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Reuters
China’s Xpeng surges 67% on U.S. debut, raises $1.5 billion in IPO
Shares of Xpeng, which counts Chinese e-commerce titan Alibaba
and Xiaomi Corp <1810.HK> among its backers, opened at $23.10 per American Depositary Share (ADS), up from the raised offer price of $15.00 per ADS. Earlier on Thursday, Xpeng increased the size of its U.S initial public offering by more than a third to about $1.5 billion, as global investors race to back companies promoting cleaner technology. The IPO, which is the third major listing in New York by Chinese EV companies in the past two years, comes as share prices of EV makers including Tesla Inc and Nio Inc have surged in recent months. -
MarketWatch
Investors should be wary of Warren Buffett’s crash warning
“They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice,” Buffett warned Berkshire Hathaway stockholders back in 2000, regarding those gambling on sky-high internet stocks. The tech-heavy Nasdaq Composite Index (COMP) which peaked at 5,049 shortly before Buffett sent out his stockholder letter, promptly collapsed over the next 2½ years by 75%. Today the stocks in the Nasdaq Composite Index are valued in aggregate at a wild, sky-high $17 trillion.
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MarketWatch
Thinking about moving to a state with lower taxes? These are the mistakes to avoid
TAX GUY If you’re contemplating moving to a different state, taxes may be a deciding factor. This column explains how to evaluate the tax picture in states you may be considering. Investigate all state and local taxes If your intent is to relocate to a lower-tax state, it may seem like a no-brainer to move to one that has no personal income tax.
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TipRanks
Billionaire Israel Englander Goes Big on These 3 Penny Stocks
Penny stocks, they divide market watchers like no other. Some investors steer clear of these tickers going for less than $5 apiece, as poor fundamentals or overwhelming headwinds could be keeping them down in the dumps.On the other hand, penny stocks lure the more risk-tolerant. Not only does the bargain price tag mean you get more bang for your buck, but also even minor share price appreciation can yield huge percentage gains. The implication? Major returns for investors.Based on the above, weeding out the long-term underperformers from the penny stocks going for gold can pose a significant challenge. In this case, the activity of legendary stock pickers can provide some inspiration. Among these Wall Street titans is Israel “Izzy” Englander. Englander serves as the Chairman, CEO and Co-Chief Investment Officer of Millennium Management, the hedge fund he founded in 1989. Speaking to his impressive track record, he took the $35 million the fund was started with and grew it into $73 billion in assets under management. With this in mind, we used TipRanks’ database to find out what the analyst community has to say about three penny stocks that Englander’s fund snapped up recently. As it turns out, each ticker has received only Buy ratings. Not to mention substantial upside potential is also on the table.Kindred Biosciences (KIN)Hoping to bring innovative biologics to veterinary medicine, Kindred Biosciences believes pets deserve the same kinds of safe and effective medicines that humans enjoy. At $3.78, Wall Street pros believe its share price could reflect the ideal entry point given everything the company has going for it.Englander is among the KIN fans. During Q2, Millenium pulled the trigger on 821,752 shares. As for the value of this new position, it comes in at $3,690,000.Also singing the healthcare name’s praises is Cantor analyst Brandon Folkes. “KIN has a pipeline of very good assets with the potential to generate significant value if they are brought to market,” Folkes explained. The analyst points out that there has been a strategy and priority shake-up over the last 12 months, but he believes the company’s “pipeline of novel animal health drugs will drive long-term shareholder value beyond levels reflected in the current stock price.”The company continues to advance its biologics programs, including IL-31 and IL-4R antibodies for canine atopic dermatitis, KIND-030 for parvovirus in dogs and KIND-510a for the control of non-regenerative anemia in cats, together with long-acting versions of certain molecules, “all of which could be best-in-class large-market opportunities,” in Folkes’ opinion.Adding to the good news, Folkes sees its partnerships as helping to unlock value. These partnerships include a manufacturing agreement with Vaxart to manufacture Vaxart’s oral vaccine candidate for COVID-19. Summing it all up, Folkes stated, “With animal health companies trading at 4.5-8.5x estimated 2021 revenue, and with business development playing a significant role in driving long-term growth for these larger animal health companies, we believe KIN’s pipeline offers a unique suite of meaningful revenue opportunities for larger companies, if KIN can deliver on its pipeline’s potential. We believe KIN’s stock remains undervalued at current levels, and as 2020 progresses, we expect pipeline advancements to drive the stock higher.”To this end, Folkes rates KIN an Overweight (i.e. Buy) along with an $11 price target. Should