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TOP PICK
Stockchase Research Editor: Michael O'Reilly MOS is a US manufacturer and world's largest producer of nutrients used in fertilizer for markets in North America and internationally. Recently reported revenues were up 37% and margins ballooned by 193%. It trades at 9x earnings, compared to peers at 21x. With good growth prospects its PEG ratio is just over 1.0 and it is trading at 1.3x book. It pays a small dividend that is backed by a payout ratio of 35% of cash flow. We would buy this with a stop loss at $21, looking to achieve $39.50 -- potential upside over 17%. Yield 0.89% (Analysts’ price target is $39.37)
chemicals

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TOP PICK
Stockchase Research Editor: Michael O'Reilly XRX is the US leader in print management services, holding over 20% of the market share. Along with that success, the company has been accelerating its digital presence and automation processes, 3D printing and cleantech. Recently reported EPS of $0.47 easily beat analyst calls for $0.37. Revenues were up 22% and margins expanded, creating a jump of $198 million in free cash flow. One can only expect these to expand further as schools and businesses return post-pandemic. It trades at 17x earnings compared to peers at 40x and is trading under book value. It pays an excellent dividend, backed by a payout ratio that is under 75% of cash flow (under 45% based next year earnings expectations). We would buy this with a stop loss at $18.50, looking to achieve $30 -- upside potential over 22%. Yield 4.17% (Analysts’ price target is $53.75)
misc industrial products

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TOP PICK
Stockchase Research Editor: Michael O'Reilly DLTH is a US based retailer of workwear through 62 outlets and a growing online platform. Recently reported revenues were up 20% over the year and margins expanded. A new CEO is onboard bringing years of experience in retail operations. It trades at 18x earnings, compared to peers at 30x and with good growth prospects, it has a PEG ratio under 1.0 -- good value. We would buy this with a stop loss at $11, looking to achieve $21 -- upside potential over 31%. Yield 0% (Analysts’ price target is $21.00)
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PAST TOP PICK
(A Top Pick Aug 06/20, Up 84.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with GOOG is progressing nicely. We recommend trailing up the stop (from $2200) to $2600. If triggered, this would all but guarantee a minimum investment return over 73%.
Business Services
COMMENT
Market push and pull. Still constructive on markets, driven by corporate profits much stronger than expected. Case rates are going up, but hospitalizations aren't. Doesn't see severe lockdowns of a year ago, because the remedy of a vaccine is out there. Valuation multiples are the same as in January based on 2021 earnings. This tells her that what's driven the markets up is not multiple expansion, but corporate profits, and this is encouraging.
Unknown
COMMENT
Use for corporate profits. Companies will spend. Capex is going up and quite strongly, especially in the areas that serve commodity, energy, and mining sectors. Spending on automation and the cloud. Government is also spending on infrastructure and renewables. Utilities, too, might need to expand their reach. A lot of catalysts for corporate spending. As companies get more confident, they'll loosen the purse strings. Important, as one company's spending is another company's revenue. It's all interrelated.
Unknown
COMMENT
Where are we as the sectors rotate to grind the markets higher? Last month or two, back to growth stocks. Back in February, when interest rates shot up, the reopening trade was positively impacted. Now that interest rates have backed off, resurgence back to growth names, as in secular growth and not cyclical growth. You must assess the valuations you're paying. Pick your points. On a pullback, that's an opportunity for an investor to start building a position in a company they've been looking at.
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