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Wells Fargo: these 2 stocks could climb at least 30%
After the January close, the first week of trading in February saw the stock market firmly return to bullish mode. The top 3 indexes closed the week at or a touching distance from all-time highs as the market reacted favorably to the latest jobs data and Democrats’ decision to move forward with a plan to $ 1.9 trillion raise. So where does the market go next? Investment firm Wells Fargo sees long-term appreciation in the stock market. Trying to look ahead, Scott Wren, senior global equities strategist at Wells Fargo, said: “Playing on our expectation of a significant rebound from last year’s pandemic-induced contraction are factors we have discussed in the past and that we expect to continue to be the pilots this year. Positive news on vaccines, easy financial policies led by the Federal Reserve and additional stimulus measures planned by the government have all helped the stock market … ”In this context, analysts at Wells Fargo hammer the table on two stocks, noting that each could jump at least 30% in the coming year. After running both in TipRanks’ database, we discovered that the rest of the street was also standing squarely in the bull camp. Guild Holdings (GHLD) The stock market may grab the headlines, but real estate is where most Americans hold their fortunes. The two markets intersect when real estate companies go public. Guild Holdings is a mortgage company that originates, sells and services real estate loans in the US residential mortgage industry. The company has a presence in most of the United States and operates through retail and word of mouth channels. The San Diego-based company held its IPO last year, in the second half of October. The open was only moderately successful, with the stock standing at $ 15 or near $ 15, below the expected $ 17. Guild Holdings sold 6.5 million shares, which was lower than the 8.5 million forecast. The IPO raised $ 97.5 million, and the company claims a current market cap to reiterate our overweight rating on GHLD. $ 972.6 million. Looking ahead, Wells Fargo analyst Donald Fandetti believes the company is well positioned to benefit from the current climate. “Despite rising interest rates, we believe management has taken a confident stance that its business model should hold up relatively well given its buy / retail stance. It is also possible to strengthen the footprint of its branches in regions such as the North East. The annual return has changed investor sentiment even more negative for originators, ”said the analyst. In this environment, Fandetti continues to “value value and buy mkt exposure”, hence his bullish view of the stock. In line with those comments, Fandetti is assigning GHLD an overweight (i.e., buy), and its price target of $ 22 indicates potential for upward growth of 36% in the coming year. (To view Fandetti’s palmares, click here) Likewise, the rest of the street gets on board. 4 purchases and 1 expectation attributed during the last three months correspond to a consensus of Strong Buy analysts. The stock is selling for $ 16.21, and its average price target of $ 19.30 implies a 19% year-over-year increase. (See analysis of GHLD’s shares on TipRanks) PDC Energy (PDCE) Next, PDC Energy, is a hydrocarbon producer based in Denver, Colorado. The company operates in the Wattenberg field in its home state, as well as in the Delaware Basin of the Permian Texas Oil Formation. PDC produces petroleum, natural gas and natural gas liquids through an aggressive horizontal drilling program. PDC saw its earnings slide in 1Q20, and even more in Q2 – but the top line moved in the right direction in Q3. The company grossed $ 303 million this quarter and, on an adjusted basis, posted earnings of $ 1.04 per share. Looking ahead to the fourth quarter report, due at the end of February, the company is expected to post earnings of 92 cents per share. According to some additional positive measures, PDC produced a total of 192,000 barrels of oil equivalent per day in the third quarter, for a total of 17.7 million boe. The company generated net operating cash flow of $ 280 million and recorded free cash flow of $ 225 million. In the third quarter, PDC was able to repay $ 215 million in debt. Analyst Thomas Hughes, in his Wells Fargo stock review, is impressed with the company’s free cash flow and potential for future production. “The generation of FCF will result in absolute debt of less than $ 1.5 billion by the end of 1Q21 according to our model, an important figure because the returns for shareholders (buyouts first) are based on this realization… Debt falling below $ 1.5 billion, the company will likely take a formula-based approach to FCF distribution… While the increased regulatory risk of CO exists, PDCE has managed to build up a backlog of permits and DUCs for development eventually, ”Hughes wrote. To that end, Hughes assigns the stock an overweight (i.e. buy), and his price target of $ 33 shows his confidence in a 30% rise for the next 12 months. (To see Hughes’ track record, click here) It’s not often that analysts all agree on a stock, so when it does, take note. PDCE’s Strong Buy consensus rating is based on a unanimity of 10 purchases. The average stock price target of $ 27.90 suggests a 10% and a change from the current stock price of $ 25.35. (See PDCE Stock Analysis on TipRanks) To find 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. 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.
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