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2 trading stocks at rock bottom; Analysts say “buy”
We are currently in a volatile phase as stocks slide sharply after the start of the year. Big tech, which boomed during the pandemic and the move to remote working, is leading the declines. Investors have taken the action of the vaccination programs and now, driven by the belief and hope that economies will soon return to more normal foundations, they are looking for stocks that we will gain to return to a pre-corona ‘market situation. There is also inflation to consider. Oil prices have risen this year and this is a commodity whose price fluctuations are sure to trickle down the supply chain. Along with rising consumer demand, prices are expected to rise, at least in the short term. All in all, this is the time to obey the old market advice: buy cheap and sell high. With stock prices falling for now and volatility rising, the low is covered. The key is to find the stocks that will be prepared to win when the bulls run again. Wall Street’s analyst corps knows this and is not afraid to recommend stocks that may have bottomed. Using the TipRanks database, we identified two such stocks. Everyone is down significantly, but everyone also has enough upside to warrant a buy recommendation. TechnipFMC Plc (FTI) We start in the hydrocarbon sector, where TechnipFMC operates two areas in the oil and gas business: subsea and surface. Until recently, the company’s projects included the exploration and production of oil and gas, the operation of drilling rigs and platforms, the refining of crude oil, petrochemical production (ethylene, benzene, naphtha, hydrogen) and on- and offshore facilities for Liquefied natural gas (LNG). Earlier this month, the petrochemical and LNG activities were spun off as Technip Energy, a separate, independently traded company. TechnipFMC maintains subsea and surface hydrocarbon activities so the company can better focus its efforts. TechnipFMC may need that focus as it has been difficult for the company to gain a foothold in the equity markets. Like most of its peers, TechnipFMC saw its share value fall sharply last winter at the height of the coronavirus crisis, but the stock has only recovered about half of the losses since then. In the past 12 months, FTI stocks are down 53%. The fourth quarter results are released today after the market closes and should shed more light on the company’s full year performance. The company reported quarterly results in 2020 that are in line with last year’s results. The second quarter recorded a loss compared to the previous year; Q1 and Q3 both showed gains over the previous year. Analyst Sean Meakim reports on FTI for JPMorgan: “Since the Technip Energies spin-off resumed on January 1st after outperforming significantly in the first few days, FTI stocks have now declined … With Newly Found Visibility for an exit from “Spin Purgatory”, investors give FTI another look, with some still waiting until the post-spin … We see the completion of the spin as an opportunity for re-evaluation … which allows for wider investor participation . The monetization of TechnipFMC’s stake in Technip Energies helps the balance sheet and provides options for capital allocation. “To that end, Meakim rates FTI as overweight (i.e. buy) and its target price of $ 20 suggests the stock can more than double in the coming year, with upside potential of 172%. (To view Meakim’s track record, click here.) There are a total of 13 recent reviews of FTI, breaking down 8-5 in favor of buy versus hold. This makes the analysts’ consensus rating a moderate buy, and suggests that Wall Street generally sees opportunity here. The stock is priced at $ 7.35, and the average target price of $ 12.18 implies an uptrend of ~ 65% over the next 12 months. (See FTI stock analysis on TipRanks) CoreCivic, Inc. (CXW) Next, CoreCivic is a for-profit detention facility provider for law enforcement agencies, primarily the US government. The company owns and operates 65 prisons and detention centers with a total capacity of 90,000 inmates in 19 states plus DC. Effective January 1 of this year, the company completed the move from a REIT to a taxable C-Corporation. The move came without fanfare, and the company announced its fourth quarter and full year 2020 results earlier this month, which cover the preparation period for the move. CXW achieved sales of 1.91 billion US dollars for the “corona year” 2020, a small decrease (3%) from 1.98 billion US dollars in 2019. The annual profit amounted to 45 cents per share. In the fourth quarter, the company reported repayment of its long-term debt of approximately $ 125 million. CoreCivic’s current long-term debt is reported at $ 2.3 billion. The company had cash and cash equivalents of $ 113 million in cash and $ 566 million in available loans at the end of 2020. The high debt burden could explain the company’s stock performance, even if sales and earnings remain positive. The stock has fallen 50% in the past 12 months after never really recovering from the price losses caused by the Corona panic last winter. Noble Capital’s 5-star analyst Joe Gomes reports on CoreCivic and remains confident despite its obvious weaknesses. “We see the fourth quarter as a continuation of a trend in the last three quarters of 2020. Despite COVID, the sharp reduction in inmates, the reduction in normal court system operations, and other impacts, CoreCivic achieved relatively flat revenues and sequential EPS growth. We believe this illustrates the strength of the company’s operating model, ”noted Gomes. Consistent with his bullish approach, Gomes keeps his outperform valuation (i.e. buy valuation) and price target of $ 15 unchanged. With this goal, the upside potential is 97%. (To see Gomes’ track record, click here.) Some stocks are flying under the radar, and CXW is one of them. Gomes’ is the only recent analyst rating of this company and it is extremely positive. (See CXW stock analysis on TipRanks.) To find great ideas for trading rundown 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 analysts presented. 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.