Lovesac company (LOVE)

Looking forward, Wald goes on to point out these SMID-cap stocks a ripe pickings for investors: “We want to emphasize that growth should remain a core position while cyclicals are positioned for bullish catch-up. We’d similarly argue that small- and mid-cap growth offers an attractive balance to both themes.”

Bearing this in mind, we took a closer look at two SMID-cap stocks backed by the analysts at Oppenheimer. Running the tickers through TipRanks’ database, we learned that Oppenheimer sees over 100% upside potential in store for each, and both have earned a “Strong Buy” consensus rating from the rest of the Street.

The Lovesac Company (LOVE)

We’ll start with Lovesac, a furniture company that traces its roots to 1995 and offers lines of customizable sac-based seating; modular couches, chairs, and recliners; integrated sound systems; and accessories such as foot blankets, throw pillows, stools, and lap tables. The company’s products are adaptable to most any available space, making them ideal for DIY home designers; the ‘Sactional’ line of modular couches is particularly good in that niche. Today, Lovesac has a network of showrooms across the US, and annual sales of more than $650 million.

Lovesac, which has a market cap of just $366 million, has had a volatile year in regard to stock performance, with the shares showing a series of ups and downs in the last 12 months. Overall, LOVE is down some 19% since last June. That share price decline comes even as the company has seen a steady pattern of year-over-year quarterly revenue growth.

In its most recently reported quarter, Q1 of fiscal year 2024, Lovesac reported two solid headline numbers: 9.1% y/y net sales growth, and 15.1% y/y comparable sales growth. These figures supported the total quarterly revenue of $141.2 million, which was $7.46 million better than had been expected. At the bottom line, Lovesac frequently runs a net quarterly loss; the recent fiscal Q1 loss came to 28 cents per share in GAAP measures, or 13 cents per share ahead of the forecast. The company generated $6.3 million in net cash from operations, a turnaround of 128% from the $21.8 million net cash burn in the prior-year quarter.

Looking at Lovesac for Oppenheimer, 5-star analyst Brian Nagel sees plenty of long-term potential, writing: “We look upon recent, solid, but not great trends at LOVE as suggestive of a still up-and-coming, omnichannel-enabled brand managing well a more challenged macro backdrop and opting to continue to strategically invest, to support intermediate to longer-term efforts, despite a more muted topline backdrop, nearer term. We continue to view LOVE as one of the most compelling, smaller cap market share grabbing stories across home furnishings and consumer, broadly. In our view, shares underappreciate meaningfully, intermediate- to longer-term sales and profit opportunities for LOVE.”

Quantifying his stance, Nagel rates Lovesac shares as Outperform (i.e. Buy) with a $60 target price that suggests a robust one-year gain of ~150%.

Overall, all 4 of the recent analyst reviews on this stock are positive, giving LOVE a unanimous Strong Buy consensus rating. The shares are trading for $24.06 and the $53.33 average price target implies ~122% upside potential on the one-year horizon.