JPMorgan Chase proposes 3 stocks with double-digit upside
November 3 is coming, and Wall Street is preparing for Biden’s victory. But what does the White House controlled by Democrats mean to the market? Although some investors believe that President Biden’s position will be detrimental to stocks and put pressure on the market, Marko Kolanovic, global head of macro quantification and derivatives strategy at JPMorgan Chase, believes that hope is different. He wrote in his latest note to clients that regardless of the outcome of the election, its conclusions will eliminate major uncertainties. In addition, the strategist believes that the release of the COVID-1
9 vaccine and the reopening of the economy may stimulate people to switch to value stocks. Kolanovic commented: “We think these two catalysts will be value catalysts, and we think they will have an impact. The decline in COVID should be a powerful catalyst for value.” JPMorgan Chase analysts believe in Kolanovic’s views. Make specific suggestions and point out three names that seem particularly compelling. Since the company’s analysts predict that everyone has at least 30% upside potential, we used TipRanks’ database for more in-depth research. And life and annuity insurance space. Based on JPMorgan’s good position in the industry, JPMorgan Chase has high hopes for the technology name. Five-star analyst Sterling Auty told the company, “Sapiens has opened up a profitable area in the insurance market, providing software and services for the world’s largest reinsurance company to 4-5 class property insurance companies. In the past three years In the middle of the year, its work to expand its product portfolio is paying off, and we expect the revenue mix to shift towards a more consistent and profitable subscription revenue. If this transition is achieved, then we hope to see the realization of stock prices Multiple expansions that have risen many times. Unlike other competitors, SPNS cooperates with property insurance companies and also focuses on life insurance, annuities and reinsurance companies. According to Auty, this will increase the entire potential market to approximately US$40 billion. Software providers need approximately US$20 billion. “Vertical insurance, especially property insurance, we believe, based on Auty’s explanation: “Very high customer retention rates create considerable lifetime customer value.” It should be noted that the company is not For the largest operators in each region, we look for suitable vacancies based on the market. In addition, Auty believes that providing software, cloud solutions and “all the services required to create a complete single-source provider has helped Sapiens establish a beachhead in various market segments.” Since 2015 By 2019, revenue has increased by 16%, and it will also increase in 2019 and 1H20. Auty said: “We believe that the smart segmentation of the market will allow Sapiens to increase the percentage of revenue from subscription software, making the growth more sustainable and more profitable.” Auty views his report optimistically, by specifying an “overweight” rating and $ 40 price target. This goal brings the upside potential to 41%. (To view Auty’s transaction history, click here) Go to the rest of the street, where 2 buys and 1 hold were posted in the last three months. Therefore, SPNS is a mid-range purchase. The average price target of $37 sets its potential upside at 30%. (See SPNS stock analysis on TipRanks) Academy Sports and Outdoors (ASO) sports goods and leisure retailer Academy Sports Sports and Outdoors just launched its IPO, but it has already attracted a lot of attention from Wall Street. JP Morgan Chase is one of them. On October 1, the JP Morgan Chase IPO was offered at a price of US$13, which was below the range of the initial public offering of US$15 to US$17. Christopher Horvers of JP Morgan told clients that ASO raised a total of US$203 million, which was 19% below initial expectations. Although this is not an ideal result, “We expect the strong potential trend and expected debt repayment in 2H20 to decrease. This five-star analyst believes that the company should continue to benefit from “outdoor sports/healthy living in the COVID-19 world “And develop other initiatives to promote the development of ASO. Turn around. These initiatives are considered “retail industry 101”, including product classification localization, product planning, pricing and promotion, and space productivity efforts, and “the pace of customer engagement Coordinate and share the benefits from the shopping center.” Most importantly, he believes that as ASO expands its e-commerce business, it can see a competitive advantage of 150-200 basis points per year. Looking to the future, due to the improvement of goods