Six Flags Entertainment Corp (SIX), Overstock.com, Inc. (OSTK) & More: Did These Analysts Make the Right Calls?

Overstock.com (NASDAQ:OSTK)

Overstock.com continued its post-earning rally on Friday after receiving a two-notch upgrade to “Buy” from BofA. The firm was highly impressed with its 22% partner sales, which were far better than the estimated 9%, and that its lower than expected opex is a sign that the company is improving in efficiency. BofA specifically states, “We believe strong Q1 results are not just a head fake but believe the company is turning the corner.”

For me, there’s no arguing the points made by BofA. On Thursday I published a piece titled, “This High-Flyer is Still Far From Reaching its Worth,” which highlighted the level of value that is present in shares of Overstock.com, Inc. (NASDAQ:OSTK). This is a company that grew 19%, saw margin improvements, and is greatly undervalued compared to its competitors. Even after its large gains, the stock still trades at just 0.34 times sales, compared to five times sales for eBay Inc (NASDAQ:EBAY) or two times sales for Amazon.com, Inc. (NASDAQ:AMZN). If the company can continue to prove its efficiency, then watch out, this could be a high-flyer for many quarters to come.

Conclusion

“Always view an analyst’s call with a bit of skepticism, and focus more on the reasons versus the performance that it creates, “Taking Charge With Value Investing (McGraw-Hill, 2013)”.

Luckily, it appears as though the three calls above were all well-thought and researched. However, this is not always the case, and investors must be cautious and remind themselves not to fall victim to the sudden gains created by an analyst’s call. Instead, focus on the “why” of a call, identify any value it presents, and then make decisions based on these factors.

The article Did These Analysts Make the Right Calls? originally appeared on Fool.com and is written by Brian Nichols.

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