A combination of factors – including the recent elections, a growing "new wave" of coronavirus cases and the prospect of COVID vaccines being on the market before the end of the year have plagued markets in recent weeks. The main impact seems to be vaccine news for now. Pharmaceutical giants Pfizer and Moderna have both announced successful trials, where Pfizer's vaccine is 90% effective and Moderna's is 94%.
The vaccine announcements are important for public health but also for the economy. Numerous states are preparing new lockdown regimes that are sure to stifle economic activity – but a vaccine release will support state governors and lawmakers in reopening. Even the announcement that such vaccines are successful in late-stage trials was enough to boost stocks; the actual release to public distribution will certainly have a greater effect.
Wall Street analysts have been busy for the past few weeks and days scanning the market for stocks likely to rise in the coming weeks. They tag many choices, but some stocks stand out. These are the ones with "Perfect 10" in the Smart Score.
The Smart Score is a unique tool that uses a range of six different factors, each of which is known to correlate with future overperformance. The Smart Score gives investments a single digit rating, letting investors know at a glance where the stock is likely to go – according to quantifiable data.
Here we look at three stocks that score a perfect 10. Let's see what's behind this review.
Hanesbrands ( HBI )
Hanesbrands Inc (NYSE 🙂 is undoubtedly one you know. Hanes is a clothing manufacturer specializing in undergarments with brands such as Hanes, Playtex, L’eggs, Champion and many more. The company's apparel is somewhat ubiquitous, reflecting their necessity, and these modest products brought in more than $ 7 billion in revenue last year.
This year, like much of the retail industry, Hanes was hit in the first quarter when the corona pandemic forced a general economic shutdown. But the company recovered quickly, with third-quarter revenues at $ 1.81 billion the highest in the past four quarters. Revenues show a more mixed picture; Earnings per share in Q2 came in at an excellent 60 cents, while Q3 saw a 30% decline to 42 cents. However, this decline meant that revenues in the third quarter were still in line with previous years' results.
The Earnings Report, with its combination of beating the estimate while declining year-over-year, pushed the stock down in recent sessions. Still, HBI has clearly recovered its value since it bottomed out in the "corona recession". The stock is up ~ 90% from its low this year. In addition to the appeal, Hanes has maintained the regular stock dividend and kept the payout at 15 cents per common share for the whole of 2020. That dividend now yields an above-average 4.6%.
On the insider front, two transactions, both by Ronal Nelson of the Board of Directors, have turned the sentiment needle on Hanes well into positive territory. In the past five days, Nelson has bought more than $ 1 million worth of stock, in two tranches, one of 50,000 shares and the other of 30,000.
Regarding Hanesbrands for Raymond James, analyst Matthew McClintock notes the company's strong current position.
"We believe HBI's results in the third quarter of 20 indicate a continuation of its market share gains in its core categories, driven by the company's inherent competitive advantages: scale, strong brands and internal supply chain", the five-star analyst noted.
In addition, McClintock believes the company is demonstrating its ability to adapt to the coronavirus scene: “ HBI & # 39; s protective apparel business is expected to slow down significantly in the future. This recently developed business to help combat the pandemic generated $ 179 million in revenues (equivalent to 10% of revenues) in 3Q20, surpassing HBI & # 39; s previous expectation of $ 150 million in 2H20. "
McClintock rates HBI as a strong buy and its $ 16 price target suggests it is up 22% from its current level.
Other analysts are on the same page. With 4 Buys and 1 Hold received in the past three months, HBI is known to be a Strong Buy. (See HBI Stock Analysis)
GDS Holdings, Ltd. ( GDS )
The first is GDS Holdings (NASDAQ :), a data center holding company from China. The Asian country is rapidly becoming a high-tech hub in the world, and GDS operates high-performance, cloud-neutral data centers. Neutrality is an essential feature as it gives GDS customers access to telecom networks in the PRC and around the world. The company's customer base mainly consists of cloud service providers, financial institutions, information technology providers, internet companies and telecom providers in the Chinese market.
The value of the Chinese market is evident in the rising equity value and income of GDS. On the top line, GDS revenues have been growing steadily this year, with the third quarter showing a 43% year-over-year increase. Profits were driven by a similar increase in total data center rented space to more than 357,000 square feet of floor space. The company has an additional 135,000 square meters under construction. Subsequently, the stock has increased in value this year, with a growth of 72%.
Regarding the stock for Raymond James, analyst Frank Louthan notes, “GDS continues to show strength in its market and remains our best long-term idea in the market. With the highest organic growth in the industry in the next two years, we expect it to continue to command a premium valuation. "
Louthan rates GDS as a strong buy along with a $ 110 price target. This figure suggests room for ~ 24% growth over the one-year horizon.
With 6 recent Buy reviews, Strong Buy analysts' consensus on GDS is unanimous. The stock retails for $ 88.92 and has an average target price of $ 107.80. (See GDS Stock Analysis)
GDS Smart Score
Americold Realty ( COLD )
Americold Realty (NYSE 🙂 is a real estate investment trust, a REIT and a unique. The company specializes in acquiring, owning and operating cold stores. These are a vital link in the distribution chains for perishable products, especially food, and Americold has more than 1 billion cubic feet of refrigerated storage space in its portfolio, in the US and Canada, Australia and New Zealand, and Argentina.
COVID or no COVID, people have to eat and food distributors have to move and store their products. For Americold, this meant stable earnings for a year that would otherwise be characterized by high volatility. The company's sales were between $ 482 million and $ 497 million for the past four quarters, with the high and low values ??both during 1H20 – and that high value was recorded in the recent Q3 report
.
As a REIT, Americold must return profits to shareholders, and like most of its peers, it uses the dividend to do so. The company increased its dividend in March of this year at the height of the coronavirus crisis and has stuck to the higher payout ever since. At 84 cents per ordinary share on an annual basis, the dividend yields 2.3%.
Analyst Michael Carroll, of RBC Capital, has only warm words for Americold.
"We are particularly encouraged by the new investments that increase COLD's footprint, scale up in key markets and expand existing / new customer relationships. We believe these strategic deals will better position the company to execute its operational strategy and achieve ~ 10% profit growth in the foreseeable future, ”noted Carroll.
To this end, Carroll Americold shares an Outperform (i.e. overweight) stock along with a price target of $ 43. Investors could achieve a 22% profit if this target is met in the coming months.
Overall, Americold gets a unanimous thumbs up from analysts' consensus, with three recent Buy reviews adding up to a Strong Buy rating. The stock is priced at $ 35.20, while the median price target of $ 42.67 is in line with Carroll's. (See COLD stock analysis)
For more ideas for stocks that trade at attractive valuations, visit Investing Insights.
