We've been working on Biden's new government for a full week and the prevailing mood is one of relief. Politics has been rejected for a few steps, which gives real hope that, at least in the short term, we have a boring time ahead. That's really all anyone wants after the crazy rollercoaster ride in 2020.
A period of calm, when investors feel safe taking a deep breath and giving decisions the time they need, is the perfect time to buy in the market. Take a step back, see the big picture, and know that now is the time for an informed step.
We opened the Investing Insights platform to find the details of three stocks that got a lot of analyst love this new year, and we've found a consistent pattern for them. They all have a Strong Buy consensus rating and a Perfect 10 of the Smart Score metric – but even better, a recent analyst review has shown an even more optimistic picture. Here are the details:
SailPoint Technologies ( SAIL )
First, Sailpoint (NYSE 🙂 focuses on access control for cloud computing systems, filling a natural vulnerability in cloud security. SailPoint's solutions include access certification, password, management and cloud management. The security products enable the tracking and management of traffic to and from cloud systems – an essential part of network security.
SailPoint saw revenue increase in 2020. In Q1, the company posted a 25% profit year-on-year; in Q2 the profit was 46%. For the third quarter, SAIL's year-on-year profit was again 25%. These increases are because the pandemic has made an increasing proportion of office work work online – and has increased the demand for security access to digital networks.
Wedbush analyst Daniel Ives notes that the company's revenue is increasing with increasing demand: “It is clear that the company's product suite is in the right spot for spending as more companies move to the cloud, with the SAIL's convincing footprint resonates with both new and existing customers … our estimate that 33% of workloads are currently in the cloud and will reach 55% by 2022, SAIL has a golden opportunity to gain market share over existing vendors and to further penetrate IT budgets in this fluid cloud shift. "
In line with this upbeat stance, Ives is outperforming SAIL stock (i.e. buying), and his $ 75 price target indicates confidence in a 31% rise for the next 12 months.
Wall Street agrees with Ives, as the Strong Buy analysts consensus assessment shows. The rating is based on 11 recent reviews, including 9 purchases and 2 holdings. However, the stock's recent appreciation has brought the price close to the $ 60.50 average, leaving room for a 6% rise. (See SAIL stock analysis)
HubSpot ( HUBS ]])
Subsequently, HubSpot (NYSE 🙂 has made a name for itself in technology as an innovator, particularly for its inbound marketing software products. HubSpot has made the lives of SEO optimizers, social media marketers, CRM experts and content managers easier with products ranging from web analytics to software integration. The company has been working with the freemium model since its founding in 2006, which allows customers to access basic services for free, while retaining the option to purchase a paid subscription for higher tier services and regular upgrades.
2020 was a good year for HubSpot as the company is perfectly positioned to capitalize on an increase in remote office and telecommuting. The company saw revenues reach $ 228.4 million in 3Q20, the last quarter for which figures are available, for a year-over-year profit of 32%. That figure was driven by subscription revenue of $ 221.1 million, which was also 32% higher than last year.
The second analyst in the TipRanks database, Brent Bracelin of Piper Sandler, took a look at HubSpot and the cloud software industry in general.
On the cloud business, at the macro level, Bracelin says: “The start of a record year for cloud software driven by an unprecedented digital awakening that propelled industry-wide valuations, including doubling our top picks for 2020, the 2021 set-up gets tougher. digital tailwind is reflected in near-peak valuation multiples with the path to recovery and the fear of cyclical rotation declining further upwards. "
As for HubSpot, the analyst cites the company as one of its "highest conviction cloud stocks for 2021".
"HubSpot has a long way to go to support high growth as it has only 3% penetration (95,000+ customers) with a global customer TAM of over 3 million," Bracelin said. "Untapped cross-sell opportunities in new CMS and Sales Hubs give us an upward preference for consensus estimates of 22% growth next year."
To this end, Bracelin rates HUBS stock as Overweight (i.e., buy), along with a price target of $ 488. This figure suggests a 39% rise for the coming year.
Bracelin is certainly not the first analyst to take an optimistic view of the software player, as TipRanks analysis presents HUBS stocks as a strong buy. With an average price target of $ 411.93, analysts are seeing ~ 18% growth for the stock. In total, the stock has received 12 Buy ratings versus 4 Holds. (See HUBS Stock Analysis)
DCP Midstream Partners ( DCP )
Based in Denver, Colorado, Next Stock is one of the largest midstream natural gas operators in the country. DCP (NYSE 🙂 operates a network of gas pipelines, hubs, storage facilities and factories extending between the Rocky Mountain, Midcontinent and Permian Basin production areas and the Gulf Coast of Texas and Louisiana. The company also operates in Michigan's Antrim gas region.
In the most recently reported quarter – 3Q20 – DCP collected and processed 4.5 billion cubic feet of gas per day, along with 375 thousand barrels of natural gas liquids. The company also reported $ 268 million in net cash generated, of which $ 130 million was free cash flow. The company reduced its indebtedness by $ 156 million in the quarter, and posted a 17% year-over-year decline in operating expenses
.
All this allowed DCP to maintain its dividend at 39 cents a share. Early in the corona crisis, the company had to scale back that payment – but only once. The recently announced 4Q20 dividend is the fourth in a row at 39 cents per common share. The annual rate of $ 1.56 gives a respectable return of 7.8%.
To that end, Raymond James analyst James Weston is raising this stock from neutral to outperforming (i.e., buying), while setting a target price of $ 24 to imply 20% growth over the one-year time horizon.
“[We] expects DCP to deliver another solid quarter with successive improvements in NGL prices, NGL market volatility and positive upstream trends … we are not taking advantage of current propane prices and expect a solid, but more normalized pricing regime for the next 12-18 months. In our view, this will create a favorable operating environment for DCP cash flows that is currently not reflected in Street estimates, ”noted Weston.
Overall, the Moderate Buy analyst's consensus rating on DCP is based on 7 recent ratings, splitting 4 to 3 Buy versus Hold. The stock is priced at $ 19.58 and the $ 23 average target suggests a ~ 15% rise from that level. (See DCP Stock Analysis)
For more ideas for stocks that trade at attractive valuations, visit Investing Insights.
