JP Morgan: 2 ‘Strong Buy’ stocks to snap up
The ‘Corona year’ confused us: a short, sharp recession last winter; a partial recovery last summer; and a retreat during the “second wave” of COVID-19 in the fall and winter. As the country enters the second spring of the pandemic, JPMorgan equity strategist Dubravko Lakos-Bujas made a number of observations about the options investors are facing. “We continue to believe that cyclical stocks will continue to trend higher as the business cycle strengthens, but we also see some expansion in market participation as high-growth and expensive momentum stocks have seen significant risk reductions … Growth stocks also become significantly risk free, decoupled from the momentum factor and now appear to be much less vulnerable (e.g. even to rising bond yields), ”noted Lakos-Bujas. In short, the strategist now sees opportunities for investors as economic growth appears to be picking up again. JPMorgan analysts translate Lakos-Bujas’ outlook into concrete recommendations and put two stocks on the table that look particularly convincing. According to these analysts, every name will see an increase in the next 12 months. After doing JPM’s stock picking on TipRanks’ database, we found that the rest of the street is right in the bull camp as well, as everyone has a “strong buy” consensus from analysts. Wheaton Precious Metals (WPM) The mining industry sounds like a good investment – and it often is. What could have more seals of approval than owning a gold mine? The miners also have some drawbacks: high overheads, unpredictable markets, and unproductive mines to name a few. Precious metals streaming companies like Wheaton exist to smooth out these (sometimes significant) bumps and add some degree of predictability to the metals markets. Streamers enter into agreements with the mining companies to buy some or all of their production at a predetermined price. The streamer can then sell the metals at the prevailing market price. Wheaton is one of the world’s largest precious metals streaming companies, with sales of $ 1.09 billion in 2020, a company record and a market cap of $ 18 billion. In its fourth quarter 20 financial report, the company showed several strong metrics. Operating cash flow was $ 208 million for the quarter and $ 750 million for the year. As previously mentioned, the company had annual sales and was able to reduce net debt to just $ 2 million. In addition, Wheaton increased its quarterly dividend to 13 cents per common share. Solid metal production ahead of the previously published 2020 guidelines underpinned these gains. JPMorgan analyst Tyler Langton likes what he sees and notes, “At current metal prices, the company should have cash flow of around $ 1.0 billion this year, which we believe will come from deals and / or dividends will be aligned. While precious metals stocks overall have been under pressure lately from rising interest rates and falling gold prices, we are still seeing an uptrend in WPM’s share price even at $ 1,600 / ounce. Gold price by the model… ”Langton is overweight (ie buy) WMP stocks and his target price of $ 58 suggests an uptrend of 53% is possible over the next 12 months. (To see Langton’s track record, click here.) The Strong Buy consensus rating for WPM shows that Wall Street believes this stock is as good as gold. The 12 final reviews here include 9 to buy and 3 to hold. The price of the stock is at $ 40.12, and the average target of $ 52.45 implies an upside of 30%. (See WPM stock analysis on TipRanks.) Smartsheet, Inc. (SMAR) Next up is Smartsheet, a SaaS company that provides cloud-based workspace management and collaboration products. These software products, which enable faster and more efficient teamwork for remote access, are obviously compatible with the current office work environment. Smartsheet announced its fourth quarter 21 results – and full fiscal year results – earlier this week, showing some strong gains in key metrics. Revenue for the quarter increased 40% year over year to $ 109.9 million. Return on sales was driven by a 49% increase in billing to $ 151.2 million and a 42% increase in subscription income to $ 101.1 million. The company had a strong positive cash flow of $ 9.9 million in net free cash flow for the quarter. This was a major turnaround from the prior-year quarter when cash flow was negative. For the full year, the company reported sales of $ 385.5 million, up 42% over the previous year. Here, too, special attention was paid to subscription income; That metric increased 45% to $ 352.8 million. A look at Smartsheet’s recurring income will help shed light on the company’s trust. Smartsheet tracks the annualized contract value (ACV) as a measure of gross income. Customers with ACV greater than $ 5,000 or more grew 31% year over year. with an ACV of $ 50,000 or more, it grew 58% year over year and with an ACV of $ 100,000 or more, it grew 68%. This shows that Smartsheet can rely on increasingly lucrative recurring income going forward. JPM 5-star analyst Mark Murphy is impressed with Smartsheet’s recent performance, enough to improve his stance on the stock from neutral to overweight (i.e. buy). “We hypothesized that this collaborative work management category is not an immediate type of pandemic-responsive purchase, but we hypothesized that it might attract attention later in the cycle as companies have more time to think about options To do work outside of Zoom and to get more insight into the distribution of your workforce after COVID-19…. We continue to believe that Smartsheet offers ample growth opportunity across multiple vectors and therefore has the potential to become part of the enterprise software structure within organizations, ”commented Murphy. Murphy has set a target price of $ 83 on the stock to support his buy recommendation, which is an uptrend of 32% over the next 12 months. (To view Murphy’s track record, click here.) A total of 8 analysts have rated Smartsheet stock. Her recommendations include 7 buys versus 1 hold. This gives the stock a strong buy analyst consensus rating. SMAR is currently selling for $ 62.86, and its average price target of $ 82 suggests the runway will trend up 30% this year. (See TipRanks SMAR stock analysis.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.