his thesis play out, a potential twelve-month gain of 191% could be in the cards. (To watch Folkes’ track record, click here)Other analysts don’t beg to differ. With 4 Buy ratings and no Holds or Sells, the word on the Street is that KIN is a Strong Buy. The $11.50 average price target is more aggressive than Folkes’ and implies 208% upside potential. (See KIN stock analysis on TipRanks)Agenus Inc. (AGEN)Next up on our list is Agenus, which develops an immuno-oncology portfolio that includes checkpoint antibodies, cell therapies, vaccines and adjuvants. While this name, which changes hands for $4.02 apiece, has stayed relatively under the radar, some believe big things could be on the horizon.During Q2, Millenium made a major purchase. Scooping up 2,339,149 shares, the hedge fund’s new AGEN position is valued at $9,193,000. 5-star analyst Mayank Mamtani, of B.Riley FBR, has also been impressed. On August 6, AGEN provided an update regarding the progress of its pipeline. Its lead programs, AGEN2034 or balstilimab (bali; anti-PD1) and AGEN1884 or zalifrelimab (zali), are on track for separate BLA submissions, both in combination as well as bali as a monotherapy by YE20, in all-comer refractory/relapsed (r/r) cervical cancer.“Of note, within r/r cervical cancer, zali/bali is clinically de-risked and meaningfully differentiated relative to competing approaches in Merck’s Keytruda and/or Iovance’s TIL-based cell therapy; further, we view zali/bali to serve as an effective fast-follower to BMY’s ipi/nivo across several tumor types with pricing optionality a key strategic leverage for AGEN to deploy upon market entry in 2021,” Mamtani explained.On top of this, AGEN1181, its multi T-cell and CTLA-4 engaging antibody which was Fc-engineered to overcome a genetic polymorphism in the CD16 allele, produced a strong result in the Phase 1 trial in MSS r/r endometrial cancer. After there was a CR generated by the AGEN1181 1 mg/kg monotherapy dose, AGEN1181 0.3 mg in combination with zali had a PR with ~80% tumor shrinkage change into a CR, as evidenced by a PET scan.“We are encouraged by AGEN identifying accelerated path to market by pursuing PD-1 refractory melanoma as well as ‘cold’ tumors in MSI-stable endometrial and colorectal cancer, and hepatocellular carcinoma, possibly in Phase 2 single-arm settings, as well as realize full potential longer term in large prevalence tumor types such as NSCLC and prostate cancer. On latter, AGEN’s intent to establish AGEN1181 as preferred checkpoint inhibitor for combination therapy was recently validated by AACR’20 abstract demonstrating synergistic benefit with several therapeutic modalities,” Mamtani added. Bearing all of this in mind, Mamtani rates AGEN a Buy along with an $8 price target, which implies a 99% upside from current levels (To watch Mamtani’s track record, click here)Looking at the consensus breakdown, it has been quiet when it comes to other analyst activity. In the last three months, only 2 analysts have issued ratings. However, as they were both Buys, the word on the Street is that AGEN is a Moderate Buy. (See Agenus stock analysis on TipRanks)Marinus (MRNS)Last but not least is Marinus, which works on neuropsychiatric therapeutics and is considered a leader in orphan epileptic disorders. Currently going for $1.76 apiece, several members of the Street believe that it’s time to get in on the action.Englander is standing squarely with the bulls on this one. The billionaire’s fund bought up 934,155 shares in Q2. Reflecting a new position, the value of the holding lands at $2,373,000.Ahead of a fast-approaching data readout, Oppenheimer analyst Jay Olson is on board. Pivotal Phase 3 Marigold data for ganaxolone (GNX) in CDKL5 Deficiency Disorder (CDD) is scheduled for release any day now. The last patient visit for this trial took place in July, and the primary endpoint is seizure frequency reduction over 17-weeks for GNX versus placebo. “Prior Phase 2 open-label trial data show seizure frequency reduction of -44% at day-28 (N=7) and -54% at 6-months (N=4), suggesting durability, and low discontinuation rate of less than 10% in Phase 3 MARIGOLD suggests favorable tolerability,” Olson commented.However, Olson points out that this data release is being “overshadowed by long-term value drivers.” The first of these is the RSE pivotal Phase 3 trial of GNX, the design and dosing of which was confirmed in the EOP2 FDA meeting. MRNS still expects to kick off the trial in Q3 2020. Olson noted, “We view pivotal Phase 3 design as similar to positive Phase 2 trial while benefiting from longer dosing with 12 hours exposure vs. 8 hours prior. MRNS expects topline data in 1H22.”If that wasn’t enough, MRNS announced that patient screening had begun for the Tuberous sclerosis complex (TSC) Phase 2 trial of GNX, with the topline readout slated for 1Q21 with Allo-S biomarker analysis.Given everything MRNS has going for it, Olson rates the stock an Outperform (i.e. Buy) along with a $6 price target. This suggests that shares could move 237% higher in the next year. (To watch Olson’s track record, click here)It turns out that other analysts also like what they’re seeing. Only Buy ratings, 4 to be exact, have been received in the last three months, so the consensus rating is a Strong Buy. In addition, the $6.50 average price target indicates 263% upside potential. (See Marinus stock analysis on TipRanks)To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.This article was originally posted on TipRanks.
