auto loan and save money even with poor credit scores.

You can view your credit score and get an easy-to-understand Credit Report Card for free at Credit.com or via the mobile app for iPhone and Android. Start by taking a look at what factors are having the most impact on your scores and credit rating so you know what to address first.

Source: credit.com

You May Have Missed the Housing Bottom, But Not the Mortgage Rate Bottom

Posted on May 15th, 2012

Over the past several months, it has become somewhat clear (insert gigantic grain of salt here) that home prices may have bottomed last year, at least in some areas of the country.

While it’s still too early to say so definitively, it looks like some homes were snatched up at rock-bottom prices a year ago.

These same homes are now valued quite a bit higher, and recent comparable sales are backing up the numbers.

Of course, some are also calling it a “mini bubble,” otherwise known as a fake recovery, spurred on in part by the record low mortgage rates.

But only time will tell…

[Tips for first-time home buyers.]

You Missed the Bottom

Perhaps you’re kicking yourself, thinking you could have purchased that same house for a lot less a year ago.

Yep, you were all set to time the bottom, and seemingly out of thin air, it came and went, and you were none the wiser.

How did that happen? You were watching home prices on a weekly basis, looking at recent sales, surveying market conditions. How could you have missed it?

Well, they always say that timing the market bottom is near impossible, partially because you only know it has actually hit bottom when it’s too late.

So did you mess up? Did you miss your chance to get the steal of the century? Not quite.

[Are mortgage rates negotiable?]

Have Mortgage Rates Bottomed?

For much of the first half of 2011, mortgage rates on the popular 30-year fixed stood around 4.75%.

While this may have seemed like the “bottom for mortgage rates,” they now sit around a percentage point lower, which most people would have never guessed in a million years.

That’s right; today you can snag a 30-year fixed for around 3.75%, which is pretty much unheard of.

And who knows, rates could fall even lower over time, though the more they drop, the less upside there is for lower rates.

You certainly shouldn’t bank on rates slipping any lower because then you’re falling into the same “timing the bottom” trap.

All that said, let’s do the math to see what the difference is using a real world scenario, assuming the home buyer is putting 20% down.

2011 Home price: $475,000
2011 Mortgage rate: 4.75%
2011 Mortgage payment: $1982.26
Total interest paid: $333,613.60

2012 Home price: $520,000
2012 Mortgage rate: 3.75%
2012 Mortgage payment: $1926.56
Total interest paid: $277,561.60

Wait just a minute here. Those who missed the housing bottom are actually ending up with a lower mortgage payment?

While not significantly lower, it’s still roughly $50 cheaper each month to buy the same house today, and results in $56,000 in interest savings throughout the life of the loan (yes, the down payment is slightly higher).

Who would have thought that? Turns out you didn’t necessarily miss out, assuming you are financing the deal via a mortgage, which most of us are.

Put simply, even though you may have missed the housing market bottom, whether by choice or accident, waiting may have actually paid off.

Read more: Home prices vs. mortgage rates.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

7 Super Small-Cap Growth Stocks to Buy

Stocks with smaller market values are outperforming by a wide margin so far this year, and strategists and analysts alike say small caps should continue to lead the way as the economic recovery gains steam.

“The U.S. economy is currently trending toward high-single digit GDP growth in 2021 as COVID-19 vaccine distribution expands and we gradually emerge from the pandemic,” says Lule Demmissie, president of Ally Invest. “That environment favors small-cap names, which tend to have a more domestic focus than larger multinational firms.”

Small caps tend to outperform in the early parts of the economic cycle, so it should come as no surprise that they are clobbering stocks with larger market values these days.

Indeed, the small-cap benchmark Russell 2000 index is up 13.6% for the year-to-date through April 8, while the blue chip Dow Jones Industrial Average added just 9.5% over the same span.

Keep in mind that small-cap stocks come with heightened volatility and risk. It’s also important to note that it can be dangerous to chase performance. But small-cap growth stocks – particularly in this environment – can offer potentially much greater rewards. 

