A Southwest Airlines Boeing 737 passenger aircraft
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According to analysts, Wall Street is calling for recovery, reflation and rotation this year amid monetary and fiscal policies that remain accommodative.
Among the cops, strategists at J.P. Morgan said the S&P 500 could hit 4,400, with a range of 4,200 to 4,600.
“Global growth is likely to be below trend in early 2021, but the strongest global recovery in a decade is likely to be felt by late 2021. Global GDP growth will hit 4.7% (Q4 / Q4) if the vaccine outlook changes develop as expected … our forecast envisages macro and market dynamics, as the further development of vaccines removes the link between mobility and virus and largely removes the greatest growth headwind – the pandemic – from the scene by 2H21 “, wrote the strategists recently in a note.
Against this background, how are investors supposed to find convincing investment opportunities? By following the movements of analysts with a proven track record. TipRanks analyst forecast service tries to attract the top performing analysts on the street or the analysts with the highest pass rate and average return per rating.
Here are analysts’ best stock picks for 2021:
Clean ports provides environmental, energy and industrial services and is one of the largest refineries and recyclers of waste oils in North America. As of 2021, the company will be the first choice of Needham analyst James Ricchiuti. To support his even more optimistic stance, the five-star analyst raised the target price from USD 75 to USD 91 (20% upside potential) and repeated a buy recommendation.
Ricchiuti admits that CLH shares “have a low bar to clear” as it was one of the few names in its reporting universe to fall in 2020 and outperformed by several competitors. According to the analystTwo COVID-related factors played a role in this poor performance.
“The shock from COVID has dampened an expected rebound in CLH’s waste oil recycling business from Safety-Kleen (SK), while Environmental Services (ES) ‘s core business was also impacted as the impact of COVID hit the overall economy,” stated Ricchiuti.
The tide could turn for the company in 2021, however. “With macro data improving, including higher manufacturing output, we expect CLH’s nuclear incineration and landfill services to see stronger demand in 2021. While the recent COVID surge is stalling recovery, CLH has a natural hedge in the ES business as it will likely lead to higher margin emergency COVID business, “said the Needham analyst. In addition, he expects the SK segment to recover gradually over the next year.
Additionally, the increased focus on ESG could benefit CLH, “both in the oil recycling business and because of its leadership position in the safe handling of hazardous waste and its ability to respond to a wide variety of environmental emergencies,” said Ricchiuti.
Given that the stock is trading at less than 10 times Ricchiuti’s adjusted EBITDA estimate for 2021, the risk / reward profile is therefore “attractive”.
Ricchiuti achieved a top 100 ranking and currently has a success rate of 68% and an average return of 21.6% per rating.
The entire travel industry has been leveled by the COVID-19 pandemic, but Cowen analyst Helane Becker sees it Southwest Airlines top pick for 2021. In a recent announcement, it maintained a buy recommendation on the stock and increased the target price from $ 46 to $ 55 (19% upside potential).
According to Becker, the air travel environment will most likely be under pressure until a COVID-19 vaccine becomes widespread. However, she argues, “The Southwest is uniquely positioned to take advantage of the current landscape.”
Becker refers to the company’s balance sheet and underlines the fact that LUV has raised around US $ 18.9 billion in liquidity since the beginning of the year. LUV currently has a net cash position of approximately $ 2 billion versus a cumulative net debt growth of 16% year to date. date to other US airlines.
“We see that investor sentiment on the stock is already favorable. However, the next six months will be tough. We believe Southwest stock will remain an attractive option for participating in the airline’s recovery, without taking an excessive downside risk. ” Peers, “said Becker.
Although some investors have raised concerns about when LUV will bring traffic, capacity, revenue and profits back to 2019 levels, Becker notes that these questions do not necessarily apply to this airline. In 2019, headwinds related to MAX grounding hampered the company. With the aircraft back on stream, the analyst believes that the cost outlook will improve and growth will accelerate.
Becker added, “Southwest’s cost structure can benefit the most from a normalized schedule as it steals off vacation days and promotes excessive pilots due to the MAX primer. We expect the company to respond faster than others because of its better results 2019 earnings level will return. ” Balance sheet, stock upside opportunities, and low hanging fruit in cost savings and is currently modeling for the company to meet that goal in 2023. “
With its 71% success rate and an average return of 18.5% per review, Becker ranks first on TipRanks’ list of top performing analysts.
