The Street experts built their reputation on the quality of their stock and market reviews, and they’re now in force to deliver interpretations of the strong start we’ve had. seen in 2023. The Street S&P 500 The index rose 5%, while the teaching-heavy Nasdaq gained nearly 10%. It’s a welcome exemption from last year’s downtrends; the question is, will it hold?
Following the situation from investment firm Evercore ISI, strategist Julian Emanuel is skeptical. He recommends that investors start allocating portfolio resources to defensive and value positions, looking for stocks that have a reputation for enduring a downturn and are trading at a low level. discount – or better yet, both. He told investors not to focus on stocks that are up today, but look for stocks that are set to rise, no matter where the economy collapses. Specifically, he points to consumer staples and energy stocks as likely to outperform for the rest of this year.
Against that backdrop, Evercore analysts made two specific picks, and we used the TipRanks database to figure out where they were. Let’s take a closer look.
New Fortress Energy Company (NFE)
The first Evercore option we’re reviewing is New Fortress Energy, a natural gas company that operates in the LNG or liquefied natural gas sector. New Fortress is focused on delivering and transporting LNG into the global supply network. The company boasts 15mm+gpd throughput capacity in its network, has 15 LNG vessels globally, and has completed more than 650 transshipment operations and over 8,000 rail and truck loading operations. Overall, New Fortress serves more than 100 corporate clients around the world.
New Fortress is expanding operations and is on track to deploy five new floating LNG (FLNG) facilities in the Gulf of Mexico, in both Texas and Mexico.
In the most recently reported quarter, Q3 of 22, New Fortress posted peak revenue of $731.9 million, more than doubling its revenue from the same period last year. For the first nine months of 2022, the company posted revenue of $1.82 billion, compared with just $674.2 million in the same period in 2021. Rising prices, high and continued demand are supporting the company’s revenue. New Fortress.
Earnings were more volatile, but even so, the company showed strong year-over-year growth. In Q3 FY21, NFE’s earnings per share suffered a net loss of 5 cents; for Q3 FY22, adjusted EPS amounted to 29 cents of profit, even after accounting for a $24 million one-time loss charge on asset sales, realized in Q2.
To capture the interest of investors, especially investors planning to move into defensive stocks, New Fortress in December announced an update to its dividend policy – a policy that will deliver significantly increased capital returns to shareholders. Under the new policy, the company paid a dividend of $3 per common share on January 13. At the new rate, the dividend yielded 7.8% and the company’s Board of Directors will rate the dividend. whether or not to pay these high dividends every six months. The new dividend policy is based on the company’s expectation of a liquidity of $11 billion over the next three years, a surprise return that will be used for aggressive buybacks and increased capital gains.
Evaluating these reserves for Evercore, 5-star analyst Jonathan Chappell has written extensively about new FLNG projects and prospects for strengthening New Fortress’ presence in U.S. gas export markets and Mexico. In his words, “NFE is uniquely positioned to build LNG export assets, with relatively unlimited commitments to spot gas production in the short term, offering high profit potential. In the short term… management said they believe having 80% of unused capacity could potentially help supply gas to the Altamira FLNG platform at a cost comparable to US gas exports from the base. existing export infrastructure on the U.S. Gulf Coast.”
“We urge investors (who may have been waiting on the sidelines before) to seriously consider NFE right now as the FLNG is, we believe, coming soon and the broader market has may not fully appreciate the potential of NFE,” Chappell summarizes.
Finally, Chappell rates NFE Stock as Doing Well (i.e. Buy) and his price target, currently set at $74, implies a one-year upside potential of ~96%. (To see Chappell’s achievements, click here)
Overall, there are 5 recent analyst ratings for NFE stock, and they include 4 Buy versus 1 Hold, for a Strong Buy consensus rating. The stock is trading at $37.8 and an average price target of $63.40 suggests a ~68% gain over the next 12 months. (See NFE Stock Forecast)
Kroger Company (KR)
Evercore’s next pick is a longtime leader in the consumer staples segment, with a recognizable name. The Kroger Company is one of the country’s largest supermarket chains, with 44 distribution centers supporting more than 2,700 stores, 420,000 employees, and operations in 35 states plus DC. Kroger posted total revenue of more than $137 billion in its last full fiscal year, 2021, and is on track to surpass that total, with $113.4 billion in revenue as of the third quarter of fiscal 2022. , the previous quarter reported.
For that quarter, the company posted peak revenue of $34.2 billion, up 6.4 percent year-over-year, and had earnings of 88 cents per diluted share, up nearly 13 percent year-over-year. period. The company’s digital sales grew 10% year-over-year in the quarter.
After a successful quarter, Kroger management announced its next dividend on March 1, at 26 cents per common share. The annual dividend payment is $1.04 and yields a yield of 2.3%. Kroger has a long history, dating back to 2011, of maintaining reliable payments.
Kroger, like many of its peers, has had to deal with increasing inflationary pressures since the fall of 2021. Rising prices increase store operating costs, cut margins, and cause pressure on consumers to buy less. Kroger is insulated from these effects, to a limited extent, as it is primarily a grocery, food and beverage chain that consumers continue to need even as prices rise.
This popular retailer caught the attention of Evercore analyst Michael Montani, who wrote about it: “Kroger provides power through, improves market share trends and is the driving force behind M&A in the industry. inflationary backdrop, with an attractive risk-reward in our view. In the base case, we see the industry growth trend above and Kroger’s improved market share performance in CY23 as reasons for multiple expansion.”
Looking ahead, Montani rates KR Stock Underperforming (i.e. Buy), with a $57 price target implying a ~27% gain in a one-year timeframe. (To see Montani’s achievements, click here)
All in all, KR stock has 14 recent analyst reviews on file. These include 6 Buys, 6 Holds and 2 Sells for a moderate Buy consensus rating. The stock has a trading price of $44.13 and an average price target of $52.57 that suggests a 19% gain over the next year. (See Kroger . stock forecast)
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deny the responsibility: The opinions expressed in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important that you do your own analysis before making any investment.
