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Morgan Stanley: these 2 stocks are set to rise at least 30%
Markets are trying to resolve a number of conflicting forces. There is an upward trend, which has been pushing stocks upward since last summer, which in recent weeks has been partially derailed by inflation fears. There is the huge fiscal stimulus of COVID’s legislative relief packages, which are helping to fuel this inflationary pressure, but there is also an ongoing vaccination program that promises a return to more normal conditions. Morgan Stanley’s chief US stock strategist Mike Wilson followed the recent ups and downs of the stock markets and shared the benefit of his experience. “We see two potential risks to think about … First, it is the risk associated with the sharp rise in interest rates as the securities markets simply achieve what the prices of other assets are already reflecting. Second, there is a risk that part of the positive operating leverage that we have witnessed in the company’s earnings reports will begin to reverse, ”noted Wilson. Moving from a general picture to a more restricted view, Wilson adds: “With this macro scenario, we continue to favor areas in the market with reasonable prices …” Taking into account Wilson’s perspective, Morgan Stanley analysts are hitting at the table in two actions, with these professionals seeing at least 30% of potential upside in the store. Running the tickers in the TipRanks database, we wanted to find out exactly what makes them so attractive. TPI Composites (TPIC) We will start in the green energy sector, where it connects with manufacturing. TPI Composites is a manufacturer of composite materials and has applied this specialized knowledge in the manufacture of wind turbine blades since 2001. In 2019, the last year with complete data available, TPI treated 18% of all onshore wind blades sold globally in a megawatt base. The company saw net sales in 2020 reach $ 1.4 billion, selling more than 9,500 blades. In its recent 4Q20 earnings report, TPI released the results for the quarter and last year as a whole. The results were strong, exceeding forecasts by a large margin, but the stock still fell sharply. A look at the data sheds some light. For the quarter, TPI reported $ 465.6 million in revenue and 14 cents of EPS, compared to expectations of $ 450 million in revenue and 12 cents of EPS. Quarterly sales increased 10% year-over-year. At the same time, the strong growth in sales in the year was not enough to offset the losses incurred at the height of the corona crisis in the first and second quarters. The company ended the year with a GAAP loss of 52 cents per share. Also on the negative side of the edge, the future forecast puts sales in 2021 in the range of $ 1.75 billion to $ 1.85 billion – this will put 2021 annual growth at about half what analysts had expected to see. Morgan Stanley analyst Laura Sanchez sees the company as fundamentally sound and writes: “We see a risk-reward that is tipped on the positive side driven by robust wind facilities around the world, market dominance due to TPI’s global footprint , growth in the transport sector and a path for margin expansion … We also note that TPIC offers investors a unique way to play secular growth in the global wind and EV markets without taking on exposure to other sectors , usually industrial. ”To this end, Sanchez rates TPIC as Overweight (ie Buy), and its target price of $ 77 implies a ~ 54% increase next year. (To see Sanchez’s track record, click here) Wall Street analysts generally agree that it is a stock to buy. Of the 10 recent reviews here, 7 are purchases and 3 are suspended, making the consensus rating a moderate purchase. The average price target of $ 63.10 suggests an increase of 28% in one year compared to the current trading price of $ 49.60. (See TPIC’s stock analysis at TipRanks) Carvana Company (CVNA) From industry and green energy, we move on to worldwide online sales, where Carvana has become a major used vehicle seller, giving a new twist to online vehicle purchases. . The company works in a network of 23 semi-automatic vehicle storage offices and garages across the continental United States, where it allows customers to test vehicles and pick up their purchases. In the fourth quarter of 2020, Carvana sold 72,172 vehicles, an increase of 43% year on year. Sales generated more than $ 1.8 billion in total revenue, an increase of 65% year-on-year. The company’s gross profit for the quarter, $ 243.9 million, increased 71% over the previous year’s quarter. These strong metrics were also seen at the year-round level. The 244,111 cars sold in 2020 represented a 37% increase in sales year-on-year, while the $ 5.587 billion in full-year revenue increased 42% year-on-year and gross profits of $ 793.8 million increased 57% compared to 2019. The earnings results are reflected in the company’s stock performance, which has shown steady growth over the past 12 months. During this period, CVNA grew 290%. It is an impressive gain, which caught the attention of Morgan Stanley analyst Adam Jonas. “In our opinion, the CVNA gap consists of: 1) pioneering advantage, 2) brand recognition, 3) robust logistics network across the country, 4) fully online transaction resources to buy and sell cars, at the same time time offering online financing and guarantee options for customers, 5) a lower fixed cost and capital intensive business model, 6) strong customer service, and 7) the ability to leverage your platform in ancillary business lines, providing you great upside optionality. ”Jonas considers CVNA to be his“ best-rated automotive retailer ”and classifies the shares as Overweight (ie, Purchase). In addition, the analyst gives CVNA a target price of $ 420, which implies a 31% increase from current levels. (To see Jonas’ track record, click here) The recent appreciation of Carvana’s shares raised the stock price to $ 321.25, slightly above the average target price of $ 314. That hasn’t stopped Wall Street analysts to evaluate stocks highly, as the analysts’ consensus rating is a strong buy, based on 16 recent reviews that include 13 purchases and 3 retentions. (See CVNA’s stock analysis at TipRanks) To find good ideas for stock trading with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock perceptions. 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 investment.