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Reuters
United Airlines announces biggest pilot job cut in its history
United Airlines
is preparing for the biggest pilot furloughs of its history after announcing on Thursday the need to cut 2,850 pilot jobs this year, or about 21% of the total, without further U.S. government aid. Airlines, reeling from the devastating impact of the novel coronavirus pandemic on air travel, have asked the U.S. government for another $25 billion to cover employee payroll through March. The first tranche, which banned any job cuts until Oct. 1, expires at the end of September, but talks in Washington have stalled as Congress has struggled to reach agreement on a broader coronavirus assistance package. -
Bloomberg
Rolls-Royce Is Fast Becoming a British Calamity
(Bloomberg Opinion) — When the employees of Rolls-Royce Holdings Plc read that coronavirus lockdowns and home-working have ignited a technology boom, they could be forgiven for weeping.The company makes the jet engines that power large passenger jets, which is one of the most technically complex engineering tasks known to man. And yet, most of Rolls-Royce’s products are grounded right now because hardly anyone’s flying. On Thursday the British manufacturer revealed the devastation inflicted on its business by Covid-19 travel restrictions: The 5.4 billion-pound ($7.1 billion) loss for the six months to June was one of the biggest profit shortfalls in U.K. corporate history.A separate announcement that Rolls-Royce’s chief financial officer, Stephen Daintith, is jumping ship to Ocado Group Plc, an online grocer, compounded the gloom. It’s depressing that e-commerce is seen as a better destination than advanced engineering.But you can’t blame Daintith for grabbing a parachute. Ocado’s shares have doubled this year, valuing the company at almost 19 billion pounds. Rolls-Royce — the pride of British manufacturing — is worth a quarter of that, having lost two-thirds of its value in eight months. Technology companies aren’t all equal in this market.Incredibly, the 5.4 billion-pound loss wasn’t even the most troubling number in Rolls-Royce’s financial statement. Its balance sheet liabilities now exceed its assets by 8 billion pounds. This partly reflects big swings in the value of currency derivatives, rather than the underlying health of the business. Nevertheless, the massive net liabilities are by far the largest of any European company, according to Bloomberg data. It’s a terrible look for a company that spends years developing new engines, and then makes most of its money from long-term service agreements. Customers need to be confident that it will be around to meet those maintenance obligations.While Rolls-Royce’s airline customers have their own pandemic problems, they’ve good reason to worry about the financial health of a key supplier. When the coronavirus crisis is over, Rolls-Royce will need to invest heavily in new technology that cuts carbon emissions. It doesn’t have the balance sheet to do that. There’s enough money to keep the lights on for the next 12 months, including 8 billion pounds of cash and undrawn credit facilities. But if there’s a second virus wave that prevents airlines from resuming long-haul flying, things might get tight in the autumn of 2021, when Rolls-Royce must repay or replace a 1.9 billion-pound revolving credit facility. The accounts include a warning of material uncertainty over whether the company can continue as a going concern if the aviation recovery takes longer than expected.Rolls-Royce is doing all it can to strengthen its defenses. Assets valued at more than 2 billion pounds have been marked for sale. But this is hardly a seller’s market. The company continues to burn through cash, and its net indebtedness (including lease liabilities) is projected to rise to almost 6 billion pounds by the end of this year. Returning to a positive cash position will take years.A large equity raise looks unavoidable to restore confidence. Unless the share price recovers a lot before then — which is unlikely — shareholders who don’t participate will be heavily diluted.The group is considering industrial partnerships to share the burden of developing of its next-generation Ultrafan engine — Rolls-Royce’s engineering pride and joy. But if things get much worse, questions will be asked about whether it should remain an independent company in such a capital-intensive industry. A merger — whether with British defense manufacturer BAE Systems Plc or another engine maker — would be a less precarious path to recovery.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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TheStreet.com
Seinfeld Is Wrong, the Big Apple’s Biggest Threat Is Not Going Away
Far be it from me to weigh in on a debate between two noted investors, but when it comes to New York City, like most residents, I have an opinion. Living in New York in the 1990s showed me the wonderful insights Seinfeld, though filmed in Los Angeles, had about our great city. New York City — and those companies that exist to own its property, especially commercial — is in really bad shape right now.
