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    Three Stocks to Watch for the Week of October 31st

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    Editorial Staff
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    Stocks surged into the close on Friday on the heels of positive consumer spending figures and mixed corporate earnings results. Personal spending increased 0.6%, exceeding Wall Street’s expectations for a 0.4% rise. The major indices finished the week with solid gains. The Dow stacked on nearly 6% for its fourth consecutive positive week, while the S&P 500 and the Nasdaq rose for the second week in a row with 4% and 2% gains, respectively.  

    This week will be eventful on the earnings front, with reports expected from several prominent companies, including Pfizer, Moderna, Toyota, Qualcomm, PayPal, Starbucks, and Kellogg’s, among others. Investors will remain focused on economic growth with Fed policymakers set to gather for the two-day November Federal Open Market Committee (FOMC) meeting, which begins on Tuesday, and a critical interest rate decision expected on Wednesday.  

    The Federal Reserve is expected to lift its benchmark interest rate by seventy-five basis points, marking the fourth time in a row it’s approved such a steep increase. The Fed’s latest such hike in September pushed the rate to a range of 3.00% to 3.25%—a level last seen in 2008. The labor market will also be in the spotlight, as several key reports will be released, including the Bureau of Labor Statistics October nonfarm payrolls report.  

    Amid unrelenting inflation and a strong potential for a recession, volatility is widely expected to continue as we head into the new year, making the job of selecting stocks difficult. A logical move in times like these is dividend stocks, which pay you just to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow. The most desirable dividend stocks have a history of raising their payouts over time as the company’s profits grow. Our first recommendation for the week is a high-yielding stocks that seem ripe for the picking as we head into the new year.  

    Anyone who has kept tabs on the global supply chain and shipping saga that’s been unfolding since the outbreak of covid is probably familiar with Genco Shipping (GNK). The company owns a fleet of 44 ships it leases for dry bulk transportation of goods like grain, coal, and iron ore. The going rate to rent one of Genco’s ships is no less than $27,000 per day, which provides some solid cash flow that the company uses to reward its shareholders.  

    Dry bulk shipping rates, along with GNK’s share price, have fallen in recent months. Still, as China recovers from recent lockdowns and seasonal demand is expected to be strong, it’s hard to see the pullback in share price as anything less than an opportunistic bargain.  

    GNK pays a handsome 14.8% dividend yield. The company will be looking to display strength ahead of its November 2nd earnings release. The company is expected to report EPS of $0.88, down 38.89% from the prior-year quarter. Meanwhile, the latest Zacks consensus estimate is calling for revenue of $91.06 million, down 22.47% from the prior-year quarter.

    One area of the market that can perform well regardless of what’s happening elsewhere in markets is biotech. Biogen (BII) is a biopharmaceutical company focused on neurological and neurodegenerative disease therapies. The company is on the leading edge of creating drugs and therapeutics for some of the more perplexing chronic diseases like Alzheimer’s. Biogen has been working on drugs that can reduce the buildup of amyloid plaques which could be critical to stemming the advancement of the disease.  

    The neurological solutions pioneer has partnered with Eisai, a Japanese pharmaceutical company, to develop Lecanemab, one of its potential amyloid plaque-destroying drug candidates. The two companies will split the drug’s profits 50/50. Recent data from lecanemab has proven “robust” as the drug saw a 27% reduction in patients’ clinical decline on cognitive and functional metrics, causing the entire industry to rethink the historically elusive answer to Alzheimer’s.  

    Following the “better than expected” Phase 3 data for lecanemab, JPMorgan analyst Chris Schott raised the firm’s price target on Biogen to $275 from $221. The analyst foresees full FDA approval for lecanemab and believes there is a high probability that the Centers for Medicare and Medicaid Services will cover the drug. Schott would not be surprised to see further upside for the shares into year-end as he expects lecanemab to dominate the competition.

    While lecanemab takes center stage, Biogen has a pipeline that features several drugs in various clinical stages. The company’s Spinraza for treating spinal muscular atrophy has been a blockbuster drug. Multiple sclerosis drugs Avonex and Plegridy generate nearly $2 billion in annual sales.  

