Gridlock is said to be a feature, not a bug, of the US Constitution, and we are about to find out. The election results have raised some questions, but a few things become clear: Democrat Joe Biden is the winner of the presidential race, but the Republicans seem to have made significant gains in the vote. We look at the prospect of a divided government – a Biden administration with a Republican Senate and a Democratic House with a stronger minority.
According to JPMorgan strategist Marko Kolanovic, this may be the best possible outcome.
“A majority in the GOP Senate must ensure that Trump's pro-business policy remains intact, and if Biden is affirmed, we should be able to expect an easing of the trade war, which would affect global trade and corporate profit growth. should stimulate, ”Kolanovic noted.
As investor fears fade – that Democrats would reverse Trump-era tax policies or focus on aggressive bureaucratic regulation – Kolanovic believes the markets are ready for profit.
Finding the right stocks to buy is always a challenge, even in an optimistic environment. Investing.com has the right tool for the job: the Smart Score, which analyzes 6 separate factors, all collected and measured by AI algorithms, and uses them to generate a simple, comprehensive score for the most traded stocks on the market. The Smart Score measures the traditional factors of stock analysis and the result is an aggregated number, a single number indicating the likely path forward.
With this in mind, we used the tool to find three stocks with "perfect 10" Smart Scores. Let's take a closer look.
Pacific ( ])
We start a diversified company, with production lines in food products and animal feed, as well as industrial alcohols and renewable fuels. Pacific Ethanol (NASDAQ 🙂 sells its products to the global market and posted large profits in 2Q20. Even with the recent losses taken into account, the stock is up a whopping 795% this year.
Profits have been since July, when the company expanded production in response to demand for sanitizing alcohols. The sale of alcohol for hand sanitizers has been a major boost to Pacific Ethanol in the wake of the coronavirus crisis. Taking into account new manufacturing and sales potential, the company has revised its 2020 earnings estimates upwards to $ 66 million to $ 86 million.
So far the company is on track. Like many small-cap manufacturers, Pacific Ethanol had a profit deficit prior to this year – but COVID-19 changed that. Earnings turned positive in Q2 and stayed that way in Q3. The sudden shift has left investors optimistic about the stocks.
Amit Dayal, five-star analyst at H.C. Wainwright, sees reason enough for an optimistic view here.
“Investors should note that management indicated that while the company has a clear view of prices, volumes of specialty alcohol delivered to customers can vary on a quarterly basis. As disinfectants are an important end market for specialty alcohols, stocks have come under some pressure with positive news about the COVID-19 vaccine. However, we believe that the demand for sanitizing products should remain high with an increase in economic activity in the short term. We believe that the improved balance sheet and cash flow allow the company to invest in previously overlooked business lines that may not be contributing sufficiently, ”said Dayal.
In line with these comments, Dayal rates this stock as a Buy along with a price target of $ 16. This figure suggests an impressive 174% upside potential for the coming year.
All three of the recent reviews on PEIX are positive, making the consensus rating a unanimous strong buy. PEIX shares are priced at $ 5.82 and have grown rapidly in 2H20, but The Street expects more growth here; the median price target is $ 16.50, representing 183% growth for Pacific Ethanol. (See PEIX Stock Analysis)
New York Times Company ( NYT )
Our Next Stock is a legendary name in the publishing world. The New York Times Company (NYSE 🙂 owns the newspaper of the same name, along with a range of other media items and Times-related brands. The company has a market capitalization of $ 6.4 billion and more than 30 corporate assets. Major brands attract 150 million readers and more than 6.5 million paid subscriptions every month.
In a news environment as fast and chaotic as 2020, the NYT has reaped the benefits of people's need to know. The stock is up 20% year-to-date, despite some errors in recent weeks.
With regard to NYT for J.P. Morgan writes analyst Alexia Quadrani, "NYT remains our mid-cap stock of choice, and we see the digital submarine growth story continuing and very likely to reach 10 million, well ahead of management's 2025 target. ARPU and margin improvements over the course of the year. over time, the stock will also look cheaper in terms of earnings, which will offset the negative valuation. sale as an attractive entry point. "
Quadrani rates this stock as Overweight (i.e., buy), and its $ 50 price target indicates a potential of 30% in the next 12 months.
Strong Buy analysts' consensus rating on NYT is unanimous and based on 4 recent reviews. Stocks have an average price target of $ 53, which indicates a rise of 37% in one year from the current trading price of $ 38.53. (See NYT inventory analysis)
Thor Industries ( THO )
Last but not least is Thor Industries (NYSE :), a major manufacturer of recreational vehicles. Motorhomes are a popular leisure activity and have made modest gains during the "corona time" because they are compatible with social distance requirements, while still allowing households to holiday together. Thor owns seven brands, including such well-known names as Airstream and Heartland. The company has a market capitalization of $ 4.8 billion and more than $ 8 billion in annual revenues.
Quarterly sales, reported for the third quarter earlier this month, recovered from a brief dip earlier this year. Third quarter sales were $ 2.32 billion, the highest of the past four quarters. Revenues, which have been declining since the third quarter of last year, showed a massive consecutive peak, from 43 cents a share to $ 2.14.
Leisure stocks have recently seen a resurgence, and BMO Capital analyst Gerrick Johnson has overhauled the industry. About Thor Industries, Johnson writes, “Shares of leisure companies tend to rise higher or lower on retail earnings than on earnings or earnings per share. We think investors' focus will shift after this quarter. Retail has caught up with investors' expectations … We think … Thor (THO) will have the longest legs in terms of consumer demand … "
Regarding sales, Johnson added, "Management sounded very optimistic about FY2021 last quarter and expects the current robust retail and restocking cycle to last at least until the end of the fiscal year."
To this end, Johnson rates THO as an Outperform (i.e., Buy) and its $ 110 price target implies a 26% increase from its current level.
Again, we look at a stock with a unanimous consensus rating from Strong Buy analysts; Thor has 4 recent Buy reviews. The stock also has an average price target of $ 115, which indicates a positive rise of 32% for the next 12 months. (See THO Stock Analysis)
For more ideas for stocks that trade at attractive valuations, visit Investing Insights.
