In a financial environment riddled with unprecedented levels of uncertainty, investors are at wits’ end. When it comes to finding an investment strategy that will yield returns, traditional methods might not be as dependable. So, how should investors get out of the rut?
In times like these, a more comprehensive stock analysis can steer investors in the direction of returns. Rather than looking solely at more conventional factors like fundamental or technical analyses, other metrics can play a key role in determining whether or not a particular stock is on a clear path forward.
TipRanks offers a tool that does exactly that. Its Smart Score measures eight key metrics including fundamentals and technicals while also taking into account analyst, blogger and news sentiment as well as hedge fund and corporate insider activity. After analyzing each metric, a single numerical score is generated, with 10 being the best possible result.
With this in mind, we poured through TipRanks’ database, filtering the results to show only the names that have earned a “Perfect 10” Smart Score. Here are three for your consideration.
Brunswick Corporation (BC)
Brunswick is a manufacturer in the leisure boating sector, building and marketing boats, marine engines, and their parts and accessories. Brunswick owns several of the premier brands in its segment, including Boston Whaler, Mercury, and SeaRay.
Boating is a leisure activity that lends itself to social distancing measures, and for those with access, it has been popular during the ‘corona summer.’ Brunswick’s financial results have reflected that – the company has seen modest sequential gains in revenues and earnings through 2020 so far, with Q2 results hitting $987 million at the top line and showing 99 cents EPS at the bottom. The EPS result was more than double the forecast. The outlook for Q3 earnings, to be reported at the end of this month, is for $1.31 profit per share.
With that as background, it should not be a surprise that the company has kept up its dividend. The payment, 24 cents per common share, yield a modest 1.5%, but the important point here is that BC had raised its dividend going into 2020 and stuck with the higher payment through the crisis.
Raymond James analyst Joseph Altobello likes Brunswick’s current retail environment. He writes, “Retail trends continued to be very strong in July and August amid unprecedented demand for boats… while demand has been strong among existing boaters as well, the lack of inventory could delay some upgrades until next year, thus helping to offset the challenging year-over-year comparisons during late spring and summer.”
Altobello rates the stock Outperform (i.e. a Buy), and his firm’s $79 target price indicates a 25% upside for the coming year. (To watch Altobello’s track record, click here)
Brunswick gets a Strong Buy from the analyst consensus, showing that Wall Street agrees with Altobello’s bullish take. The recent reviews break down to 9 Buys and just 2 Holds. Shares are priced at $62.11, and the $79 average target is in-line with Raymond James’. (See Brunswick stock analysis on TipRanks)
Guidewire Software (GWRE)
This California-based software company offers subscription services: BillingCenter, ClaimsCenter, and PolicyCenter in the property & casualty insurance sector. It’s a specialized niche, for which Guidewire developed its own programming language, Gosu, which was later released as open source.
Most people carry insurance; it’s a product that exists to protect our money, and we all have a vested interest in that. Guidewire results have reflected that. The company showed losses in the fourth quarter of 2019 and the first two quarters of this year – but Q4 through Q2 are GWRE’s slowest normally. Revenues and earnings pick up in Q3 – and in Q3 CY20, Guidewire blew away the earnings forecast, with 56 cents EPS against a 20-cent estimate, and revenues of $243 million.
Among the fans is Needham analyst Mayank Tandon, who stands tall with a #97 ranking among 7,000 Wall Street analysts. He writes of Guidewire, “GWRE remains one of the premier providers of cloud-based core software solutions for P&C carriers. We believe the market is large and healthy and is in the early days of a long transition towards cloud-based solutions from dated legacy solutions. We anticipate the revenue/margin trajectory to be smoother as management executes on the model transition.”
The 5-star analyst rates this stock a Buy, and his $130 price target suggests it has room for 26% growth in the next 12 months. (To watch Tandon’s track record, click here)
Overall, Guidewire is rated a Moderate Buy from the analyst consensus, with 4 Buys and 2 Holds set recently. The stock is not cheap, priced at $103.39, and its average price target of $134 is slightly higher than Tandon’s; it implies a 30% upside potential. (See GWRE stock analysis on TipRanks)
LPL Financial Holdings (LPLA)
Last on our list of Perfect 10s is LPL Financial Holdings, the largest independent broker-dealer in the US. The company was formed through a merger action in 1989, and since then has developed a reputation for generating profits and returns. LPL Financial sees over $5 billion in annual revenues. Its services offered include financial advice, retail brokerage services, and access to the financial products universe.
The general downturn has customers pinching their pennies, however. While LPL saw big gains in the first quarter of this year, the second quarter saw sequential losses. Revenues fell from $546 million to $461 million, and EPS dropped from $2.06 to $1.42.
In an important point, however, LPL continued to keep up its dividend. As with Brunswick above, the payment and yield are both modest – the key is, the company saw no reason to reduce either, and remains able to cover the payout at current income levels. The dividend pays 25 cents per common share quarter, with a yield of 1.2%.
5-star analyst Steven Chubak, of Wolfe Research, writes of LPL, “[We] believe that strong organic growth at a reasonable valuation is one of the best themes to own in an uncertain macro backdrop. So long as LPLA can consistently execute and deliver sustained organic growth momentum, it should continue to attract interest from a broader investor base, supporting continued outperformance.”
Chubak’s Overweight (i.e. Buy) rating here is supported by his $100 price target, which implies a one-year upside of 22%. (To watch Chubak’s track record, click here)
This is another stock with a Moderate Buy rating from the analyst consensus. LPLA has 5 recent Buys and 2 Holds from the Wall Street analyst corps. Shares are priced at $82.90 and have an average target of $98.71, slightly lower than Chubak’s and pointing to a 19% upside for the year ahead. (See LPLA stock analysis on TipRanks)
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.