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  • J.P. Morgan Says These 3 Stocks Could Surge Over 100% From Current Levels
    Business
    TipRanks

    J.P. Morgan Says These 3 Stocks Could Surge Over 100% From Current Levels

    After the summer bulls, markets corrected themselves – but more than that, the selling was highly concentrated in the tech sector. The tech-heavy NASDAQ is now leading the on the fall, having lost 11.5% since September 2.JPMorgan strategist Marko Kolanovic points out that much of the market is now well-positioned for a rebound. Kolanovic believes that stocks will head back up in the last quarter of the year.“Now we think the selloff is probably over. Positioning is low. We got a little bit of a purge, so we think actually market can move higher from here,” Kolanovic noted.Acting on Kolanovic’s outlook, JPMorgan's stock analysts are starting to point out their picks for another bull run. These are stocks that JPM believes they may double or better over the coming year. Running the tickers through TipRanks’ database, we wanted to find out what makes them so compelling.NexTier Oilfield Solutions (NEX)The first JPM pick is NexTier, a provider of oilfield support services. The oil industry is more than just production companies. There are a slew of companies that provide drilling expertise, fluid technology for fracking, geological expertise, pumping systems – all the ancillary services that allow the drillers to extract the oil and gas. That is the sector where NexTier lives.Unfortunately, it’s a sector that has proven vulnerable to falling oil prices and the economic disruption brought on by the coronavirus pandemic crisis. Revenues fell from Q1’s $627 million to $196 million in Q2; EPS was negative in both quarters.But NexTier has a few advantages that put it in a good place to take advantage of a market upturn. These advantages, among others, are on the mind of JPM analyst Sean Meakim. “Admittedly we’re concerned about the sector disappointing the generalist 'COVID-19 recovery' crowd given the asymmetry of earnings beta to oil, but with 1) a solid balance sheet (net debt $17mm), 2) our outlook for positive (if modest) cash generation in 2021 (JPMe +$20mm), 3) a pathway to delivering comparably attractive utilization levels and margins, and 4) the cheapest valuation in the group (~20% of replacement), we think NexTier stands out as one of the best positioned pressure pumpers in our coverage,” Meakim opined.In line with his optimism, Meakim rates NEX an Overweight (i.e. Buy) along with a $5 price target. His target suggests an eye-opening upside potential of 203% for the coming year. (To watch Meakim’s track record, click here)Similarly, the rest of the Street is getting onboard. 6 Buy ratings and 2 Hold assigned in the last three months add up to a Strong Buy analyst consensus. In addition, the $3.70 average price target puts the potential twelve-month gain 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 airline industry. It’s not commonly known, but most airlines don’t actually own their aircraft; for a variety of reasons, they lease them. Fly Leasing, which owns a fleet of 86 commercial airliners valued at $2.7 billion, is one of the leasing companies. Its aircraft, mostly Boeing 737 and Airbus A320 models, are leased out to 41 airlines in 25 countries. Fly Leasing derives income from the rentals, the maintenance fees, and the security payments.As can be imagined, the corona crisis – and specifically, the lockdowns and travel restrictions which are not yet fully lifted – hurt Fly Leasing, along with the airline industry generally. With flights grounded and ticket sales badly depressed, income fell – and airlines were forced to cut back or defer their aircraft lease payments. This is a situation that is only now beginning to improve.The numbers show it, as far as they can. FLY’s revenue has fallen from $135 million in 4Q19 to $87 million 1Q20 to $79 million the most recent quarter. EPS, similarly, has dropped, with Q2 showing just 37 cents, well below the 43-cent forecast. But there are some bright spots, and JPM’s Jamie Baker points out the most important.“[We] conservatively expect no deferral repayments in 2H20 vs. management’s expected $37m. Overall, our deferral and repayment assumptions are in line with the other lessors in our coverage. We are assuming no capex for the remainder of the year, consistent with management’s commentary for no capital commitments in 2020 [...] Despite recent volatility seen in the space, we believe lessors’ earnings profiles are more robust relative to airlines,” Baker noted.In short, Baker believes that Fly Leasing has gotten its income, spending, and cash situation under control – putting the stock in the starting blocks should markets turn for the better. Baker rates FLY an Overweight (i.e. Buy), and his $15 price target implies a powerful upside of 155% for the next 12 months. (To watch Baker’s track record, click here)Over the past 3 months, two other analysts have thrown the hat in with a view on the aircraft leasing company. The two additional Buy ratings provide FLY with a Strong Buy consensus rating. With an average price target of $11.83, investors stand to take home an 101% gain, should the target be met over the next 12 months. (See FLY stock analysis on TipRanks)Lincoln National Corporation (LNC)Last up, Lincoln National, is a Pennsylvania-based insurance holding company. Lincoln’s subsidiaries and operations are split into four segments: annuities, group protection, life insurance, and retirement plans. The company is listed on the S&P 500, boasts a market cap of $5.8 billion, and over $290 billion in total assets.The generally depressed business climate of 1H20 put a damper on LCN, pushing revenues down to $3.5 billion from $4.3 billion six months ago. Earnings are down, too. Q2 EPS came in at 97 cents, missing forecasts by 36%. There is a bright spot: through all of this, LNC has kept up its dividend payment, without cuts and without suspensions. The current quarterly dividend is 40 cents per common share, or $1.60 annually, and yields 4.7%. That is a yield almost 2.5x higher than found among peer companies on the S&P 500.Jimmy Bhullar covers this stock for JPM, and while he acknowledges the weak Q2 results, he also points out that the company should benefit as business conditions slowly return to normal.“LNC’s 2Q results were weak, marked by a shortfall in EPS and weak business trends. A majority of the shortfall was due to elevated COVID-19 claims and weak alternative investment income, factors that should improve in future periods [...] The market recovery should help alternative investment income and reported spreads as well…”These comments support Bhullar’s Overweight rating. His $73 price target indicates room for a robust 143% upside from current levels (To watch Bhullar’s track record, click here)Overall, the Moderate Buy rating on LNC is based on 3 recent Buy reviews, against 5 Holds. The stock is selling for $30 and the average price target is $45.13, suggesting a possible 50% upside for the coming year. (See LNC stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

