We’ve seen the market take a break lately, and that’s not surprising considering the year-to-date rally. Stocks pour out of the gate in 2023 as if in a hurry to deposit the terrible year of 2022 into the historic barrel.
Observing the sharp and sudden change in sentiment, BlackRock’s chief bond officer, Rick Rieder, called the rise “unusual”. However, Rieder, who holds about $2.4 trillion in assets, is not ready to put on the bullish outfit yet.
With margins compressed across the board, stocks are generally “fine” and that’s why Rieder says he “would rather buy income – both debt and equity – I’d rather buy stable income.” much more determined.” Reider will favor companies with “quality earnings”.
That’s not BlackRock’s talk. Strolling, the investment giant with more than 7% stake in two names offers just that; stocks exhibit high profitability, making them ideal names to own in any macro context. We opened the TipRanks database to see how these names fare among the Street’s stock gurus. This is the lowest level.
Free Energy Company (LBRT)
Stocks plummeted in 2022, that was well-founded, but not all of it was battered. The energy industry is one of the few that makes a lot of money, and you could add Liberty Oilfield Services to the list of better-performing stocks – it’s up 65% over the course of the year.
Liberty is a North American oilfield services company that offers onshore oil and gas exploration and production companies what the company calls an “innovation suite” of services and technologies. finishing technology. It provides high quality hydraulic, engineering and line fracturing services; In short, Liberty is a pure pressure pump company.
And that value proposition has served it well lately, as evident in the company’s latest quarterly report for the fourth quarter of 2022. Revenue increased 78.4% year-over-year. to 1.22 billion USD. Net income came in at $153 million, up from $147 million generated in the third quarter. The result was fully diluted earnings per share of $0.82, and that led to earnings. record full dilution per share of $2.11 for the full year.
In even more good news, the company has raised its existing share repurchase authorization to $500 million, up from $250 million originally authorized when the program started in July.
With an established profit profile, moving on to Blackrock’s participation, the fund giant now owns 13,292,031 shares, or 7.3% of LBRT’s shares, and is worth more than $203 million at price. current stock.
Weighing from Stifel, 5-star analyst Stephen Gengaro highlights many reasons why investors should back the stock at an ‘attractive valuation’.
“We believe that increasing US completion activity in 2023 coupled with tight supply and demand pressures on fundamentals will support strong growth for LBRT. We expect increased profitability, strong FCF and increased cash return for shareholders as LBRT implements its dividend repurchase and distribution program. We believe stocks offer attractive trading risk/reward at just 2.3x the estimated EBITDA 2023,” said Gengaro.
Not only does Gengaro predict a solid future, he’s also backing his stance with a Buy rating and a $28 price target, creating a chance for an 82% gain in 12 months. (To see Gengaro’s achievements, click here)
Most on the Street agree with that point; With the exception of one hedge keeper, all 5 other recent analyst reviews have been positive, making the consensus here to be Strong Buy. (See LBRT stock forecast)
Unified parcel service (ups)
We will now switch to using UPS, one of the largest express delivery companies in the world. With a footprint in 220 countries and territories and a workforce of ~500,000 people providing a variety of logistics solutions to its customers, the delivery giant’s revenue will reach $100 billion by 2022.
However, in Q4, a 2.7% year-over-year decline to $27 billion showed top revenue $1.03 billion below consensus expectations. At 27.9 million, average daily pack volume was also below the 28.2 million forecast, while total package volume for the quarter came in at 1.76 billion, below Street’s 1.78 billion forecast.
However, the company remains solidly profitable, as adj. EPS came in at $3.62, beating Street’s forecast of $3.59. Operating cash came in at $14.1 billion and free cash flow came in at $9.0 billion.
For 2023, the company predicts revenue will be between $97 billion and $99.4 billion and sees consolidated adjusted operating margins between 12.8% and 13.6%. .
And for the 14th year in a row, the Board of Directors approved an increase in the company’s quarterly dividend. With a 6.6% increase, UPS will pay a 2023 first quarter dividend of $1.62, which will generate a dividend yield of 3.4%. Furthermore, the Board of Directors also gave the green light for a new $5 billion share buyback authorization, continuing the existing authorization.
Blackrock is here with 7.9% ownership. This is equivalent to holding 57,900,388 shares. Right now, these are worth almost $11 billion.
For Deutsche Bank analyst Amit Mehrotra, UPS’s bullish case rests on the company taking all the right steps. Explaining his stance, Mehrotra writes: “For our 2023 estimates, we think triangular disclosures with EPS are around $11.60 per share versus consensus of approx. $12 per share. We note, however, that this reflects more than $900 million in below-projected non-cash pension income in 2023, which we estimate to be about 3 times what was projected. in consensus on a net basis. This is because UPS is reinvesting the full amount of its higher-end retirement benefits ($420 million) into initiatives to improve service, productivity, and transit times. In our view, this is exactly the right strategy to drive sustainable value creation and it is worth noting that operating profit for 2023 is roughly in line with consensus despite the investment. this increase.”
Finally, Mehrotra rates UPS Share Buy with a $220 price target, implying ~17% upside potential over the next year. (To see Mehrotra’s achievements, click here)
Overall, the consensus rating here is Buy Moderate, based on 19 analyst reviews including 10 Buys, 8 Holds and one Sell. (See UPS Stock Forecast)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.
