After a month of solid gains, with the Dow, S&P 500 and NASDAQ all hitting new record highs, markets have fallen slightly. This short series of losses fits into the general trading pattern of the past six months: strong gains, a brief pullback that didn’t wipe them out completely, followed by another round of gains. Rinse and repeat.
It is a market environment made for long-term investors. Short turn-downs are nothing to fear, but they do come with additional risks for day trading. But today’s long-term trends seem to be working for investors willing to “buy and forget.” The juxtaposition of periodic losses on an uptrend makes finding the “perfect” stock more important than ever.
which caused TipRanks Smart Score a perfect tool. The Smart Score evaluates a series of factors for each stock—eight factors in all—then distill them into a single-digit rating on a scale of 1 to 10. It lets investors see at a glance where a stock is likely to rise, before getting into the details. to dive.
With this in mind, we used the TipRanks database to extract three stocks with a ‘Perfect 10’ from the Smart Score. Unsurprisingly, these are also Strong Buys with significant upside potential for the coming year. Let’s take a closer look at that.
Eastman Chemistry (EMN)
Eastman, based in Tennessee, started in 1920 and was once a subsidiary of Kodak. Today, the company is focused on the manufacturing of materials, employs more than 14,000 people worldwide, conducts business in 100 countries and achieved sales of $8.5 billion last year. Eastman has an extensive product list that includes solvents, resins, acids, glycols and polymers.
Eastman’s products are essential in most of their customer sectors – a fact that helped the company weather the coronavirus crisis. After a one-mile drop in sales in the second quarter of last year, the company’s sales have posted three quarters in a row of consecutive gains. Fourth quarter revenue was $2.4 billion, about 3% above consensus and up 7.5% year over year. Earnings per share, at $1.99, were up more than 5% yoy. Shares in Eastman are up 42% in the past 12 months, surpassing the 31% gain on the S&P in the same period.
Eastman maintained its commitment to shareholders and announced a 69 cents ordinary stock dividend in May. The payment is the third at this level; the company has a recent history of increasing payment between Q3 and Q4 – and has a longer history, going back 12 years, of keeping the dividend reliable. The annualized rate of $2.76 per common share gives a return of 2.5%, slightly higher than the average of the publicly traded companies of the S&P 500.
Eastman is a healthy company, with a diverse product line and strong market share and brand name; of these led Wolfe Research analyst Josh Silverstein to rate the stock as Outperform (ie buy), with a price target of $154, implying a ~42% increase over the next 12 months. (To view Silverstein’s track record, click here)
Silverstein supports his position, writing:[We] believe the outlook for EMN emerging from the downturn remains positive… Our view is broad market exposure with more room for recovery with less cyclicality than peers and the potential for continued price gains that could exceed sequential EBITDA growth peak levels. ”
The consensus rating, a strong buy based on 10 buys and 3 positions, clearly shows that Wall Street generally agrees with bullish views on this. The stock is priced at $108.19 and their average price target of $138.31 suggests a 28% gain. (See EMN stock analysis on TipRanks)
Kinross Gold Corporation (KGC)
The right stock could be a figurative gold mine, but if that stock is in a mining company, it could also just be a literal gold mine! Kinross is a $7.7 billion gold mining company based in Toronto, Canada and operating in the US, Russia, West Africa and Brazil. The company has approximately 30 million ounces of proven and likely gold reserves, and this year’s first quarter saw gold production of 558,777 ounces.
Kinross shows a clear pattern in its quarterly results, with the lowest sales in the first quarter and rising revenues through the fourth quarter. The most recent report, for 1Q21, fits this pattern perfectly. The reported $989 million was lower than the $1.23 billion in the fourth quarter, but it was a noticeable increase of 5.5% year-over-year. The gains are partly due to a rise in realized gold prices, which rose 13% yoy to $1,787 an ounce.
In the first quarter, Kinross dodged two bullets that could have seriously hampered operations. First, the Round Mountain opencast mine in Nevada showed instability of the north wall. It was a dangerous situation that delayed some planned mining activities, but has been resolved. And second, a fire in June halted production at the Tasiast mine and plant in Mauritania. The company has been working with local officials to get the situation under control and set a timetable for re-production.
Sometimes Wall Street analysts take a flashy move on a stock – and that’s the case here. Credit Suisse analyst Fahad Tariq deemed it appropriate to upgrade KGC shares from Neutral to Outperform (i.e. a Buy), writing of the shares: “While we appreciate that the company YTD has had two major operational hurdles – the instability of the Round Mountain well wall and Tasiast- fire – we think the impact is mainly limited to 2021 with 2022/23 still looking like strong production years There could also be an advantage of a possible earlier restart of the Tasiast factory over the current (somewhat conservative In 2022, we expect the company to make up for lost Phase W ounces from Round Mountain with other ore sources, and expect the higher quality ounces at Tasiast to be pulled forward…. We also see the stock gaining backed by buybacks, which can be accelerated in the near term.”
Tariq gives Kinross stock a price target of $8, which represents a ~31% increase this year. (To view Tariq’s track record, click here)
With 10 recent ratings on file, including 8 to buy and just 2 to hold, Kinross gets a Strong Buy consensus rating from Wall Street analysts. The average price target of $9.50 suggests a 55% gain for the stock, slightly more bullish than Tariq’s above. The current trading price here is $6.09. (See KGC stock analysis on TipRanks)
Synchrony Financial (SYFU)
We end up in the financial sector, where Synchrony, the parent company of Synchrony Bank, provides credit, savings and other banking services for consumers. The company is headquartered in Stamford, Connecticut, is FDIC insured and fully managed online. Like many other online companies, which are able to provide customer service despite the COVID lockdowns, Synchrony saw strong stock gains in the past year and its share price increased 103% in the past 12 months.
Earlier this month, Synchrony announced it was revamping the consumer finance program it runs in partnership with TJX Companies (TJX), the parent company of TJ Maxx department stores. The renewal will make Synchrony the exclusive provider of TJX’s rewards programs. In a related – but potentially much larger step – Synchrony is also partnering with Amazon (AMZN) on the Amazon.com Store Card and Prime Store Cards.
Also this month, Synchrony released its financials for the second quarter of 21, with a net profit of $1.2 billion. This works out to $2.12 per share, up 22% from the previous quarter — and light-years higher than the 6 cent EPS reported in the same quarter last year. In a key statistic, the company reported a 58% yoy gain in new accounts, to 6.3 million.
Evercore ISI Analyst John Pancaric initiates coverage of Synchrony by noting the companies’ strong ties to Amazon, writing: “We recognize that despite the company’s scale, the financial contribution of the Amazon deal is likely to be limited by particularly low prices – evident in the JP Morgan’s apparent willingness to break up and consider Amazon’s pricing power. Accordingly, we believe the underlying profitability of Amazon’s relationship with Synchrony will be heavily driven by transaction volume and other potential product pairings…”
However, Pancari is bullish but rates SYF as Outperform (ie buy) and sets a price target of $56, indicating confidence of around 22% gain over one year. (To view Pancari’s record, click here)
This financial services company has received a whopping 16 ratings from the Wall Street analyst corps, including 13 on Buy and 3 on Hold. This gives the stock a Strong Buy consensus view, while the average price target of $55.80 suggests a 24% increase from the trading price of $44.80. (See SYF stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the recommended analysts only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.