    BIIB shares spiked on the positive lecanemab results and have dwindled since. A better entry opportunity may come, but for long-term-minded investors focusing on growth, Biogen is an intriguing candidate even at its current level.

    Given the unprecedented situation with major world powers Russia and China,  Washington is taking steps to strengthen the technical capabilities of its military and its allies while also seeking to protect the U.S. from cyber threats.

    Booz Allen Hamilton (BAH) is one of the world’s largest cybersecurity solutions providers. Specializing in marketing cybersecurity products that other companies produce, nearly every U.S. federal, intelligence and defense agency uses its services. In other words, Booz Allen is poised to scoop up a significant portion of the whopping 15.6 billion that the U.S. is expected to spend on cybersecurity in 2023.

    For its fiscal 2023 first quarter, which ended June 30, revenue surged 13% year over year to $2.25 billion, while its net income jumped an impressive 50% to $138.1 million. Wall Street expects $4.88 EPS for the entire year, indicating a reasonable forward P/E of 19.4 times.  

    Stifel analyst Bert Subin recently raised the firm’s price target on BAH to $105 from $102 after hosting the company at the firm’s London Industrials & Renewables Summit and coming away with a favorable outlook, driven by continued demand tailwinds and an easing labor market. The current consensus recommendation is to Buy Booz Allen. A median price target of $105 represents an increase of 10% from the current price. 

    Is CTRA the Best Natural Gas Stock?

    By
    Editorial Staff
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    There very well may be a bullish market ahead for natural gas stocks, and analysts most definitely see it… 

    Enter Coterra Energy (CTRA), a formidable player in the natural gas realm where vast reserves, cost-effective operations, and strong financial standing come together to offer up a confident performer. 

    Coterra masterfully distributes its free cash flow to shareholders through a mix of regular dividends, buybacks, and occasional special dividends. CTRA’s performance history is also a sign of reliability. 

    Coterra Energy will attract any income-focused investors who enjoy high future returns… 

    Coterra Energy (CTRA) is one of the strongest choices in the energy sector right now. CTRA stands out as a top player due to its large reserves and solid balance sheet, making it a reliable income play. With a market cap of $21 billion, CTRA is among the biggest players in the industry, primarily generating revenue from natural gas sales, supplemented by oil and NGLs (natural gas liquids). 

    CTRA‘s reserves are expected to last between 15 and 20 years, and it continues to explore new discoveries to replenish its inventory. Additionally, CTRA benefits from strong price realization, capturing around 100% of the WTI price and approximately 90% of natural gas in the Marcellus basin. With plans to reduce activity 

    in the Marcellus and redirect resources to the promising Permian and Anadarko basins, this can contribute to CTRA’s projected oil production growth of 5% per year without increasing capital spending. 

    By successfully maintaining healthy business metrics, CTRA is in an excellent position to return cash to shareholders. It offers a 7.94% annual dividend yield with a $0.20 per share quarterly payout. Moreover, CTRA repurchased 11 million shares totaling $268 million, representing 76% of the free cash flow returned to shareholders. It has also done a hell of a consistent job of beating analysts’ earnings projections. 

    Most recently, CTRA beat EPS and revenue by margins of 24.11% and 13.09%, respectively. CTRA reported EPS of $0.87 per share vs. $0.70 per share as expected and revenue of $1.78 billion vs. $1.57 billion as expected. CTRA also boasts significant earnings beats for all of fiscal year 2022. 

    For the present quarter, CTRA is projected to report $1.3 billion in sales at $0.37 per share. It is currently up by 9.28% year-to-date and trades around the bottom of its existing 52-week range, which leaves room for growth. CTRA has a volatility-safe beta score of 0.27 and a 10-day average trading volume of 6.54 million shares. As assigned by analysts, CTRA has a median price target of $29, with a high of $39 and a low of $25, giving it an upside potential of more than 45% of its current price. 

    Considering its strategic buybacks and dividends, the company is clearly committed to its shareholders, and given the positive outlook on natural gas prices and CTRA‘s strengths as a top-tier player, it is a compelling buy for investors with a bullish view of the energy sector. 