For Mizuho Securities Analyst Vijay Rakesh, semiconductor company Broadcom is his first choice for the new year. In a bullish signal, the analyst gave the target price a boost on December 28, with the figure moving from $ 460 to $ 480 (10% upside potential).
2021 will be the first full year for the ramp of 5G handsets worldwide, and that’s a good thing AVGOaccording to Rakesh. In particular, he sees gains in RF content that will benefit Broadcom and some other players in the semiconductor space.
Regarding the key 5G marketsThe analyst points to “China with attractive 5G handset options under $ 400, USA with 5G-enabled iPhone 12 and South Korea.”
Based on management comments, stronger iPhone trends have resulted in “the wireless top line growing 50% year over year in the January quarter, and recent management changes have created a more focused outlook for every semiconductor and software segment to have”.
Additionally, Rakesh applauds the company’s ability to do so continue to drive the result Leverage on free cash flow from software acquisitions and work-from-home trends. According to the analyst, these software mergers and acquisitions have “played a key role in achieving better margins and stability in a cyclical semiconductor environment”.
“We continue to see AVGO as a top pick with strong ownership and content growth in key segments, a leader in SerDes, growing content with iPhone13 and potential enterprise software mergers and acquisitions as the company increases FCF and continues to increase its dividend.” Rakesh commented.
With a success rate of 70% and an average return of 24.1% per review Rakesh is ranked number 90.
On to another player in the semiconductor room, Ambarella develops low-performance, high-resolution video compression, image processing, and deep neural network processors and software to enable cameras to extract data from high-resolution video streams.
The chip maker recently got a thumbs up from Kevin Cassidy of Rosenblatt Securities, the analyst said a Buy valuation and $ 115 target price That target suggests the stock could gain 24% over the next twelve months.
“We believe Ambarella is on the verge of converting video into useful data at the edge of the network. We see this as a multi-year product cycle as the 100 million cameras currently installed are upgraded and previously unserved markets are reached,” said Cassidy.
Management says “the first wave” of Computer Vision-Enabled (CV) System-on-Chip (SoC) embedded in professional surveillance networks will be the main driver for new revenue growth. It should be noted that AMBA’s CV SoC devices are compatible. So when new CV SoCs are introduced, Cassidy argues that “customers can port their software to the new device and reduce time to market”.
Regarding the next wave, Cassidy noted that CV-based revenue will most likely come from the home surveillance market by the second half of 21, while the third wave will come from the automotive market.
“We’re seeing several new applications for CV-enabled devices. The announced AWS Panorama System leverages the previous announcement from Sagemaker NEO (January CY2020) and is an example of converting captured video into practical data to improve manufacturing safety, quality and efficiency, “explains Cassidy.
Additionally, the five-star analyst points to AMBA’s product demonstrations during CES starting Jan. 11 as a potential catalyst for stocks.
Cassidy With a 72% success rate and an average return of 24.9% per review, it more than deserves its place on the TipRanks list.
2021 could be just as strange as 2020, says BTIG Analyst Peter Saleh. He believes the negative impact of the COVID-19 resurgence will impact fundamentals in the first half of the year, with a strong rebound emerging in the second half.
That sales rebound is likely to be “uneven”, however, favoring the West Coast and the Northeast, as Saleh believes those regions operated under severe indoor restaurant restrictions for most of the year. “With the success of alfresco dining, the growth of off-premises and historically under-utilized dining rooms, we believe that most full-service restaurants will be able to hit pre-COVID sales when capacity drops to 50%. until 75% is increased. These regions are likely to recover more during the year, “he said.
In this sense, Saleh has supported Papa Johns To do this, he reiterated a buy recommendation and a target price of $ 115, which is the highest on the street. This target implies an upside potential of 36% compared to the current level.
“We remain bullish on Papa John’s stock as we see multiple opportunities to increase shareholder value and believe these levers could make the company an interesting acquisition candidate. During the pandemic Papa John’s this year benefited greatly and sales brought it back to pre-COVID levels, we anticipate several short- and long-term levers to increase shareholder value to unfold over the next year, “commented Saleh.
Based on PZZA’s ability to improve unit growth, increase restaurant and commissioner margins, reduce G&A costs, and increase leverage by up to $ 300 million, Saleh believes that the company is ready to outperform its competitors in this area.
As evidence of its stellar track record, Saleh has achieved a 75% success rate and an average return of 22.9% per review.