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Bloomberg
Nikola Founder Giving 50 Employees $233 Million of His Stock
(Bloomberg) — Trevor Milton, the founder and chairman of Nikola Corp., is giving the first 50 employees of the electric-truck startup 6 million of his own shares after making a promise when he hired them.“When I first started this company I was looking for the best employees in the world and it was a huge risk,” Milton said in a video posted on his Instagram page. “The likelihood of us ever succeeding was like next to none and luckily I found an incredible group of employees that started with me from day one.”Nikola said the grant of options for shares of common stock won’t dilute shareholders and there will be no compensation by the company to the founder. Employees, meanwhile, are subject to a lock-up requirement through Nov. 30. The potential stock value of options he’s handing over in the Phoenix-based company is currently worth about $233 million.Shares in Nikola have jumped since it started trading on the Nasdaq via a reverse merger in early June, driven by investor appetite for electric-vehicle manufacturers, even as the company has yet to produce its first vehicle.Milton, a self-described serial entrepreneur who flunked out of high school and then passed the General Educational Development test, has used social media to promote the firm, drawing parallels to Elon Musk, the world’s fourth-richest person. Milton, 37, is worth $4.6 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people. That figure will drop once the share transfer is complete.He’s said on Twitter that he has no plans to sell his own stock and he has approval from Nikola’s board to borrow against his stake to add to his position.“It could be worth billions in the future if we do well,” Milton said in Wednesday’s announcement. “Who knows where it will go. But I am making good on my promise.”Not everyone will be delighted by his gift. Milton said a couple of those first employees have since departed.The company has garnered its share of skeptics. In June, as the shares surged to almost $80, a frenzy of short sellers sent Nikola borrowing fees soaring as it projected zero revenue for 2020. The stock has since gone back to $38.82, with its short interest at about 2% of shares outstanding, down from 11% in June, according to IHS Markit Ltd. data.While the success of the company developing hydrogen fuel cell-powered semi trucks has boosted Milton’s fortune, some of its early investors are also reaping the benefits. Among them is the Agnelli family’s CNH Industrial NV, Jeff Ubben’s ValueAct Capital Management, South Korea’s Hanwha Group, and Nikola’s first backer: Worthington Industries Inc., the metals manufacturer where Milton used to work.(Updates with details of gift in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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TipRanks
3 Big Dividend Stocks Yielding Over 5%; Truist Says ‘Buy’
Right before the corona crisis, the NASDAQ peaked at 9,817. It closed yesterday at 11,665. The tech-heavy index has been setting records consistently since mid-June. The S&P 500’s post-crash performance has been almost as good.It’s clear that investors are in a buying mood. Despite all of the uncertainty in recent weeks – the resurgence of COVID-19, the upcoming Presidential election, the stop-and-go economic progress – stocks are rising. Truist (formerly SunTrust) chief market strategist Keith Lerner sees the current rally as the real deal, not just another bubble, and reflective of a general optimism. He writes, “[The] stock market is about anticipating the future and we feel in about a year or so most of the population will be immunized with a vaccine, and the economy will begin to return to accelerated growth.”Lerner directly addresses bubble fears in his comments on the NASDAQ. Remembering how that index soared in the runup to the dot.com bubble collapse, Lerner sees reasons for investors to remain calm. He notes that while the NASDAQ is 22% above its long-term trend, in the late 90s the index reached 280% above the trend line. Lerner adds that tech stocks doubled their value in 2000, just before their bubble burst – but now are up only 35% in the past 12 months. “Absolute valuations are elevated”, he says, “but are less than half of the levels reached back then.”Lerner’s firm is backing him on this call. Truist analysts are pinpointing three stocks with plenty of potential for strong ROI, mainly through dividends. We’ve pulled up the details from the TipRanks database, to find out what lies behind these calls.SL Green Realty Corporation (SLG)The first dividend pick from Truist is New York City’s largest commercial