Given the increased interest in these securities, we decided to find some of analysts’ favorite small caps to buy. To do so, we screened the Russell 2000 for small caps with outsized growth prospects and analysts’ highest consensus recommendations, according to S&P Global Market Intelligence.

Here’s how the recommendation system works: S&P Global Market Intelligence surveys analysts’ stock recommendations and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Any score below 2.5 means that analysts, on average, rate the stock as being Buy-worthy. The closer a score gets to 1.0, the stronger the Buy recommendation.

We also limited ourselves to names with projected long-term growth (LTG) rates of at least 20%. That means analysts, on average, expect these companies to generate compound annual earnings per share (EPS) growth of 20% or more for the next three to five years. 

And lastly, we dug into research, fundamental factors and analysts’ estimates on the most promising small caps. 

That led us to this list of the 7 best small-cap growth stocks to buy now, by virtue of their high analyst ratings and bullish outlooks. Read on as we analyze what makes each one stand out.

Share prices are as of April 8. Companies are listed by strength of analysts’ consensus recommendation, from lowest to highest. Data courtesy of S&P Global Market Intelligence, unless otherwise noted.

1 of 7

Q2 Holdings

Digital banking technologyDigital banking technology
  • Market value: $5.7 billion
  • Long-term growth rate: 150.0%
  • Analysts’ consensus recommendation: 1.68 (Buy)

Q2 Holdings (QTWO, $103.06) provides cloud-based virtual banking services to regional and community financial institutions. The idea is to make it so that smaller firms – which are sometimes small caps themselves – can give account holders the same kind of top-flight online tools, services and experiences as the industry’s big boys.

To that end, Q2 recently announced the acquisition of ClickSWITCH, which focuses on customer acquisition and retention by making the process of switching digital accounts easier. Terms of the deal were not disclosed. 

Q2’s business model and execution has Wall Street drooling over the small cap’s growth prospects. Indeed, analysts expect the software company to generate compound annual earnings per share growth of 150% over the next three to five years, according to data from S&P Global Market Intelligence. 

“In the last year, the pandemic has accelerated the digital transformation efforts and investments of the financial services industry, and we believe Q2 Holdings is well positioned to support and grow its customer base,” writes Stifel equity research analyst Tom Roderick, who rates the stock at Buy. 

Of the 19 analysts covering Q2 tracked by S&P Global Market Intelligence, 10 call it a Strong Buy, five say Buy and four rate it at Hold. Their average target price of $152.25 gives QTWO implied upside of almost 50% over the next 12 months or so. Such high expected returns make it easy to understand why the Street sees QTWO as one of the best small-cap growth stocks.

2 of 7

BellRing Brands

A man drinking a protein shakeA man drinking a protein shake
  • Market value: $962.8 million
  • Long-term growth rate: 21.6%
  • Analysts’ consensus recommendation: 1.60 (Buy)

BellRing Brands (BRBR, $24.37), which sells protein shakes and other nutritional beverages, powders and supplements, is forecast to generate unusually healthy EPS growth over the next few years. 

Stifel equity research, which specializes in small caps, says BellRing offers a “compelling growth opportunity” thanks to its positioning in the large and fast-growing category known as “convenient nutrition.”

U.S. consumers are increasingly turning toward high-protein, low-carbohydrate foods and beverages for snacks and meal replacement, Stifel notes, and BellRing Brands, spun off from Post Holdings (POST) in late 2019, is in prime position to thrive from those changing consumer tastes. 

After all, the company’s portfolio includes such well-known brands as Premier Protein shakes and PowerBar nutrition bars. 

In another point favoring the bulls, BellRing’s “asset-light business model requires limited capital expenditures and generates very strong free cash flow,” notes Stifel analyst Christopher Growe, who rates the stock at Buy.

Most of the Street also puts BRBR in the small-caps-to-buy camp. Of the 15 analysts covering BRBR, eight call it a Strong Buy, five say Buy and two have it at Hold. Their average price target of $28.33 gives the stock implied upside of about 16% over the next year or so. 

With shares trading at just a bit more than 25 times estimated earnings for 2022, BRBR appears to offer a compelling valuation.

