The Consensus Is In: Buy These 4 Stocks
I love attending investment conferences. Investors gather to discuss the latest and most efficient methods of profiting from the financial markets. Encouraged and guided by the speakers, who are recognized experts in their discipline, the discourse among the attendees often reveals the current state of the markets. Knowing the consensus provides a great base for further research in that direction.
#-ad_banner-#In October, Barron’s hosted their 12th annual Art of Successful Investing (AOSI) conference in New York City. The presenters read like a laundry list of the leading investment professionals. The consensus was that the stock market indexes are fully valued, despite the multitude of stocks trading in the deep-value zone. A Barron’s article recapping the conference called this disconnect, “a growing chasm in the stock market between overvalued shares and those that get little love.”
However, the conference wasn’t just useful for a thousand-mile-high view of the market — the stock picking gurus in attendance named many stocks trading in the value zone.
Here are my favorite names identified at the conference.
Carnival Corp (NYSE: CCL)
Shares of this cruise ship operator fell off their 52-week high toward the middle of 2016, but have recently recovered to a similar level.
The price drop was mostly due to a $40 million fine levied by the Justice Department for intentional and illegal waste dumping. The one-time event caused investors to dump shares, creating an ideal buying opportunity.
Carnival has also maintained or increased its revenue yield guidance and announced several initiatives designed to improve yields into the future.
Importantly, the initiatives include the addition of 17 new ships by 2020, which should allow them to keep customer demand high. Carnival has promised a 10% return on capital by fiscal 2018.
Action To Take: Buy now in the $53 zone with stops at $49.23 per share.
Celestica (NYSE: CLS)
This manufacturing services company’s stock price has fallen from the highs but has begun a climb back over the last several trading sessions. In this way, the daily chart is remarkably similar to Carnival Corporation.
Celestica boasts $6 billion in annual revenue with climbing profit margins. The company recently reported better-than-expected earnings and its net cash position is growing.
Plans are in the works to increase front-end investment and evolve the customer portfolio to drive growth.
Action To Take: Buy now under $12.50 per share with first stops at $10.73 per share. My target price is $17.00 per share.
PTC (Nasdaq: PTC)
Another stock with a strangely similar chart pattern of the previous two value names, PTC is a global software company that boasts a suite of products for the Internet of Things. In fact, the company is currently regarded as the leader in the Internet of Things revolution.
The internet of things (IoT) describes a movement in the technology space in which manufacturers are creating products that are directly connected to the internet without having to use a computer. IoT helps in servicing equipment and systems automatically. And this doesn’t have to mean complex systems — it could be as benign as a milk container in your refrigerator automatically ordering its replacement when the milk runs low. In other words, this is our future!
PTC boasts a $5 billion valuation, but recently missed EPS and revenue guidance. However, booking beat high-end estimates thanks to PTC’s business model transition.
Action To Take: Buy now in the $49 per share zone with a target price of $56.00 per share. Initial stops are suggested at $42.33 per share.
Evertec (NYSE: EVTC)
Evertec is a merchant transaction processing company with a market cap just over $1 billion. Once again, the share price shows a similar pattern to the other stocks on this list. Prices pushed to a high just above $18.50 per share, sold off, then started climbing higher.
The issue investors have with the shares is the fact that it is a Puerto Rico-based company. Puerto Rico has significant financial problems, making investors skittish. However, President Obama recently signed legislation helping the commonwealth with debt reconstruction.
Currently, Evertec trades at approximately ten times estimated 2016 earnings. When compared to the fact that similar companies have been acquired for 30 times earnings, the value becomes self-evident.
It’s also worth noting that Puerto Rico has a large unbanked population that will transition to credit and debit cards. This expected growth, and the fact that the company is looking at acquisitions in South and Central America, paints a very bullish picture for the shares.
Action To Take: Buy now in the $18 per share zone. My target price is $25.00 per share and stops are suggested at $14.44 per share.
Editor’s Note: Tech companies have a history of turning stockholders, secretaries and even janitors into “overnight” millionaires. In 2017, innovations in virtual reality will do the same for owners of these 2 stocks…