Of course we all want to get rid of the coronavirus – and if it disappears, the general economy is expected to pick up again. To get to the details: Jonathan Golub, Chief U.S. Credit Suisse's Equity Strategist sees economic momentum weakening after the pandemic and sets a one-year target for the S&P 500 of 4,050, or 10.5% above current levels.
Considering what investors can expect, Golub writes, "As we look to 2022, the virus will be a fading memory, the economy will be robust but slowing, the yield curve steeper and volatility lower, and the rotation to cyclical. largely behind us. "
In the meantime, investors want to know where to put their money now – which means that Wall Street analysts are also in the business of finding the stocks that are ready for profit in the next 12 months.
Using the Investing Insights platform, we collected the details of three stocks with a Perfect 10 of the Smart Score – a one-digit composite score based on the collected data. These are stocks that have impressed the analysts – showing strong signs of gains in the short or medium term based on the data analysis algorithms.
Nomad Foods ( NOMD )
We start in the food industry, the basic necessity that we cannot live without. Nomad Foods (NYSE 🙂 is a UK-based distributor in the frozen foods niche that has become an essential part of the modern food chain. Frozen foods offer variety, freshness and relatively easy storage, bringing Nomad more than $ 2.4 billion in annual revenues.
The COVID crisis prompted the public to eat more at home, which was good for the grocery industry in general and frozen foods in particular. The company's third-quarter earnings of 35 cents a share are 25% higher than a year ago. The company posted EUR 576 million (US $ 685 million) in sales, representing growth of 12% yoy.
Writing of BTIG, five-star analyst Peter Saleh says: “[We] believes the company will continue to build on its lead in the Western European frozen foods market. We expect recent lockdowns could fuel a resurgence of organic sales growth, as in 2Q20 and to a lesser extent in 3Q20. Looking ahead, we expect the company to leverage its plant-based offering to attract new customers while investing in marketing initiatives to retain customers it acquired during the pandemic. "
Saleh assesses NOMD a buy and sets a price target of $ 30 to indicate that he believes in 26% upside potential for the coming year.
In total, Nomad has 6 recent ratings, which are broken down into a 5-to-1 split of Buy versus Hold. This makes the analyst agree on a strong buy. The average price target is $ 28.33, which is 19% a year higher than the current stock price of $ 23.84. (See NOMD Stock Analysis)
Cleveland-Cliffs ( CLF )
Next is Cleveland-Cliffs (NYSE :), an Ohio mining company. Cleveland-Cliffs specializes in iron production and has four active mines in Minnesota and Michigan. The company focuses on the mining, extraction and pelletization of the ore, a process that produces iron pellets in various grades suitable for blast furnace smelting, steelmaking and alloy. Cleveland-Cliffs on its own is capable of producing more than 40% of the total US iron pellet capacity. It also produces flat rolled products from carbon steel, stainless steel and electrical steel.
While the economy is picking up and recovering from the worst of the coronavirus hits, Cleveland-Cliffs' revenues have increased. The company's revenue has been growing since the first quarter of 2020, with consecutive gains in both Q2 and Q3. The third quarter was $ 1.65 billion, in line with analyst expectations and well above the $ 555.6 million recorded in the same quarter a year ago.
The stock price reflected this recovery. The stock bottomed out in mid-March, at just $ 3.14 per share. Since then, it has shown impressive growth. The stocks fully made up for those losses in the middle of winter and are now trading at 32% since the start of the year.
GLJ Research Analyst Gordon Johnson sees Cleveland-Cliffs winning as the pandemic recedes and customers resume normal economic activity. To that end, the analyst upgraded CLF from Hold to Buy, and its $ 15.80 price target suggests it is up 46% over the next year.
“US auto production has returned to pre-pandemic levels, a definite positive for Cliffs as ~ 27% of (future) steel demand comes from that sector. Even the number of oil / gas platforms, while still falling sharply year-on-year, seems to be turning a corner in terms of growth. In addition, our checks indicate possible delays in additions to the delivery. As we see it, this dynamic, which pushed US HRC prices to nearly $ 734 / short ton last week, has the potential to … keep the price level sustained into 2021, ”stated Johnson.
In general, the average purchasing consensus rating on CLF is based on an even distribution; the stock has 3 purchases and 3 holds on record. (See CLF Stock Analysis)
EQT Corporation ( ] EQT )
Last but not least is EQT Corporation (NYSE :), an energy player in the natural gas market. In fact, it is the largest natural gas producer in the US, with operations in the Appalachian Basin in the states of Ohio, West Virginia and Pennsylvania. The company owns lease and exploration rights of more than 1 million acres and has nearly 20 trillion cubic feet of proven reserves.
Unfortunately, low energy prices have taken their toll here. With the exception of 1Q20, EQT has been posting net losses since the second quarter of last year. The most recent report, for Q3 2020, showed a net EPS loss of 15 cents per share. While the loss was less than analysts' expectations, it was deeper than the quarter of a year ago.
Despite recurring quarterly losses, EQT shares are up an impressive 34% so far this year – and there are still 5 weeks left. The gains completely erased the losses incurred at the start of the corona crisis and reflect the confidence of investors in the gas industry as a vital utility.
One of the bulls is Wells Fargo analyst Tom Hughes who wrote, “As Northeast gas disparities continue to struggle in the shoulder season and weighed on the 4Q20 guidance for realizations leading up to a potentially optimistic background for the commodity in By 2021, EQT's solid operational update for 3Q20 should instill confidence in investors that operational improvements at EQT since Mr. Rice and his team took over last year are still moving forward. "
"EQT continues to work on its operational and financial metrics ahead of what hopefully should be a constructive macro environment," concluded the analyst.
Accordingly, Hughes rates EQT stock as overweight (i.e., buy) and sets a target price of $ 21. This represents a 31% increase from current levels.
EQT is another company with a unanimous consensus rating for Strong Buy analysts based on 6 positive reviews. The stock is now trading at $ 14.49, and the average price target of $ 19.25 suggests ~ 33% of upside potential for a year. (See EQT Stock Analysis)
For more ideas for stocks that trade at attractive valuations, visit Investing Insights.