landlord. SL Green Realty is a real estate investment trust (REIT), and its primary investments are office buildings and shopping centers lower Manhattan. The company owns addresses on some of the area’s most famous thoroughfares, including Park Avenue, Lexington, and Avenue of the Americas. The company owns 41 million square feet in 96 buildings in one of the world’s hottest real estate markets.Judging by the earnings data, the corona crisis simply passed SLG right by. The company saw an EPS spike in Q1, while Q2’s results fell back to historical levels. The second quarter saw earnings per share of 74 cents, and funds from operations per share of $1.70.Anticipating a worse hit than it actually felt, SL Green took protective steps at the beginning of the corona epidemic and shutdowns to defend its cash flow – including a sharp reduction in the dividend. Management cut the payment from 89 cents per share to 29.5 cents share, with the lower dividend taking effect in March. Since then, the company has maintained its monthly payment at the lower level. The 29.5 cent dividend gives an annualized payment of $3.54, and a high yield of 7.5%.Truist analyst Ki Bin Kim notes that SL Green inhabits a niche in transformation, writing, “The argument over the future of office space in a post COVID-19 world may not be adequately settled until physical occupancy rebounds and finds its level, likely well into next year.”Kim goes on, however, to explain why SL Green makes an attractive pick-up for investors: “[We] think SLG offers compelling value for longer-term investors with a more balanced outlook for the future of office space (likely many more workers alternating between home and the office, but few strictly at home). In the meantime, strong liquidity mitigates above-average leverage…”The analyst puts a Buy rating on the stock, and his $75 price target indicates room for 54% upside growth in the next 12 months. (To watch Kim’s track record, click here)Overall, Wall Street is cautious where Truist is bullish. SLG gets a Hold rating from the analyst consensus view, based on 1 Buy and 4 Holds set in recent weeks. Yet, the stock’s $57.20 average price target suggests room for 14% growth from the current trading price of $48.82. (See SLG stock analysis on TipRanks)Ryder System, Inc. (R)The next stock of our list of Truist picks is Ryder System, the consumer-oriented truck rental company. Ryder’s trucks and vans are only part of the business model, however – the company’s largest segment is fleet management, and the company also provides transportation management, supply chain management, and full-service leasing and maintenance. Ryder operates in the US and Canada.The company was hit hard by the coronavirus crisis and economic downturn. Lockdown policies kept trucks in the depots and cut far back on the revenue streams, turning EPS negative in both quarters of 1H20. Q2, which included economic restarts, saw some mitigation of the net loss, however, which was less sever than expected, and further EPS loss narrowing is expected for Q3.Through all of this, Ryder management has maintained its dividend payment. The company takes pride in being a true dividend champion, and the Q3 declaration, made in July for a September payout, marks 44 years – 176 consecutive quarter – without missing a dividend. The payment is only 56 cents per common share, but that gives an impressive yield of 5.6%. That is almost triple the average yield found among S&P-listed companies.Stephanie Benjamin, 5-star analyst with Truist, underlines some fundamental strength of R shares in the current climate. She writes, “[We] understand there is frustration surrounding the depreciation headwinds, we think it is important to look at the positives from the quarter, mainly: (1) 2Q adjusted EBITDA exceeded expectations, (2) raised FCF expectations, (3) the hardest hit COVID businesses improved throughout 2Q, and (4) cost-cutting remains a key priority.”In line with her comments, Benjamin rates the stock a Buy. Her $48 price target implies a 15% upside for the coming year. (To watch Benjamin’s track record, click here)Overall, the analyst consensus rating is a Moderate Buy, based on 2 Buys, 1 Hold, and 1 Sell. The stock is selling for $41.61, and the $40.50 average price target suggests the stock is poised to stay range bound. (See Ryder stock analysis on TipRanks)Regency Centers Corporation (REG)Florida-based Regency Centers, another REIT, is the last stock on today’s list of Truist picks. Regency is a major owner of retail space, with 408 properties around the US. The company specializes in shopping centers anchored by grocery stores, and boasts over 52 million square feet of leasable space. Regency