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    Three High-Yield Dividend Stocks for the New Year

    By
    Editorial Staff
    -
    0

    Amid unrelenting inflation and a strong potential for a recession, volatility is widely expected to continue as we head into the new year, making the job of selecting stocks difficult. A logical move in times like these is dividend stocks, which pay you to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow. The most desirable dividend stocks have a history of raising payouts over time as the company’s profits grow.  

    In this list, we’ll look at three yield-paying stocks that seem ripe for the picking as we head into the new year.  

    Pioneer Natural Resources Company (PXD) has long viewed sustainability as a balance of economic growth, environmental stewardship, and social responsibility. Its emphasis is on developing natural resources that protect surrounding communities and preserve the environment.

    In the wake of the pandemic, when energy prices were, cheap PXD struck an almost perfectly timed agreement to buy fellow Permian Basin producer Parsley Energy for $4.5 billion. If you’re wondering how PXD managed to finance that transaction, the answer lies in the fact that it was an all-stock deal that ensured Pioneer didn’t have a new giant debt load hanging over its head. The fact that Parsley operated primarily in the same region of West Texas, where Pioneer had both expertise and existing staff, has paid off over time.   

    That deal was a coup for Pioneer shareholders, built on the fact it was large and well-capitalized at a time when stressed and debt-reliant shale plays were looking for a white knight. On top of that acquisition, PXD also boosted its dividend by 25% at the start of the year as further evidence of its strong balance sheet.

    Investors can look forward to upcoming tailwinds, including Pioneer’s recently announced partnership with the world’s largest renewable energy producer, NextEraEnergy (NEE), to develop a 140-megawatt wind generation facility on Pioneer-owned land. The project will supply the company’s Permian Basin operations with low-cost, renewable power and is expected to be operational next year.  

    In the third quarter, revenue was up 22% YOY to $6.09 billion, smashing the consensus estimate of 4.57 billion. The company reported earnings of $7.48 per share, beating consensus expectations of $7.27 per share. So far, in 2022, the company has rewarded its investors handsomely with $20.73 per share through its generous 10.78% cash dividend. Chief Executive Officer Scott D. Sheffield stated, “Pioneer continues to execute on our investment framework that provides best-in-class capital returns to shareholders. This framework is expected to result in $7.5 billion of cash flow being returned to shareholders during 2022, including $26 per share in dividends and continued opportunistic share repurchases.”

    Even after gaining 33% over the past year, Pioneer shares likely still have valuation upside in addition to their tremendous dividend income potential.   

    Anyone who has kept tabs on the global supply chain and shipping saga that’s been unfolding since the outbreak of covid is probably familiar with Genco Shipping (GNK). The company owns a fleet of 44 ships it leases for dry bulk transportation of goods like grain, coal, and iron ore. The going rate to rent one of Genco’s ships is no less than $27,000 per day, which provides some solid cash flow that the company uses to reward its shareholders.  

    Dry bulk shipping rates, along with GNK’s share price, have fallen in recent months. Still, as China recovers from recent lockdowns and seasonal demand is expected to be strong, it’s hard to see the pullback in share price as anything less than an opportunistic bargain. This is a very volatile sector, but it’s essential to the world’s supply chain. 

    Although the company missed consensus EPS and revenue estimates in the third quarter, it remained consistent with its previously outlined value strategy. The company’s prudent cargo coverage in Q2 resulted in significant benchmark freight outperformance in Q3, allowing Genco to pass the savings onto its investors via a 56% quarterly dividend increase on a sequential basis. Over the last four quarters, the company has declared dividends of $2.74 per share, delivering on its commitment to return substantial capital to shareholders. GNK currently pays a 20% dividend yield.  

    It should be no surprise that the defense giant Lockheed Martin (LMT) has outperformed the market this year. There are apparent geopolitical implications with the war in Ukraine. When Russia decided to invade its neighbor, both U.S. and European forces rushed in to help Ukraine. It may be some time before LMT stock pops again, as it did at the onset of Russia’s invasion of Ukraine. However, its order books are likely to improve due to rising defense budgets in the U.S. and abroad. Along with Lockheed providing support to Ukrainian resistance fighters, the looming uncertainties in Russia could lead to massive economic problems and gaps in power in former Soviet Union-controlled areas.

