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JP Morgan: 2 stocks to consider buying (and 1 to avoid)
In a report on current market conditions – and strategic vision for the future – JPMorgan’s Marko Kolanovic sees plenty of reason for optimism. Kolanovic sees that the risk has eased over the past few weeks and given the usual daily swings the markets should see a sustained rally. The biggest news, in Kolanovic’s opinion, is the positive development reports. rapid and imminent availability of a COVID-19 vaccine. This is a game-changer, allowing investors to “look through the recent surge in COVID-19 cases until the pandemic’s imminent end and a wider reopening of the economy.” Secondly, regarding the importance of the market, is the shared result of national elections. Kolanovic describes a Biden presidency combined with increased Republican strength in the House and a Republican majority in the Senate as “the best of both worlds.” A divided government is unlikely to dismantle the business-friendly measures taken by the Trump administration, while Biden is likely to facilitate the trade war. The result, according to Kolanovic’s team, will be “less market volatility, which could lead to inflows into risky assets.” To that end, JPM’s stock analysts have been busy scanning stocks, looking for those who are likely to win – or lose – in the coming months. Of particular interest, we pulled out TipRanks data on two stocks the firm says will show double-digit growth, and one that JPM says it is avoiding. Vroom, Inc. (VRM) We’ll start with Vroom, an online used vehicle retailer. In addition to cars, the company also sells parts and accessories, and provides insurance, car rentals, and purchase finance, for US customers only. Vroom is a newcomer to the markets; it went public in June and rose rapidly, peaking on September 1. Since then, stocks have slipped and are now down 22% since closing their first day. The rise and fall are the result of headwinds and headwinds pushing against the stock. On the bright side, Vroom won during the general shift to online selling. Additionally, the company’s focus on used vehicles has been beneficial during the pandemic, when customers were nervous or cash-strapped – but in both cases, reluctant to invest large sums for one. new car. On the negative side of the ledger, this reluctance to spend has spilled over into the used car market as well. Vroom had to contend with low margins while cutting prices to attract sales. Covering the stock of JPM, analyst Rajat Gupta sees the current state of the stock as an opportunity for investors. Bad times are probably temporary, he thinks, and this company is about to take off. “Net-net, with short-term expectations now reset and potential for acceleration in unit growth and gross margin in 2021, we see the setup as favorable in the short to medium term for action with few catalysts incremental negatives … we believe execution will be critical given the heavy reliance on third parties for key operational aspects such as repackaging and logistics, ”Gupta wrote. Based on this assessment, Gupta places the stock overweight (i.e. buy), and its price target of $ 70 implies a 91% increase for the coming year. (To see Gupta’s history, click here) Even after its share price has fallen, Vroom retains a strong buy by analyst consensus. The rating is based on 11 reviews, including 10 purchases and 1 sale. VRM sells for $ 36.81, and its average price target of $ 59.40 suggests it has room for around 61% year-on-year growth. (See VRM market analysis on TipRanks) Colfax Corporation (CFX) Next, Colfax, a niche manufacturing company. Colfax produces a range of equipment for the welding, medical device, and air and gas handling markets, ranging from medical equipment for joint reconstruction to welding helmets and cutting torches. While it might sound incongruous, the consolidation is working for Colfax and the company is experiencing a turnaround after losses from the corona crisis in 2Q20. Third quarter results, at 41 cents per share, showed both good and bad. It was down 32% year over year, but has more than quadrupled sequentially and beat estimates. Revenue increased 29% sequentially to $ 805 million. Management expects to see continued sequential improvements through the remainder of 2020 and forecast annual profit in the range of 45 cents to 50 cents per share. Representing JPM, 5-star analyst Stephen Tusa said:[We] consider the stock to be relatively cheap compared to its peers close to the Fab Tech and Med Tech space with a significant rise after COVID-19 that does not yet appear to be fully realized in valuation compared to the expectations of FY2 peers. CFX has strong brands and franchises… and an underestimated productivity opportunity with an end market rebound in Fab Tech and spikes in demand in Med Tech. Tusa backs up his bullish comments with an overweight (ie buy) rating and a price target of $ 52 indicating his confidence in a 38% year-over-year increase. (To look at Tusa’s track record, click here) Overall, Colfax has an analyst consensus moderate buy rating, based on 8 reviews broken down into 5 buy, 2 take and 1 sell. However, the majority expect the stocks to stay in the range for now, as indicated by the current average price target of $ 38.63. (See CFX market analysis on TipRanks) Beyond Meat (BYND) Last on today’s JPM call list is Beyond Meat, a company that made a lot of waves last year when it raised more $ 3.8 billion when it went public. The company offers a vegetarian-based meat substitute and markets products that are more nutritious and tasty – and closer to meat – than competing products. The company was founded in 2009 and has expanded its product line to include simulated beef, pork and chicken products. Overall, the BYND stock still shows a positive facade. Shares are up 88% year-to-date and the company reported net profit in 1Q20, just as the corona crisis began. Since then, however, profits have turned negative – and worse yet, revenues have shown a sharp decline sequentially in the third quarter. The latest quarterly figures showed $ 94 million at the peak, down 16% from the second quarter and well below the forecast of $ 133 million, and an EPS loss of 28 cents – far worse than the loss of 3 cents expected. The biggest blow to Beyond Meat came from the decline in restaurant business which was only partially redeemed by a 40% increase in grocery sales. The company announced a partnership with McDonald’s to provide the meat substitute for the fast food giant’s new McPlant menu, but even that announcement was missed. BYND shares fell sharply when it was said McD’s had developed the meat substitute in-house. While this misconception has been corrected, BYND has only partially bounced back. In short, this company is facing severe headwinds in the near term, and JPM advises caution due to “the visibility so low and the last quarter surprisingly mild.” Ken Goldman, rated 5 stars on TipRanks, writes of BYND: “We’re now trying to model a company that (a) we don’t know exactly why 3Q was so bad (the company’s explanation didn’t seem substantiated. by significant data), and (b) the partnership with McDonald’s could be a game-changer or fail. Goldman’s cautiousness is evident from its underweight rating (ie a sell off), and its price target of $ 104 suggests a Stock. (To look at Goldman’s track record, click here) JPM isn’t the only company advising caution here. The Beyond Meat analyst consensus rating is a moderate sell, based on 2 buy, 7 take, and 7 sell over the past few weeks. The stock is selling for $ 141.91 and its average price target of $ 110.71 indicates a likely 22% drop in the coming year. (See BYND Stock Analysis on TipRanks) To get great ideas for stocks traded at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. those of 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.
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