The Daily Top Stock Picks
Today's stock picks by Mike Philbrick and Gordon Reid are ZUT-T, CGL-T, HXE-T, BAC-N, HON-N, LEA-N.
TOP PICK
These top picks are conservative calls due to the higher volatility of inflation and the markets. He often does not own the ETF's themselves but uses the underlying Futures market. Supply chain problems continue to add to the volatility. A utilities ETF is conservative since it gives reliable revenue streams, therefore higher cash flow and more resilience to global shocks.
E.T.F.'s
$27.450
No
TOP PICK
Own it as gold bullion. It helps diversify the portfolio. Bullion helps protect against both inflation and deflation and is more resilient in a low growth environment.
E.T.F.'s
TOP PICK
It is a capped fund and a play on energy which faces a bumpy road. The longer term secular has a positive skew to energy stocks. Because of ESG and the environmental concerns we have under-invested in the production and development of oil and gas and therefore there is a tightness in the supply chain. Start to pick at them, take your time and be patient. Use cyclical draw-downs to build and maintain portfolio positions.
E.T.F.'s
TOP PICK
The poster bank for investment are most levered to higher interest rates and will do the best as rates rise. Their last report was positive, talking about strong loan growth. If the US Fed navigates a soft landing, BAC will do very well. If there's a recession, that will hit loan growth in the banks, but he sees a soft landing. (Analysts’ price target is $42.43)
banks
TOP PICK
A broad industrial that makes home safety products but also they make avionics and aerospace instrumentation. Their order book is at a record backlog of $29.5 billion. Their latest earnings beat earnings and revenues. They reaffirmed growth for 2022. Trades under 20x earnings. Solid balance sheet and dividend. (Analysts’ price target is $206.67)
INDUSTRIAL PRODUCTS
TOP PICK
Are a tier-one supplier of car OEMs, making seating systems and advance power management. The car industry faces chip shortages, so Lear is effected by the number of units it can deliver to carmakers, but this backlog is starting to decline and normalization is happening. Another tailwind if that electrification will boost the power management business, which boasts high margins. Lear has a good 8% free cash flow. Buy, hold and be patient. (Analysts’ price target is $167.27)
Automotive
TOP PICK
Company provides maximize exposure to energy bull market (drilled 9 of the 10 best wells in most economic play in North America).
Trading at 1.9x cash flow & 38% free cash flow.
Pledged to buyback stock and return 75% of cash flow to shareholders.
5x multiple of current share price, or $18 share price target is possible.
Very under priced energy stock.
oil / gas
TOP PICK
Single asset company (oil) with large amount of torque/exposure to energy prices.
35 years of inventory (oil reserves) and only paying for 2 years at current share price.
Expecting 50% of free cash flow next quarter and 100% this time next year.
Expecting a 6x multiple on current share price which implies a $42 share price.
Large share price discount being presented to investors(~2.5 cash flow).
oil / gas
TOP PICK
Board recently committed to at least 60% of free cash flow to share buybacks & dividends this year and 2023.
Looking into a significant issuer bid to buyback over 10% of their stock.
Currently trading at ~1.6x cash flow and 39% free cash flow yield.
Expecting company to debt free next year.
Looking for a 5x multiple on current share price $26.
oil / gas
TOP PICK
Bed Bath & Beyond Inc. and subsidiaries (the 'Company') is an omnichannel retailer that makes it easy for its customers to feel at home. The Company sells a wide assortment of merchandise in the Home, Baby, Beauty and Wellness markets. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond. Social media mentions are up 13% in the past 24h.
specialty stores
TOP PICK
Silvergate Capital Corporation is a registered bank holding company for Silvergate Bank, headquartered in La Jolla, California. Silvergate Bank is a commercial bank that opened in 1988, has been profitable for 22 consecutive years, and has focused its strategy on creating the banking platform for innovators, especially in the digital currency industry, and developing product and service solutions addressing the needs of entrepreneurs. The Company's assets consist primarily of its investment in the Bank and the Company's primary activities are conducted through the Bank. Social media mentions are up 133% in the past 24h.
banks
TOP PICK
Verizon is one of the largest communication technology companies in the world. Verizon Communications Inc. was formed on June 30, 2000 and is celebrating its 20th year as one of the world’s leading providers of technology, communications, information and entertainment products and services. Headquartered in New York City and with a presence around the world, Verizon generated revenues of $128.3 billion in 2020. The company offers voice, data and video services and solutions on its award winning networks and platforms, delivering on customers’ demand for mobility, reliable network connectivity, security and control. Social media mentions are up 157% in the past 24h.
telephone utilities
TOP PICK
Stockchase Research Editor: Michael O'Reilly This 720,000 boepd producer saw a four fold increase in net earnings over the year. The company has announced a deal to divest their UK and Norwegian assets for over $400 million. The new CEO has pledged to improve the company's safety record. It currently trades at 10x earnings and 1.5x book value and supports a ROE of 24%. It pays a good dividend, backed by a payout ratio under 40% of cash flow. We recommend placing a stop-loss at $32, looking to achieve $50 -- upside potential over 24%. Yield 4.79% (Analysts’ price target is $49.95)
integrated oils
TOP PICK
Stockchase Research Editor: Michael O'Reilly This North American producer of packaging and tissue products recently beat earnings estimates by 50%. It trades under book value and only 7x earnings -- good value here. Its dividend is strong and growing, backed by a payout ratio under 40% of cash flow. We recommend placing a stop-loss at $8.00, looking to achieve $13.50 -- upside potential over 38%. Yield 5.3% (Analysts’ price target is $13.31)
east coast forestry
TOP PICK
Stockchase Research Editor: Michael O'Reilly This supplier of heavy equipment maintenance and service has had issues during the pandemic with staffing, but has been able to weather the effects of rising costs and still generate positive free cash flow. It trades at 10x earnings, 1.5x book, and supports a ROE of 18%. It pays a small dividend backed by a payout ratio under 20% of cash flow. We recommend placing a stop-loss at $12.00, looking to achieve $23.00 -- upside potential over 45%. Yield 2.1% (Analysts’ price target is $23.25)
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What are the best stocks to buy today?
According to Mike Philbrick and Gordon Reid, the best stocks to buy today are ZUT-T, CGL-T, HXE-T, BAC-N, HON-N, LEA-N.
