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3 ‘Strong Buy’ Stocks From Wall Street’s Top Female Analysts

Wall Street has, with justification, a reputation as a ‘boys club,’ but that hasn’t stopped some high-powered women from getting to the upper crust of the Street’s analyst corps. While women as a whole make up fewer than 1 in 10 of the Street’s analysts, they are well-represented among the top-tier analysts.

In fact, a study published in the Journal of Accounting Research shows that female analysts issue bolder and more accurate forecasts than their male counterparts. The author, Dr Alok Kumar, came to this conclusion after examining over 2 million stock forecasts made by 17,240 analysts covering a total of 13,636 stocks.

A deep dive into TipRanks database shows that the 50 highest-ranked women among the Street’s professional stock analysts, have an average success rate of 60.9%, with an average return on their recommendations of 19.5%. In other words, an investor who follows their lead is going to find that his portfolio outperforms the overall markets by a generous margin.

So let’s go one step farther. We’ll pull up the details on three stocks which have gotten recent ‘Buy’ ratings from the top three female analysts – and that boast Strong Buy consensus ratings from the rest of the Street. These stocks come from a wide range of sectors, and offer a variety of inducements for investors. Let's take a closer look.

Alaska Air (ALK)

The first stock we're looking at is Alaska Air, North America’s sixth-largest airline. Despite its name, the airline is based in SeaTac, in the State of Washington’s Seattle region – although Alaska is the airline’s largest market. Alaska Air serves Alaska, the Pacific Northwest, and points south on the West Coast, connecting them with destinations throughout the US and Canada, as well as Mexico and Central America.

The airline has a reputation for keeping its fleet up-to-date, and earlier this month Alaska Air announced that it was ‘recalibrating’ its existing purchase agreement with Boeing, an agreement under which Alaska Air was bringing in up to 145 737-9 aircraft. The update to the purchase will see Alaska Air switch some of the new airliners to larger-capacity 737-10s, and others to longer-range 737-8s.

The adjustment to the fleet expansion comes after a year (2021) in which Alaska Air saw the top line make year-over-year gains of 73%. Revenue for 2021 came in at $6.177 billion, up from $3.57 billion the year before. In the last quarter of the year, ALK reported $1.9 billion in revenue, for 135% y/y growth. Earnings, which had been deeply negative in 2020, turned positive in 3Q21, and remained positive in Q4. Diluted EPS was reported at 24 cents, up from the year-ago quarter’s $2.55 EPS loss. The company reported having $3.1 billion in unrestricted cash at the end of 2021.

The company’s shift back into profitability is the key point for these shares, as noted by Cowen analyst Helane Becker. Becker, who is rated 5-stars and ranked in the top 1% of analysts by TipRanks writes: “We expect Alaska Air to return to sustainable profitability in March, and for that to continue through at least the summer months. We expect the airline to be profitable in March, and as they update guidance during the quarter, if it is better than expected, it would be a catalyst for the shares.”

Becker’s comments back up her Outperform (i.e. Buy) rating on Alaska Air, while her $66 price target implies a one-year upside of ~41%. (To see all the stocks in Becker’s coverage list, click here)

While Becker’s comments are bullish, she is not outlier – 6 out of 7 analysts have rated the stock as a Buy, for a Strong Buy consensus view. The stock is selling for $46.67 and has a $74.43 average price target, suggesting an upside of ~59% in the year ahead. (See ALK stock analysis on TipRanks)

Pinnacle Financial Partners (PNFP)

Next up is Pinnacle Financial, a Tennessee-based bank, with operations in its home state as well as Virginia, North and South Carolina, Georgia, and Alabama. Pinnacle offers a full range of banking services, including checking and savings, investments, trust management, and mortgages, to both retail and commercial customers. In addition, customers have access to the bank through an online portal and a mobile app, for round the clock service.

In January of this year, Pinnacle reported its 4Q21 results, showing revenues in line with the last two years’ results, and EPS of $1.71 per share. The bottom line was down 2% sequentially, but up 20% year-over-year, and well above the $1.59 EPS that had been expected. At the top line, total revenues came in at $339 million, up 11% y/y. For the past two years, the bank’s revenues have stayed within a 10% range, between $308 million and $339 million.

