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JP Morgan: 2 ‘strong buy’ shares to snap up
The ‘corona year’ brought us confusion: a short and sharp recession last winter; a partial recovery last summer; and a retreat during the ‘second wave’ of COVID-19 in the fall and winter. As the country now heads towards its second spring of the pandemic, JPMorgan’s stock strategist Dubravko Lakos-Bujas has made a series of observations about the options investors face. “We continue with the view that cyclical stocks continue to lead positively as the business cycle strengthens, but we also see some expansion of market share due to the significant reduction in risk that occurred in high-growth stocks and expensive dynamics. “Growth in stocks also had its risks substantially reduced, decoupled from the Momentum factor and now seem much less vulnerable (for example, to increased bond yields),” noted Lakos-Bujas. In short, the strategist sees opportunity for investors now, as economic growth appears to be returning to work. By turning Lakos-Bujas’ perspective into concrete recommendations, JPMorgan’s analysts are hitting the table with two actions that seem especially attractive. According to these analysts, each name is expected to increase in the next 12 months. After analyzing JPM’s stock choices through the TipRanks database, we found that the rest of the Street is also in the bullring, as each has a “strong buy” analyst consensus. Wheaton Precious Metals (WPM) The mining industry looks like a good investment – and it often is. After all, what could be more prestigious than owning a gold mine? Miners also have some disadvantages: high overhead, unpredictable markets and unproductive mines, to name just a few. Precious metals streaming companies, such as Wheaton, exist to smooth out these bumps (which are sometimes substantial) and to bring a level of predictability to the metals markets. Streamer companies enter into agreements with mining companies to buy part or all of the production at a predetermined price. The streamer can then sell the metals at the prevailing market price. Wheaton is one of the largest precious metals streaming companies in the world, with revenue of $ 1.09 billion in 2020, a company record and a market capitalization of $ 18 billion. In its 4Q20 financial report, the company presented several strong metrics. Operating cash flow reached US $ 208 million in the quarter and US $ 750 million for the entire year. The company, as noted, record annual revenue and was able to reduce its net debt to just $ 2 million. In addition, Wheaton increased its quarterly dividend to 13 cents per common share. The production of solid metal, above the guidance previously published for 2020, sustained these gains. JPMorgan analyst Tyler Langton likes what he is seeing, noting: “With current metal prices, the company is expected to generate about $ 1.0 billion in cash flow this year, which we believe will be targeted at businesses and / or dividends. Although stocks of precious metals as a whole have recently been pressured by rising interest rates and falling gold prices, we still see a positive side to WPM’s share price, even at $ 1,600 / ounce. gold price through the model … ”Langton places an overweight (ie buy) rating on WMP shares, and his $ 58 target price suggests that there is room for a 53% rise in the next 12 months . (To view Langton’s track record, click here) The strong buying consensus rating at WPM shows that Wall Street believes this action is as good as gold. The 12 recent reviews here include 9 to buy and 3 to retain. The shares are quoted at $ 40.12, and the average target of $ 52.45 implies an increase of 30%. (See WPM stock analysis at TipRanks) Smartsheet, Inc. (SMAR) Next comes Smartsheet, a SaaS company, offering cloud-based workspace management and collaboration products. These software products, which enable faster and more efficient remote access teamwork, are obviously compatible with today’s office environment. Smartsheet reported its 4Q21 – and the results for the full fiscal year – earlier this week and showed some strong gains in key metrics. In the quarter, revenue grew 40% year over year, to $ 109.9 million. Net revenue was driven by a 49% increase in revenue, to $ 151.2 million, and a 42% increase in subscription revenue, to $ 101.1 million. The company had a strong positive cash flow in the quarter, US $ 9.9 million in net free cash flow. This was a sharp turnaround compared to the previous year’s quarter, when cash flow was negative. For the entire year, the company reported revenues of $ 385.5 million, an increase of 42% year-on-year. Once again, subscription revenue was particularly noted; this metric increased 45% to $ 352.8 million. A look at Smartsheet’s recurring earnings will help clarify the company’s confidence. Smartsheet tracks the value of the annualized contract (LCA) as a measure of gross revenue; customers with a LCA greater than $ 5,000 or more grew 31% year-on-year; with LCA of $ 50,000 or more it grew 58% yoy, and with LCA of $ 100,000 or more it grew 68%. This indicates that Smartsheet can count on increasingly profitable recurring revenue in the future. JPM 5-star analyst Mark Murphy is impressed by Smartsheet’s recent performance, enough to update his position on Neutral to Overweight (ie Buy) shares. “We are articulating a thesis that this category of collaborative work management was not a type of immediate pandemic response purchase, but we theorize that it could start to gain attention later in the cycle, as companies have more time to think about ways to get the job done out of Zoom and as they get more visibility into the distribution of their post-COVID-19 workforce…. We continue to believe that Smartsheet faces broad growth opportunities across multiple vectors and therefore carries the potential to become part of the enterprise software fabric within organizations, ”commented Murphy. Murphy sets a target price of $ 83 for the stock as a guarantee of his purchase rating, which implies a 32% rise in the next 12 months. (To see Murphy’s history, click here) In all, a total of 8 analysts weighed in on Smartsheet’s actions and his recommendations include 7 purchases against just 1 wait. This gives the stock a strong buy analyst consensus rating. SMAR is currently selling for $ 62.86, and its average price target of $ 82 suggests an increase of 30% this year. (See SMAR’s stock analysis on TipRanks) To find good ideas for trading stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content should be used for informational purposes only. It is very important to do your own analysis before making any investments.