JP Morgan says these 3 stocks could rise over 100% from where they are now
Markets corrected after the summer bulls – but beyond that, sales were heavily focused on the tech sector. Tech-heavy NASDAQ now leads the fall after losing 11.5% since September 2nd. JPMorgan strategist Marko Kolanovic points out that much of the market is now well positioned for recovery. Kolanovic expects stocks to rise again in the final quarter of the year. “Now we think the sell-off is probably over. The positioning is low. We̵
7;re doing a little cleanup so we believe the market can actually move up from here, ”noted Kolanovic. Given Kolanovic’s outlook, JPMorgan stock analysts are beginning to reveal their pick for yet another bull run. These are stocks that JPM believes could double or improve in the coming year. We ran the tickers through TipRanks’ database and wanted to see what makes them so compelling.NexTier Oilfield Solutions (NEX) JPM’s first pick is NexTier, an oilfield support service provider. The oil industry is more than just a manufacturing company. There are a number of companies that provide drilling skills, fluid technology for fracking, geological expertise, and pumping systems – all of the ancillary services that drillers can use to produce oil and gas. This is the sector that NexTier lives in. Unfortunately, this sector is vulnerable to falling oil prices and the economic disruption caused by the coronavirus pandemic crisis. Revenue decreased from $ 627 million in the first quarter to $ 196 million in the second quarter. The EPS was negative in both quarters. However, NexTier has a few perks that put it in a good place to benefit from a market recovery. These advantages are important to JPM analyst Sean Meakim, among others. “Granted, we are concerned that the sector is disappointing the overall COVID-19 recovery given the asymmetry of beta earnings versus oil, but with 1) a solid balance sheet (net debt $ 17M), 2) our positive outlook ( If modest) cash generation in 2021 (JPMe + $ 20M), 3) a way to achieve comparably attractive occupancy rates and margins, and 4) the cheapest valuation in the group (~ 20% of replacement), NexTier falls in our opinion according to one of the best positioned pressure pumps in our coverage, ”said Meakim. In line with his optimism, Meakim rates NEX as overweight (ie buy) along with a price target of $ 5. His goal foresees an upward opening upward potential of 203% for the coming year. (To see Meakim’s track record, click here.) Likewise, the rest of the road climbs aboard. 6 buy ratings and 2 hold ratings awarded in the last three months result in a strong buy analyst consensus. Additionally, the average target price of $ 3.70 puts the potential gain after twelve months at 124%. (See NEX stock analysis on TipRanks) Fly Leasing (FLY) The next stock on our list of JPMorgan picks is Fly Leasing, a company with an interesting niche in the aviation industry. It’s not widely known, but most airlines don’t own their planes. they lease them for various reasons. Fly Leasing, which owns a fleet of 86 commercial aircraft valued at $ 2.7 billion, is one of the leasing companies. The aircraft, mainly Boeing 737 and Airbus A320, are leased to 41 airlines in 25 countries. Fly Leasing generates income from rents, maintenance fees and security payments. As you can imagine, the Corona crisis – and in particular the bans and travel restrictions that have not yet been fully lifted – has harmed fly leasing and the aviation industry in general. With flights suspended and ticket sales heavily burdened, revenues fell – and airlines had to cut or postpone their aircraft lease payments. This is a situation that is only now beginning to improve. The numbers show it as much as they can. FLY revenue fell from $ 135 million in fourth quarter 19 to $ 87 million in first quarter 20 to $ 79 million in the last quarter. The EPS also fell, with the second quarter only showing 37 cents and thus well below the 43 cents forecast. But there are some bright spots, and JPM’s Jamie Baker points out the most important. “[We] Conservatively, don’t expect deferred repayments in 2H20 versus management’s $ 37 million expected. Overall, our deferral and repayment assumptions are consistent with the other lessors in our coverage. We do not expect any investment for the remainder of the year, which is in line with management’s comment for no capital commitments in 2020 […] Despite the recent volatility in this area, we believe lessors’ profit profiles are more robust compared to airlines, ”said Baker. In a nutshell, Baker believes Fly Leasing has got its income, expense and cash under control – by investing the stock, the starting blocks should change for the better. Baker rates FLY as overweight (i.e. buy) and their price target of $ 15 implies a strong uptrend of 155% over the next 12 months. (To see Baker’s track record, click here.) In the past three months, two more analysts have thrown their hats on the aircraft leasing company. The two additional purchase ratings give FLY a strong purchase consensus rating. With an average target price of $ 11.83, investors can take home a 101% gain if the target is met in the next 12 months. (See FLY stock analysis on TipRanks) Lincoln National Corporation (LNC) Most recently, Lincoln National is a Pennsylvania-based insurance holding company. Lincoln’s subsidiaries and operations are divided into four segments: annuities, group protection, life insurance and retirement planning. The company is listed on the S&P 500, has a market capitalization of $ 5.8 billion, and total assets of over $ 290 billion. The generally depressed business climate of 1H20 has dampened LCN, reducing revenue from $ 4.3 billion six months ago to $ 3.5 billion. The result is also falling. The EPS for the second quarter was 97 cents, with the forecasts missing by 36%. There’s a bright spot: through all of this, LNC has maintained its dividend payment with no cuts and no suspensions. The current quarterly dividend is 40 cents per common share or $ 1.60 per year, yielding 4.7%. That’s a nearly 2.5x higher return than peers in the S&P 500. Jimmy Bhullar covers this stock for JPM, and while acknowledging the poor second quarter results, he also points out that the company is away from it should benefit if business conditions slowly return to normal. “LNC’s second quarter results were poor, characterized by a decline in EPS and weak business trends. Much of the deficit was due to increased COVID-19 claims and weak alternative investment income, factors that should improve in future periods […] The market rally should also contribute to alternative capital gains and reported spreads… ”These comments support Bhullar’s overweight rating. Its target price of $ 73 indicates a robust uptrend of 143% from current levels (To see Bhullar’s track record, click here). Overall, the rating for a moderate purchase of LNC is based on 3 current purchase ratings versus 5 holds. The stock is selling for $ 30 and the average price target is $ 45.13, indicating a possible uptrend of 50% for the year ahead. (See LNC Stock Analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, ‘a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.