Pinnacle had $38.5 billion in assets at the end of 2021, a total that included $23.4 billion in performing loans. Net interest income was reported as $238.7 million for the quarter, up 8% y/y. The company’s solid asset base gave it confidence to increase its dividend in the February declaration, from 18 cents per share to 22 cents. At this rate, the payment annualizes to 88 cents per common share, and yields a modest 0.9%. The key here is not the yield, but the reliability; Pinnacle has an 8-year history of maintaining its dividend payments.

Truist analyst Jennifer Demba, the #82 analyst out of more than 7,700 rated by TipRanks, lays out a bullish cash for Pinnacle: “Strong loan and fee growth and modest LLR releases should offset lower PPP income, nonrecurring valuation adj. and low double-digit expense growth. BHG income should grow +20% this year as the company portfolios more loans to enhance the franchise value. Revenue producer hiring this year should exceed the record level in 2021…. the shares remain attractive for the growth & profitability profile, in our view.”

Standing squarely in the bull camp, Demba rates PNFP a Buy, and her $140 price target implies a robust upside of 65% for the next 12 months. (To see all the stocks in Demba’s coverage list, click here)

Pinnacle has a unanimous Strong Buy consensus rating, based on 4 positive reviews set for the shares in recent months. The stock is selling for $91.78 and has an average target of $127.50, suggesting a one-year upside potential of ~39%. (See Pinnacle stock analysis on TipRanks)

Energy Transfer (ET)

Last on our list today is Energy Transfer, one of the hydrocarbon industry’s midstream companies. The midstreamers move extracted oil and gas from wellheads to a variety of storage and terminal facilities, including tank farms, refineries, and import-export hubs. The companies typically control widespread networks of transport assets, and Energy Transfer is no exception. ET’s assets include pipelines and processing facilities, and connect the Gulf of Mexico region with North Dakota, the Great Lakes, and the Appalachian gas basins. ET’s operations are centered in the states of Texas, Oklahoma, Arkansas, and Louisiana.

In recent months, Energy Transfer has been taking steps to streamline operations and to prepare for a deemphasis on carbon-based energy. In January, the company expanded its Alternative Energy Group, which focuses on alt energy and carbon capture projects. And on March 1, ET announced that it will be divesting itself of its interest in Energy Transfer Canada. The second move, involving cash proceeds of approximately $270 million for ET, will allow the company to better focus on its US operations and improve the balance sheet.

Oil and natural gas are big business, and ET has reaped high profits from the midstream sector. In its 4Q21 results, reported last month, the company had $18.66 billion in revenues and EPS of 29 cents. These results were 86% and 52% higher year-over-year, respectively. Importantly for investors, ET’s distributable cash flow also increased, rising 17% y/y to $1.6 billion.

That last metric is of interest, because it funds the company’s dividend payment. ET had cut back on the payment back in November of 2020, in response to the corona crisis. The February 2022 dividend marked the first time since then that the payment was increased. The 15% bump in the common share dividend took the payment to 17.5 cents per share, or 70 cents on an annualized basis. This gives the dividend a robust yield of 6.7%.

RBC analyst Elvira Scotto, Wall Street’s top stock pro according to TipRanks, comes down firmly in favor of investing in ET. She writes, "ET has several growth projects that it expects to complete by year-end 2022 at a 6x build multiple on average, which should provide a boost to 2023 EBITDA as well. In addition, with a stronger balance sheet, ET is poised to return more cash to unitholders through distribution growth. We continue to believe ET offers investors a compelling value proposition.”

In line with this bullish stance, Scotto rates the stock an Outperform (i.e. Buy), and her $14 price target implies an upside of 34% for the next 12 months. (To see all the stocks in Scotto's coverage list, click here)

Are other analysts in agreement? They are. Only Buy ratings, 8, in fact, have been issued in the last three months. Therefore, the message is clear: ET is a Strong Buy. Given the $13.88 average price target, shares could soar ~33% in the next year. (See ET 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.