We all want to be rid of the coronavirus, of course – and when it fades, the general economy is expected to bounce back. Getting to specifics, Credit Suisse Chief U.S. Equity Strategist Jonathan Golub sees economic momentum moderating post-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 toward 2022, the virus will be a fading memory, the economy robust, but decelerating, the yield curve steeper and volatility lower, and the rotation into cyclical largely behind us.”
In the meantime, investors want to know where to put their money now – which means Wall Street’s analysts are also busy finding the stocks that are primed for gains in the next 12 months.
Using TipRanks database, we’ve pulled the details on three stocks that combine a Strong Buy consensus rating with a Perfect 10 from the Smart Score — a single-digit amalgamated score based on the collated data from TipRanks. These are stocks that have impressed the analysts – and show strong signs of near- to mid-term gains based on the data analysis algorithms.
Nomad Foods (NOMD)
We’ll start in the food industry, the basic necessity we cannot do without. Nomad Foods is a UK-based distributor in the frozen foods niche, which has become a vital part of the modern food chain. Frozen foods offer variety, freshness, and relatively easy storage – all of which has brought Nomad over $2.4 billion in annual revenues.
The COVID crisis prompted the public to eat at home more, and that was good for the grocery industry generally and frozen foods specifically. The company’s Q3 earnings, at 35 cents per share, are up 25% from one year ago. The company posted 576 million Euros (US$685 million) on the top line, implying a 12% yoy growth.
Writing from BTIG, 5-star analyst Peter Saleh says, “[We] believe the company will continue to build on its lead in Western Europe’s frozen food market. We expect recent lock downs could fuel a resurgence in organic sales growth as it did in 2Q20 and to a lesser extent in 3Q20. Looking ahead, we expect the company to lean into its plant-based offering to attract new customers while investing in marketing initiatives to retain customers that it gained during the pandemic.”
Saleh rates NOMD a Buy, and sets a $30 price target to indicate his belief in a 26% upside for the next year. (To watch Saleh’s track record, click here)
Overall, Nomad has 6 recent reviews, breaking down in a 5-to-1 split of Buy versus Hold. This makes the analyst consensus view a Strong Buy. The average price target is $28.33, for a 19% one-year upside from the current share price of $23.84. (See NOMD stock analysis on TipRanks)
Rackspace Technology (RXT)
Rackspace Technology is a cloud computing company out of Texas, offering data management and data security, across applications and at any scale. Rackspace’s customer base is global, and the company has offices in Australia, Singapore, India, Germany, and the UK.
This cloud-tech innovator is newcomer in the stock markets, having held its IPO just this past August. The company sold 33.5 million shares at $21 each, the low end of the target range, and has been volatile since.
The third quarter results were somewhat mixed for RXT. The company reported a 13% year-over-year gain in revenue, to $682 million, with a quarterly record of $315 million in bookings – an impressive 64% yoy gain. Net income, however, registered a 54-cent per share loss. That loss came even as Core Revenue – Multicloud Services and Apps & Cross Platform combined – gained 18% compared to the year-ago quarter.
Analysts are willing, for now, to forgive Rackspace’s slightly shaky entry into the stock markets. Covering this stock for Deutsche Bank, 5-star analyst Bryan Keane notes the company’s strong Core Revenue performance and adds, “…RXT delivered continued broad-based bookings momentum and further expansion of the pipeline (exceeding its sales target into Oct). As a result, RXT raised FY20 core pro-forma revenue growth guidance by ~50bps to ~14-15% implying an estimated ~2ppts of pro-forma organic growth acceleration at the mid-point into 4Q20 which we believe could have modest potential for upside based on recent bookings and retention trends.”
To this end, Keane rates RXT a Buy, and his $26 price target implies a solid 45% one-year upside. (To watch Keane’s track record, click here)
The Deutsche Bank view is in-line with Wall Street here; the analyst consensus on RXT is a unanimous Strong Buy, based on 5 positive reviews. The stock is selling for $17.85 and its $28 average price target suggests it has a 57% upside on the one-year time horizon. (See RXT stock analysis on TipRanks)
EQT Corporation (EQT)
Last but not least is EQT Corporation, an energy player in the natural gas market. In fact, it’s 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 holds lease and exploration rights more than 1 million acres, and has nearly 20 trillion cubic feet in proven reserves.
Unfortunately, low energy prices have taken a toll here. Except for 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 expected by the analysts, it was deeper than the year-ago quarter.
Despite the recurring quarterly losses, EQT shares are up an impressive 34% so far this year – and there are still 5 weeks left. The gains have completely erased losses taken at the start of the corona crisis, and reflect investor confidence in the gas industry as a vital utility.
Among the bulls is Wells Fargo analyst Tom Hughes who wrote, “While northeast gas differentials continue to struggle in the shoulder season and weighed on 4Q20 guidance for realizations ahead of a potentially bullish backdrop for the commodity in 2021, EQT’s solid operational update for 3Q20 should help buoy investor confidence that the operational improvements at EQT since Mr. Rice and his team took over last year still have momentum.”
“EQT continues to work on its operating and financial metrics ahead of what should hopefully be a constructive macro environment,” the analyst concluded.
Accordingly, Hughes rates EQT shares an Overweight (i.e. Buy), and sets a price target of $21. This represents a 31% upside from current levels. (To watch Hughes’ track record, click here)
EQT is another company with a unanimous Strong Buy analyst consensus rating, this one based on 6 positive reviews. The stock is trading now for $14.49, and its $19.25 average price target suggests ~33% one-year upside potential. (See EQT stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.