saw $1.13 billion in total revenues for 2019, putting the company in a strong position when the coronavirus hit.That strong position – and the long-term nature of many of the company’s leases – stood it in good stead, helping keep Q1 earnings in line with previous quarter. Regency did not see a major slip in earnings and revenue until the second quarter of 2020. Q2 EPS came in at 61 cents per share, down 37% sequentially. The outlook for Q3 is somewhat better, predicting 79 cents EPS.The company has raised its dividend by a half-cent per common share as 2020 started, and has kept the new dividend. At 59.5 cents per common share, REG’s dividend has a 5.8% yield. The yield is impressive enough, but more so is the company’s 11-year history of consistent payments and gradual dividend increases.Ki Bin Kim, quoted above on SLG, covered this REIT for Truist, and liked what he saw. He wrote of the stock, “[Keep] in mind that the surface results are also a reflection of management’s likely conservative stance (on reserves) and not a concrete mark on quality, long-term risk, terminal value or re-leasabilty, which is REG’s advantage. Lastly, REG didn’t cut the dividend (and probably doesn’t need to) and the balance sheet is conservatively levered, which matters.”Kim’s Buy rating is supported by a $48 price target, suggesting a 17% upside in the coming year. (To watch Kim’s track record, click here)All in all, Regency has a Moderate Buy analyst consensus rating, based on 11 reviews including 4 Buys, 6 Holds, and 1 Sell. Shares are selling for $41.02 and the average price target of $45.50 implies an 11% upside from current levels. (See REG stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.This article was originally posted on TipRanks.
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TipRanks
Analysts Say These 3 Stocks Are Their Top Picks for 2020 and Beyond
The markets are setting new records with an almost boring regularity. The tech-heavy NASDAQ is well above 11,600, and the S&P 500 has tested – and broken – resistance at 3,400. Investors are clearly willing to buy, and the only question is, what to buy?There is no one easy answer to that question, but investors can still find answers – by following Wall Street’s top analysts when they publish their top picks. As we head into the tail end of the year, the analysts are doing just that – publishing their top stock picks for the rest of this year and into the next.The stocks are a varied lot, offering investors a range of choices – in economic sectors, in return potential, and in cost of entry. Using TipRanks’ Stock Comparison tool, we lined up the three alongside each other to get the lowdown on what the near-term holds for these top picks.CarParts.com (PRTS)We will start with CarParts.com, an e-commerce company in the factory direct niche – in this case, making it easier and cheaper for drivers and garages to find and buy quality car parts. By cutting out much of the brick-and-mortar supply chain, CarParts.com can offer lower prices and quick delivery. The coronavirus crisis presented a unique opportunity for the company, as the lockdown policies had the side effect of promoting online and mail delivery business along with all sorts of DIY.That combination helps explain the rapid share appreciation that PRTS has seen in recent months. The stock has a long history of mostly flat trading, under $5, but after bottoming out on March 18 this year, PRTS has seen a long, uninterrupted, 5-month run of growth. Shares are up a whopping 967% during that time, making PRTS one of the stock market’s strongest recent growth stories.Craig-Hallum’s analyst Ryan Sigdahl is deeply impressed by CarParts.com. The 5-star notes that the corona crisis was only the opportunity for the company’s rise – by good fortune, it came as management was working to improve customer service and profitability, and the timing was a happy coincidence. Sigdahl selected PRTS as his top pick, noting: “The dynamic change at PRTS is quite remarkable. From a no growth company a few quarters ago to a company growing revenue over 60% with accelerating business momentum. This isn’t a COVID pop-and-fade play, there are real operational improvements driving this fundamental inflection, including meaningful improvements to technology, marketing and supply chain… We think the stock is going significantly higher as they [management] execute on a massive market opportunity.”Accordingly, Sigdahl rates PRTS a Buy, along with a $20 price target. This figure implies a 37% upside potential for the coming year, shows his confidence. (To watch Sigdahl’s track record, click here)After its strong recent growth, CarParts.com has earned a unanimous Strong