  • Exxon Mobil's Dividend Yield Hits 10%: What Investors Need To Know
    Business
    Benzinga

    Exxon Mobil's Dividend Yield Hits 10%: What Investors Need To Know

    Exxon Mobil's dividend yield has continued to rise in a year that the stock has fallen by more than 50%. What Happened: Exxon Mobil Corporation's (NYSE: XOM) dividend yield is sitting above 10% as of Thursday.The company paid out a dividend of 87 cents in September. Based on the ex-dividend date of Aug. 12, the annual dividend rate was 7.9%.The dividend yield was 7.9% and 5.8% at the ex-dividend dates of the other dividends paid in 2020.In 2019, all four ex-dividend dates were at yields of 5% or less. In 2018, all four dates were 4.1% or less. Charts dating back to 1989 show that Exxon Mobil's dividend yield is at its highest-ever level. What's Next: Exxon Mobil has a history of raising its quarterly dividend payout.The 87-cent quarterly payout has stayed the same for six straight quarters.Since 2008, ExxonMobil has never had the same quarterly dividend payout for more than four straight quarters.MKM Partners analyst John Gerdes has suggested ExxonMobil may need to raise $15 billion in debt to support its dividend over the next two years.Options trading trends are also pointing to a potential dividend cut this year or the next. XOM Price Action: Shares of ExxonMobil were down 0.2% at $34.32 at the close Thursday.Photo by Michael Rivera via Wikimedia. See more from Benzinga * Dave Portnoy Shares Thoughts On Penn Stock Offering, Barstool App Figures * Churchill Capital Launches Fifth SPAC * Spotify, Match Group, Epic Games Join Fight Against Apple's App Store(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Hedge Fund Bets on Lithium Miner After Big Electric Vehicle Win
    Business
    Bloomberg

    Hedge Fund Bets on Lithium Miner After Big Electric Vehicle Win

    (Bloomberg) -- Formidable Asset Management LLC, a hedge fund that bet on electric-vehicle maker Workhorse Group Inc., and battery maker Nano One Materials Corp. is now putting its money on a lithium mining company.The Cincinnati-based fund sees Lithium Americas Corp. as a “differentiated operator” within the sector that has imminent production, a strategic location for some of its operations and undervalued assets, the fund wrote in a research report on Friday.“Based on the valuation of its competitors (relative to their potential production/earnings) as well as recent prices paid for assets by its competitors, LAC’s current market cap is well below what we believe the value of its assets to be,” firm said in its report.The estimated fair value for the stock is between $15 and $22, which is significantly higher than its Sept. 24 close of $7.18. The stock gained 19% in U.S. trading on Friday and closed at $8.54 with a market cap of about $771 million. Formidable didn’t specify the size of its position in the miner.The hedge fund also noted that its fair value analysis excludes the potential for a higher share price if the market valued Lithium Americas as a battery company, as opposed to just a producer of the raw material.“Even at ‘normal’ lithium prices, the company is being given almost no credit for its Thacker Pass opportunity, which has the potential to be twice as valuable as its Argentinian operation,” it said.Formidable’s bet on electric-vehicle maker Workhorse Group earlier this year, helped the fund rally about 25% in June, beating the S&P 500. The main contributor to the fund’s June performance was its stake in Workhorse, according to a letter seen by Bloomberg. Workhorse surged 600% in the month of June, making it the second-best performing stock on the Nasdaq Composite Index. Since then, Workhorse has climbed another 43%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.