3 of 7

Rackspace Technology

Cloud technologyCloud technology
  • Market value: $5.3 billion
  • Long-term growth rate: 21.8%
  • Analysts’ consensus recommendation: 1.50 (Strong Buy)

Rackspace Technology (RXT, $25.61) partners with cloud services providers such as Google parent Alphabet (GOOGL), Amazon.com (AMZN) and Microsoft (MSFT) to manage its enterprise customers’ cloud-based services. 

And make no mistake, this sort of expertise is much in demand.

The pandemic accelerated many industries’ migration to cloud technology. As such, plenty of firms have discovered they need all the help they can get when it comes to transitioning and managing their operations – often with more than one cloud service provider.

“The prevalence of a multicloud approach has created integration and operational complexity that require expertise and resources most companies lack,”  writes William Blair analyst Jim Breen, who rates RXT at Outperform (the equivalent of Buy). “This creates an opportunity for a multicloud services partner to enable businesses to fully realize the benefits of cloud transformation.”

Breen adds that research firm IDC forecasts the managed cloud services market to grow 15% a year to more than $100 billion by 2024.

As the leading company in the field of multicloud services, bulls argue that Rackspace stands to benefit disproportionately from all this burgeoning demand. 

Speaking of bulls, of the 10 analysts covering the stock tracked by S&P Global Market Intelligence, five rate RXT at Strong Buy and five call it a Buy. The bottom line is that Rackspace easily makes the Street’s list of small-cap growth stocks to buy.

4 of 7

Chart Industries

Cryogenic technologyCryogenic technology
  • Market value: $5.3 billion
  • Long-term growth rate: 34.2%
  • Analysts’ consensus recommendation: 1.50 (Strong Buy)

Shares in Chart Industries (GTLS, $146.76), which manufactures cryogenic equipment for industrial gasses such as liquefied natural gas (LNG), are riding the global secular trend toward sustainable energy.

The market certainly likes GTLS’ commitment to greener energy. The small-cap stock is up more than 410% over the past 52 weeks – analysts expect a torrid pace of profit growth over the next few years to keep the gains coming. Indeed, the Street forecasts compound annual EPS growth of more than 34% over the next three to five years.

Analysts say the company’s unique portfolio of technologies gives it an edge in a growing industry. To that end, they applauded its $20 million acquisition of Sustainable Energy Solutions in December because it bolsters the company’s carbon capture capabilities.

“In the context of the decarbonization megatrend, Chart is a one-of-a-kind play on the global shift to more gas-centric economies,” writes Raymond James analyst Pavel Molchanov in a note to clients. “There is upside potential from large liquefied natural gas projects. Notwithstanding the lingering headwinds from the North American energy sector, we reiterate our Outperform [Buy] rating.”

Stifel, which chimes in with a Buy rating, says GTLS deserves a premium valuation given its outsized growth prospects. 

“With potentially a decade or more of high single-digit to low double-digit revenue growth, more recurring revenue, accelerating hydrogen opportunities, and the potential big LNG surprise bounces, we expect shares could trade north of 30 times normalized earnings,” writes analyst Benjamin Nolan.

The stock currently trades at nearly 30 times estimated earnings for 2022, per S&P Global Market Intelligence. Small caps to buy often sport lofty valuations, but with a projected long-term growth rate of more than 34%, one could argue GTLS is actually a bargain.

Raymond James and Stifel are very much in the majority on the Street, where 12 analysts rate GTLS at Strong Buy, four say Buy, one has it at Hold and one says Sell.

5 of 7

NeoGenomics

Lab equipmentLab equipment
  • Market value: $5.5 billion
  • Long-term growth rate: 43.0%
  • Analysts’ consensus recommendation: 1.33 (Strong Buy)

NeoGenomics (NEO, $47.87), an oncology testing and research laboratory, is still coming out from under the pressure of the pandemic, which led to the cancellation of legions of procedures.

But there’s been quite a lot of activity at the company, nevertheless, and analysts still see it as one of the better small-cap growth stocks to buy.