    Given the recession-proof nature of defense contracting, Lockheed Martin should continue reporting positive results and rewarding shareholders through its quarterly 2.7% forward yield. In other words, even if the market dives again, LMT will likely stand firm. The company runs a P/E ratio of 24 times, below the sector median of 28.3 times. As well, LMT features excellent longer-term growth and profitability metrics.

    Three Deeply Discounted Stocks with Enormous Growth Potential

    By
    Editorial Staff
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    The growth stock collapse of 2022 has shifted to a growth stock resurgence in 2023. Cathie Wood’s growth-centric ARK Innovation ETF (ARKK) sank nearly 70% last year. This year it’s up more than 20% and may just be the beginning amid a shifting economic backdrop.

    Even after a hot start to 2023, some growth stocks look way too cheap. We’ve got three recommendations of stocks with stellar growth potential presenting attractive risk-reward propositions at their current prices.    

    Meta Platforms Inc. (META)

    One notable growth name that got hammered in 2022 is Meta Platforms Inc. The stock currently trades at less than 25x forward earnings. Still, with the most prominent family of apps and 4 billion users worldwide, META’s recovery this year has been swift. The ticker has stacked on 64% YTD. 

    Despite its recent rally, the social media leader’s stock is still down 46% from its high and looks cheaply valued for long-term investors. Meta trades at under 20 times the expected annual profit and four times expected sales. With a core business that has held up well against intense pressures, underappreciated potential for success in the metaverse and shares trading at multiples that leave room for big upside, Meta stock continues to look significantly undervalued.

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    Lithium Americas Corp (LAC) 

    By 2029, electric vehicles could account for a third of the North American market and about 26% of vehicles produced worldwide, according to AutoForecast Solutions. Lithium Americas Corp is one company hoping to ride the wave of anticipated global EV demand. The company has full ownership of two development-stage mining operations in Argentina. One of which is approaching initial production, expected to come later this year. 

    The high-growth -potential small-cap has been gaining the attention of the pros on Wall Street. “We believe 2023 could be an eventful year as there could be a number of key announcements on growth projects and Argentina divesture, which could be catalysts for the share price,” explained HSBC analyst Santhosh Seshadri. To this end, Seshadri recently initiated coverage of LAC with a Buy rating, backed by a $36 price target.

    Most analysts agree with Seshadri’s thesis. LAC claims a Strong Buy consensus rating, based on 13 Buys vs. 1 Hold and no Sell ratings. At $37, the average price target makes room for 12-month gains of 74%.

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    AssetMark Financial Holdings (AMK)

    Leading asset manager AssetMark Financial continues to grow as it looks to become a full-service wealth management platform. Its recent acquisition of Adhesion Wealth, which provides wealth management technology solutions to investment advisors and asset managers, will expand its offerings. The company has been growing rapidly and has forecast annual EPS growth of 32% during the next five years. It has also seen its valuation come down to a P/E of 22, which is an excellent value for this growth stock.

    The stock is up 34% already this year. Even if the market does retreat, AssetMark still expects roughly 10% growth in assets on its platform in 2023 and 20% year-over-year revenue growth. And as we emerge from this volatile market toward the next bull market, the company, a leader in the market, should see continued growth since asset managers thrive in bull markets.

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    Three Mid-Cap Tech Stocks to Snap Up Before It’s Too Late

    By
    Editorial Staff
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    With the Nasdaq solidly in a bear market, most market participants are busy talking about the steep losses tech names have suffered. But in the long term, the technology sector will be a force to reckon with in the market, and if history repeats itself, stocks from the technology sector could start their path to recovery sooner than other stocks. Following the dot-com bubble and the financial crisis of 2008, the tech-heavy Nasdaq Composite hit its trough long before the S&P 500. 

    This go around, for innovation-focused investors, the potential of some mid-cap tech stocks (stocks with a market cap. that is > $2 billion and < $10 billion) should not be ignored. While small-cap stocks are often fast-growing but volatile, and large-cap stocks tend to be slow growing and relatively stable, the best mid-caps tend to fall in between: less volatile than fast-moving small caps but with more growth potential than mammoth large-cap companies. Top-ranked mid-cap stocks have a high potential to enhance their profitability, productivity, and market share.

