After a year most of us want to forget, 2021 begins with stability and an even keel. The elections are safely behind us, the new Biden administration promises a 'no drama' approach, a highly divided and hyper-partisan Congress is unlikely to pass sweeping, reformed or unchanged legislation, and COVID vaccines are ready for distribution . It's a recipe for a quiet news cycle.
That makes it a perfect time to buy in the stock market. Investors can read the tea leaves or study the data – regardless of their preferred method of stock analysis – and use this period of rest to make rational choices about stock movements.
Using the Investing Insights platform, we collected three stocks that form a bullish case. All three meet a profile that should interest value investors. They have unanimous Strong Buy consensus ratings, along with a "perfect 10" from the Smart Score. That score, a unique measure, evaluates a stock based on 6 factors with a proven high correlation to future overperformance. A score of "10" indicates that the stock is likely to increase in the coming year. And finally, all three of these stocks have double digit upside potential, indicating that they are still undervalued.
UMH Properties ( UMH )
We start with UMH Properties (NYSE 🙂 in the real estate investment (REIT) sector. This company, which started in the mobile home industry after WWII, later became the foremost builder of produced housing. Today, UMH owns and manages a portfolio of 124 manufactured residential communities across 8 states in the Northeast and Midwest, totaling more than 23,000 units.
As a REIT, UMH has taken advantage of the nature of manufactured homes as affordable options in the housing market. UMH sells both the manufactured homes to residents, while rents out the plots of land on which the properties are located, and rents homes to residents. Equity income, a key measure, grew 8.6% year-on-year in the third quarter.
Also in the third quarter, UMH reported sales growth of 16% yoy, with sales of $ 43.1 million compared to $ 37.3 million in the same quarter a year ago. Funds from Operations, another key measure in the REIT industry, came in at 11 cents a share, up from 14 cents in 3Q19. The decline came when the company bought out $ 2.9 million in Series B preferred stock.
REITs are required to return income to shareholders, and UMH achieves this with a reliable dividend and a high return of 4.7%. The payment, at 18 cents per common share, is paid quarterly and has been kept stable for over ten years.
Compass Point Analyst Merrill Ross believes the company is well positioned to create value for both households and shareholders.
“We believe that UMH has proven that it can provide attractive, affordable housing to both tenants and homeowners in a more efficient way than was possible with vertical rental properties. As UMH improves its financing costs, it can compete more effectively with other MH community owners in the public and private spheres, and because it has a successful formula to reverse under-managed communities, we believe UMH can consolidate private properties around the world. coming years to build on its potential for value creation, ”said Ross.
To this end, Ross views UMH as a buy, and its $ 20 price target implies a 25% year-up.
Overall, the unanimous Strong Buy on UMH is based on 5 recent reviews. The stock is selling for $ 15.92, and the $ 18.40 average price target suggests there is room for 15% growth from that level. (See UMH stock analysis)
Laird Superfood ( ] LSF )
Laird Superfood (NYSE 🙂 is a newcomer to the stock markets that only went public last September. The company manufactures and markets a range of plant-based, nutritious food additives and snacks, and is best known for its line of specialty non-dairy coffee creamers. Laird targets customers who want to add nutrition and an energy boost to their diet.
Since its IPO in September, the company has reported third quarter earnings. Sales were strong at $ 7.6 million, more than 26% higher than forecast and 118% higher than a year ago. The company also reported 115% year-on-year growth in online sales. E-commerce now makes up 49% of the company's net sales – no surprise during the "corona year"
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The stock review comes from Robert Burleson, a five-star analyst from Canaccord. Burleson reiterates its optimistic stance, saying, “We continue to view LSF as an attractive platform to respond to strong demand trends for plant-based functional foods, noting LSF's competitively differentiated omnichannel approach and ingredient ethos. Over time, we expect LSF will be able to leverage its brand and vertically integrated operation to success across a wide variety of plant-based categories, driving over-sales growth and healthy margin expansion. "
Burleson rates LSF stock a Buy in addition to a $ 70 price target. This figure indicates his confidence in ~ 63% growth over the one-year horizon.
Laird has not attracted much analyst attention, but those who viewed the stock agree with Burleson's assessment. LSF has a unanimous Strong Buy analyst consensus rating, based on 3 recent reviews. The $ 62.33 average price target suggests room for ~ 39% gains in the coming year. (See LSF Inventory Analysis)
TravelCenters of America ( TA )
Last but not least is TravelCenters of America (NASDAQ :), a big name in the transportation industry. TravelCenters owns, operates and competes full-service highway stops in the US – an important niche in a country heavily reliant on long-haul transportation, and in which private car ownership has long mystically encouraged the "road trip". TA & # 39; s network of rest stops offers travelers convenience stores and fast food outlets in addition to gasoline and diesel and the expected amenities.
The corona crisis was a difficult time for TA, as lockdown regulations put pressure on travel. The company's revenues bottomed out in the second quarter and fell to $ 986 million, but increased sequentially by 28% to $ 1.27 billion in the third quarter. Earnings per share were also strong at 61 cents, showing impressive growth of 165% year-on-year. These gains came when the economy reopened – and with air travel still limited, cars are becoming the standard for long haul, a circumstance that benefits TravelCenters.
About TravelCenters for BTIG is analyst James Sullivan, who rates the stock as Buy, and his $ 40 price target suggests a 22% rise for the next year.
Supporting his position, Sullivan commented, “TA is in the process of putting a series of failed initiatives behind it under the previous management team. The current new management team has strengthened the balance sheet and plans to improve operations by taking both cost savings and revenue-generating measures that should increase margins […]. While we expect spending for 2020 to be focused on non-revenue-generating maintenance and repair items, we expect higher expenditures to generate good ROI in 2021 and beyond … "
Overall, TravelCenters stock gets a unanimous thumbs up, with 3 Buys backing the Strong Buy consensus assessment of the stock. The stock is selling for $ 32.87, and the median price target of $ 38.33 suggests ~ 17% upside potential. (See TA stock analysis)
Visit Investing Insights for more ideas for stocks that trade at attractive valuations.