Buy analyst consensus rating, based on 3 recent positive reviews. Shares are selling for $14.40, and the $18.67 average price target suggests it has room for 29% growth this year. (See PRTS stock analysis on TipRanks)Ternium SA (TX)And now we move on to the heavy industry sector, where Ternium is a major steel producer in Latin America. The company has manufacturing plants in Argentina, Brazil, Colombia, Mexico, and the southern US. Ternium is a steel supplier for a variety of industries, including automotive, construction, HVAC, and home appliance. Steel is a found in a wide range of common products that we use daily, giving the company a solid niche.Writing for Scotiabank, analyst Alfonso Salazar explains why Ternium is his top pick in the Latin American steel industry. In his view, the case is clear: “We continue to favor steel producers in Mexico over peers with operations in other LatAm countries. We believe Mexican producers are better positioned for a recovery, as steel demand relies more on exports of steel products that should be boosted by the USMCA agreement. We see Ternium’s better-than-expected shipments in Q2/20 as an indication of a good start point for a gradual recovery in 2H20.”These comments support an Outperform (i.e. Buy) rating, and Salazar’s $25 price target suggest that TX has room for an impressive 45% upside in the coming year. (To watch Salazar’s track record, click here)Overall, it has been relatively quiet when it comes to other analyst activity. In the last three months, only 3 analysts have issued ratings — 2 Buys and 1 Hold. Based on the $21.50 average price target, shares could climb nearly 25% higher from current levels. (See TX stock analysis on TipRanks)First Republic Bank (FRC)Next on our list of analyst top picks is First Republic Bank, a banking and wealth management company based in San Francisco. The company has offices in many of California’s wealthy coastal cities (Los Angeles, San Diego, Palo Alto, Santa Barbara), as well as in Palm Beach, Boston, New York City, and Jackson, Wyoming. First Republic offers trust and wealth management services to clients in the low-risk, high net-worth categories.First Republic’s business model gave it two important advantages over other bank companies during the coronavirus crisis of 1H20. First, the company’s clientele is high quality, with plenty of money, assets, and resources; and second, the bank has no formal branches to maintain. When the social lockdown policies went into effect, First Republic was able to adapt easily to the virtual office. This made it possible for the bank to report only a minor dip in Q1 earnings, followed by a surge in Q2. Revenues in the first half of the year rose modestly from Q4 2019.Dave Rochester, 5-star analyst with Compass Point, has chosen FRC as his top pick, and explains why in a detailed note: “A stronger credit profile better insulates FRC vs. peers from tail risk on the credit side. Solid underwriting, unique incentive structures including credit claw-backs, and stronger-relative credit history likely supports safety stock status and continued material valuation premium in the downturn… [A] key differentiator of FRC is its large concentration of high net worth individuals in the customer base… FRC’s urban coastal markets contain 59% of all high net worth households in the US, positioning the company well for continuing to take share in this higher net worth segment.”In line with these comments, Rochester rates the stock a Buy. His $132 price target implies a one-year upside of 14%. (To watch Rochester’s track record, click here)The analyst consensus rating on First Republic is a Moderate Buy, based on 7 Buys, 7 Holds, and 1 Sell set in the past 3 months. The stock is selling for $114.86 and has an average price target of $114.86; this suggests a modest upside of 4% from current levels. (See FRC stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.This article was originally posted on TipRanks.
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U.S.News & World Report
Is Dividend Stock Investing a Good Idea?
Investors should be wary of the generous dividend yields provided by some companies when it is masking their thin profit margins, high debt levels and underperforming stock prices. While investors have been drawn to dividend-yielding companies for their yield, these storied companies are now facing lackluster growth and shrinking demand as the economy contracts amid the pandemic. Dividend investing is attractive to investors seeking yield and income, especially as interest rates have reached lows, but some companies have maintained their yields despite historic losses the last two quarters and plummeting stock prices.