    Our research team has a few recommendations for mid-cap tech stocks poised to take off when the technology sector regains traction.  

    DXC Technology Co. (DXC) is a provider of information technology services and products targeting IT modernization, including both on-premises and cloud services, as well as data-driven operations and workplace modernization. The company serves 6,000 customers globally across the private and public sectors and has a market cap of $6.55 billion.

    For its second quarter, DXC Technology reported $3.57 billion in revenue, down 11.5% year-over-year and slightly higher than the $3.55 billion Wall Street was expecting. The company reported $0.75 earnings per share for the quarter, beating the consensus estimate of $0.73.   

    “I am pleased with our second quarter results, where we delivered organic revenue, margin, and EPS at the top end of our guidance range. This is the kind of strong performance that we are accustomed to, as our revenue performance is one of the best results we have delivered, and our margins are clearly benefiting from our cost optimization program. All of this gives us confidence that we have built a quality company that is well-positioned to achieve our short-term and long-term goals,” commented  Mike Salvino, DXC Chairman, President, and CEO.

    DXC’s share price has fallen 15% in 2022, leaving them priced at only around eight times this year’s projected earnings. Short-term, prolonged market weakness could continue to weigh heavily on the stock, but those with a longer-term outlook will likely appreciate a deeper pull-back as an opportunity to get in at a better price.  

    Founded in 2001, Canadian Solar Inc. (CSIQ) is a leading manufacturer of solar photovoltaic modules and a provider of solar energy solutions. CSIQ has delivered around 52 GW of solar modules to thousands of customers in more than 150 countries through the end of 2021, reaching approximately 13 million households. Canadian Solar derives roughly 47% of its revenue from Asia, 35% from the Americas, and 18% from Europe and everywhere else.

    Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. With a market cap of $2.8 billion, the company has the potential to advance based on its continued business growth, favorable earnings, and revenue outlook.

    Benefitting from renewed interest in renewable energy solutions, Canadian Solar posted revenue of $2.31 billion in Q2 of this year, up nearly 62% from the year-ago quarter. CSIQ is up 19% year to date, while the Nasdaq index is down 29% during the same period, making Canadian Solar intriguing on a relative level. Moreover, the share price remains 39% below its February 2021 peak, and now may be a good time to buy before the next leg up.  

    Online security is a young, quickly evolving industry. Competition is heavy in the space, and demand continues to grow faster in both volume and complexity. Not all companies from the burgeoning subsector are set to last. The undisputed global leader when it comes to identity security, CyberArk (CYBR), has been gaining attention on Wall Street. The stock is up 26% over the past six months and could continue to gain heading into 2023. Regardless of any short-term earnings volatility, the potential for long-term, steady growth is too great to ignore.  

    CyberArk’s innovations occur across its self-hosted solutions and expanding SaaS portfolio of privileged access management, secrets management, and cloud privilege security offerings, helping its customers enable “Zero Trust” by enforcing least privilege. Under the framework of its Zero Trust approach, its teams can focus on identifying, isolating, and stopping threats from compromising identities and gaining privilege before they can do harm.

    The Israel-based company was recently named a leader in the Gartner Magic Quadrant for Privileged Access Management for 2021. It was positioned both highest in the ability to execute and furthest in completeness of vision for the fourth time in a row. It comes as no surprise the business has been attracting customers to its subscription-based services, which means tremendously reliable cash flow, a good sign for anyone eyeing the small-cap.  

    For its third quarter, CyberArk reported a 133% growth acceleration from the previous year’s quarter of the subscription portion of its annual recurring revenue (ARR) to $255 million. Total ARR came in at $465 million, with growth accelerating to 48%. Management also increased the full-year 2022 ARR Guidance Range to  $589-$601 million, up from a prior estimate of $583.5-$598.5 million. With a market cap of $6.21 billion, CYBR is one of the top choices of mid-cap cybersecurity stocks available.

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