and inventory , Horvers expects to have 100 basis points of gross profit opportunity management. In addition, the analyst said that as ASO improves DC distribution, reorganizes labor, optimizes transportation and implements cross-terminals, the company’s gross profit margin may increase by 100. At present, only 22% of products are cross-connected, and ASO will repay more than $600 million in debt and refinance its term loan in the fourth quarter. Horvers pointed out that this will reduce interest expenses and push it down to The adjusted gross profit margin is less than 4 times leverage. In terms of valuation, ASO’s current price-to-earnings ratio is only 4.6 times that of analysts’ 2021 EV/EBITDA expectations, so it is quite attractive. Everything ASO has done persuades Horvers to give Overweight rating to cover. In addition to call options, he also set a price target of $ 21, implying its upside potential of 41%. (To view Horvers’ track record, click here) Do other analysts agree? They Yes. Only 7 exact “buy” ratings have been issued in the past three months. Therefore, the message is clear: ASO is a strong buy. Considering the average price target of $19.58, the stock may rise by 32% next year. (please See ASO stock analysis on TipRanks) Mission Produce (AVO) As an advanced avocado network, Mission Produce is one of the top players in the avocado game. It purchases, produces and distributes fresh crocodile from customers in 25 countries. Pear. Like ASO, this name has also recently begun to trade on the open market, and has been praised by JP Morgan. Analyst Thomas Palmer wrote in the latest report to clients: “For the company to cover stocks, we see EBITDA long The future growth is mainly driven by the number of distribution-driven, and the proportion of avocados is higher. These avocados come from the company’s own farms (the profit margin is significantly higher than that of third-party procurement). The analyst’s optimistic view is partly related to AVO as the “global leader in avocado distribution.” The company distributed 596 million pounds of avocados in the four quarters ending in July 2020, with an average sales growth of 12.5 over the past ten years. %, and the industry is 9%. In addition, the company also has an agricultural business that increases profits in Peru, providing 11% of avocado sales in FY19. Palmer also pointed out that in the past ten years, the consumption of Hass avocados in the United States has compounded annual consumption. The average growth rate is 8%. board. The US Department of Agriculture’s dietary guidelines (encouraging the consumption of high-quality fat and fiber) and demographic trends have contributed to this growth. Most importantly, Parr acquiesced that the increase in volume may drive EBITDA growth. He said: “AVO’s sales growth in the past ten years has been driven by its industry-leading (and expanding) distribution and mature center network and diversified procurement model (with two countries of origin throughout the year). “Finally, Palmer estimates that for distribution, high single-digit sales growth (approximately 8-10% per year) and stable gross profit per pound will play a role. For the farms owned by the company, due to increased production, he expects that the output will increase by 22% in FY20, and the output will increase by 12% in FY21 and FY22. He added: “According to our model, the gross profit per pound of missionary-based avocados is four times higher than that of externally sourced avocados.” In terms of valuation, Palmer also liked what he saw. “We believe that the current valuation is less than 9 times FY22E EV/EBITDA, which is a compelling entry point, especially considering that its valuation does not include (a) the value of AVO equity investment income (profitable), and (B) Investment in agricultural operations, he explained. This will not be surprising, and then Palmer joined the Bulls. In addition to starting to give an “overweight” rating, he also set a target price of $18 for the stock If this goal is achieved in the next twelve months, investors may receive 36% of the return. (To view Palmer’s track record, click here) Judging from the consensus breakdown, there is no consensus Exception. In the past three months, there were 5 buys and no hold or sell allocations. Wall Street’s argument is that AVO is a strong buy. The average target price is $17.40, which means that the upside potential is 32%. ( See AVO stock analysis on TipRanks) To find a good idea for stock trading at attractive valuations, please visit TipRanks’ Best Buys to Buy, a newly launched tool that integrates all TipRanks stock insights Together. Those featured analysts. The content is for reference only. It is very important to conduct your own analysis before making any investment.