In February, the company said longtime Chairman and CEO Doug VanOort would step aside to become executive chairman in April. He was succeeded by Mark Mallon, former CEO of Ironwood Pharmaceuticals (IRWD). The following month, NeoGenomics announced a $65 million cash-and-stock deal for Trapelo Health, an IT firm focused on precision oncology. 

All the while, shares have been lagging in 2021, falling more than 11% for the year-to-date vs. a gain of 13.5% for the small-cap benchmark Russell 2000.

Although COVID-19 has been squeezing clinical volumes – and bad winter weather is always a concern – analysts by and large remain fans of this small cap’s industry position. 

“We continue to find the company’s leading market share in clinical oncology testing and expanding presence in pharma services for oncology-based clients to be a very attractive combination,” writes William Blair equity analyst Brian Weinstein, who rates NEO at Outperform. 

Of the 12 analysts covering NEO tracked by S&P Global Market Intelligence, nine call it a Strong Buy, two say Buy and one says Hold. With an average target price of $63.20, analysts give NEO implied upside of about 32% in the next year or so. That’s good enough to make almost any list of small caps to buy.

6 of 7

Lovesac

A Lovesac storeA Lovesac store
  • Market value: $917.3 million
  • Long-term growth rate: 32.5%
  • Analysts’ consensus recommendation: 1.14 (Strong Buy)

The Lovesac Co. (LOVE, $62.47) is a niche consumer discretionary company that designs “foam-filled furniture,” which mostly includes bean bag chairs. 

Although it operates about 90 showrooms at malls around the country, revenue – thankfully – is largely driven by online sales. That’s led to a boom in business as folks, stuck at home, shop online for ways to spruce up their living spaces.

Shares have followed, rising about 45% for the year-to-date and more than 1,000% over the past 52 weeks. And analysts expect even more upside ahead, driven by a long-term growth rate forecast of 32.5% for the next three to five years, according to S&P Global Market Intelligence. 

Stifel, which says LOVE is among its small caps to Buy, expects the consumer shift to buying furnishing online to persist, and even accelerate, once the pandemic subsides.

“Lovesac is well positioned for continued share gains in the furniture category with its strong product, omni-channel capabilities and enhancements to the platform, many of which were initiated during the pandemic,” writes Stifel’s Lamont Williams in a note to clients.

The analyst adds that LOVE has a long ramp-up opportunity thanks to a new generation of home buyers.

“As the housing market remains healthy there is the opportunity to capture new buyers as more middle- to upper-income millennials become homeowners and increase spending on [the company’s] category,” Williams writes. 

Of the seven analysts covering the stock tracked by S&P Global Market Intelligence, six rate it at Strong Buy and one says Buy. That’s a small sample size, but the bull case for LOVE as one of the better small-cap growth stocks to buy still stands.

7 of 7

AdaptHealth

An elderly person using a walker during home rehabAn elderly person using a walker during home rehab
  • Market value: $4.3 billion
  • Long-term growth rate: 43.0%
  • Analysts’ consensus recommendation: 1.11 (Strong Buy)

AdaptHealth (AHCO, $37.61) comes in at No. 1 on our list of small caps to buy thanks to their outsized growth prospects. The bull case rests partly on demographics and the aging of baby boomers. 

AdaptHealth provides home healthcare equipment and medical supplies. Most notably, it provides sleep therapy equipment such as CPAP machines for sleep apnea – a condition that tends to increase with age and weight.

With the majority of the boomer cohort of roughly 70 million Americans hitting their 60s and 70s, home medical equipment for sleep apnea and other conditions is increasingly in demand.

Mergers and acquisitions are also a part of the company’s growth story, notes UBS Global Research, which rates AHCO at Buy. Most recently, in February, the company closed a $2 billion cash-and-stock deal for AeroCare, a respiratory and home medical equipment distributor. 

“AdaptHealth exits 2020 with material themes of accelerating growth,” writes UBS analyst Whit Mayo. “In each quarter of 2022, we assume that AHCO acquires $35 million in annual revenues, closing these deals at the middle of the quarter. This drives estimated acquired revs from yet to be announced deals of $70 million.”

