Wall Street analysts are notoriously optimistic, a bias we consider in our proprietary Quadrix rating system when assessing earnings targets and upside potential for the recommended stocks, notes Rich Moroney, editor of the small cap advisory service, Upside.

The three stocks reviewed below — which all earn our top "Best Buy" rating — have favorable revision trends for estimated current-year and next-year earnings.

As an added check, we focused on stocks with strong scores for earnings predictability, a Quadrix factor that measures the consistency of year-to-year earnings growth. For extra confidence, we also screened for stocks that beat consensus earnings estimates in at least three of the last four quarters.

Atkore (ATKR) trades at only five times trailing earnings, versus a median of 18 for electrical component makers in the S&P 1500 Index. If the P/E reverts to the three-year norm, Atkore’s share price would climb roughly 90% based on estimated current-year earnings and 22% on projected 2023 profits.

While the first target seems optimistic, a 20% 12-month gain seems achievable. Leveraged to robust spending on construction and infrastructure, Atkore has limited exposure to the slowing housing market.

Atkore — with an earnings predictability score of 90 — is expected to report June-quarter results on Aug. 2, with the four-analyst consensus calling for per-share profits of $5.22, up 32%.

Revenue is projected to advance 18% and exceed $1 billion for the first time. Atkore has topped consensus profit estimates in at least 15 consecutive quarters. March-quarter earnings surged 93% and exceeded Wall Street expectations by 43%.

A semiconductor company, Diodes (DIOD) is benefiting from gains in high-growth markets like automotive and communications.Wall Street expects the company to deliver excellent June-quarter numbers on August 4. Six analysts offer sales and profit estimates, with the consensus for both adjusted higher over the past 90 days.

Revenue is projected to be up 14% to $500 million. Per-share earnings are expected to surge 45% to $1.74. The consensus was $1.60 three months ago. The earnings predictability score is a healthy 65.

Diodes has 94% upside based on the average of our four target prices, with a minimum gain of 85%. More reasonably, the stock seems capable of advancing 20% to 25% over the next 12 months given the company’s operating momentum, strong market position, and improved cash flow.

Earning a Value score of 87, Jabil (JBL) has 73% upside based on the average of our four target prices. To surpass its high of $72 reached in late December, the stock would need to climb 31%.

Jabil manufactures electronic products for clients on contract, including leading tech companies looking to cut costs and accelerate product delivery. Apple (AAPL) was the largest customer in 2021 at 22% of sales, while four other clients accounted for a combined 25% of revenue.

Jabil is expected to increase per-share profits by 49% for the August quarter and 33% for fiscal 2022 ending August. Wall Street targets per-share profit growth of 6% in fiscal 2023, a conservative figure given recent profit momentum. Profit estimates are trending higher, lifting the Earnings Estimates score to 98 from 75 at the end of May.

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