The Motley Fool

Appen share price tipped to hit $28.00 in 2019

The Appen Ltd (ASX: APX) share price returned from its trading halt on Tuesday and tumbled 9% lower to $22.14.

Despite this decline the shares of the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence are still up 72.5% since the start of the year.

This makes Appen the best performer on the ASX 200 in 2019 ahead of payments company Afterpay Touch Group Ltd (ASX: APT) and iron ore producer Fortescue Metals Group Limited (ASX: FMG).

Is it too late to buy Appen shares?

I don’t believe it is too late to invest in Appen, especially if you’re prepared to make a buy and hold investment.

I’m not alone with this view. According to a note out of Citi on Tuesday, the broker has upgraded Appen’s shares to a buy rating from neutral and lifted the price target on them by 20% to $28.04 following the acquisition of the Figure Eight business.

This price target implies potential upside of almost 27% for its shares over the next 12 months.

Figure Eight is a best in class machine learning software platform which uses highly automated annotation tools to transform unstructured text, image, audio and video data into customised high-quality artificial intelligence training data.

Citi believes that Figure Eight is a good fit for Appen and expects it to provide the technology and expertise required to allow the company to scale and improve its productivity materially.

However, as the Figure Eight business made a loss in FY 2018, the broker expects it to act as a drag on Appen’s performance this year. As a result, it has lowered its earnings estimates slightly for FY 2019.

After which, it believes the business will contribute strongly to Appen’s FY 2020 and FY 2021 results.

I think Citi makes a great point on Appen and believe it is a quality investment option. Its shares are trading at a premium to the market average, though. Whilst I believe its strong growth potential justifies this, they are still a reasonably high risk option and could be unsuitable for investors with a low tolerance for risk. It is also worth noting that Citi handled the capital raising to fund the acquisition of Figure Eight.

As well as Appen, I think these buy-rated growth shares would be great options in March.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked...

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2019."

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!