Small caps have been rallying in 2021, but not AHCO, which is essentially flat for the year-to-date. Happily, the Street expects that to change sooner rather than later. With an average target price of $47.22, analysts give the stock implied upside of about 25% over the next 12 months or so.

Of the nine analysts covering AHCO tracked by S&P Global Market Intelligence, eight rate it at Strong Buy and one says Buy. As noted above, they expect the company to generate compound annual EPS growth of 43% over the next three to five years.

Source: kiplinger.com

5 Myths (and 5 Truths) About Selling Your Home

True or false: All real estate advice is good advice. (Hint: It depends.)

Everyone has advice about the real estate market, but not all of that unsolicited information is true. So when it comes time to list your home, you’ll need to separate fact from fiction.

Below we’ve identified the top five real estate myths — and debunked them so you can hop on the fast track to selling your property.

1. I need to redo my kitchen and bathroom before selling

Truth: While kitchens and bathrooms can increase the value of a home, you won’t get a large return on investment if you do a major renovation just before selling.

Minor renovations, on the other hand, may help you sell your home for a higher price. New countertops or new appliances may be just the kind of bait you need to reel in a buyer. Check out comparable listings in your neighborhood, and see what work you need to do to compete in the market.

2. My home’s exterior isn’t as important as the interior

Truth: Home buyers often make snap judgments based simply on a home’s exterior, so curb appeal is very important.

“A lot of buyers search online or drive by properties before they even enlist my services,” says Bic DeCaro, a real estate agent at Westgate Realty Group in Falls Church, Virginia. “If the yard is cluttered or the driveway is all broken up, there’s a chance they won’t ever enter the house — they’ll just keep driving.”

The good news is that it doesn’t cost a bundle to improve your home’s exterior. Start by cutting the grass, trimming the hedges and clearing away any clutter. Then, for less than $50, you could put up new house numbers, paint the front door, plant some flowers or install a new, more stylish porch light.

3. If my house is clean, I don’t need to stage it

Truth: Tidy is a good first step, but professional home stagers have raised the bar. Tossing dirty laundry in the closet and sweeping the front steps just aren’t enough anymore.

Stagers make homes appeal to a broad range of tastes. They can skillfully identify ways to highlight your home’s best features and compensate for its shortcomings. For example, they might recommend removing blinds from a window with a great view or replacing a double bed with a twin to make a bedroom look bigger.

Of course, you don’t have to hire a professional stager. But if you don’t, be ready to use some of their tactics to get your home ready for sale — especially if staging is a trend where you live. An unstaged house will pale when compared to others on the market.

4. Granite and stainless steel appliances are old news

Truth: The majority of home shoppers still want granite counters and stainless steel appliances. Quartz, marble and concrete counters also have wide appeal.

“Most shoppers just want to steer away from anything that looks dated,” says Dru Bloomfield, a real estate agent with Platinum Living Realty in Scottsdale, Arizona. “When you a design a space, you need to decide if you’re doing it for yourself or for resale potential.”

She suggests that if you’re not planning to move anytime soon, decorate how you’d like. But if you’re planning to put your home on the market within the next couple of years, stick to elements with mass appeal.

“I recently sold a house where the kitchen had been remodeled 12 years ago, and everybody thought it had just been done because the owners had chosen timeless elements: dark maple cabinets, granite counters and stainless steel appliances.”

5. Home shoppers can ignore paint colors they don’t like

Truth: Moving is a lot of work, and while many home buyers realize they could take on the task of painting walls, they simply don’t want to.

That’s why one of the most important things you can do to update your home is apply a fresh coat of neutral paint. Neutral colors also help a property stand out in online photographs, which is where most potential buyers will get their first impression of your property.

Hiring a professional to paint the interior of a 2,000-square-foot house will cost about $3,000 to $6,000, depending on labor costs in your region. You could buy the paint and do the job yourself for $300 to $500. Either way, if a fresh coat of paint helps your home stand out in a crowded market, it’s probably a worthwhile investment.

Related:

Originally published April 1, 2014.

Source: zillow.com