June opened with a bang in the markets following positive news on the jobs front. According to the latest Department of Labor report, U.S. employers added 2.5 million people to their payrolls in May, pushing the unemployment rate down to 13%. For perspective, analysts were expecting the BLS to report job losses of 8.3 million and an unemployment rate of nearly 20%.
As societies and states return to a more normal functioning state, traders are going to find that some stocks are particularly well positioned to take advantage of post-pandemic conditions. Right now, Wall Street’s analyst corps is working to tag just which stocks investors should bet on.
We used the TipRanks database to pull up the details on three stocks which the analysts describe as their 'top picks.' Let's take a closer look.
Nomad Foods, Ltd. (NOMD)
We’ll start in the food industry. Frozen foods have long been a staple in home kitchens, and UK-based Nomad is a major distributor in the niche. The company boasts a $4.3 billion market cap and over $2.2 billion in annual revenues.
The social lockdown policies forced a sudden change in consumers’ eating habits. Eating out was out – in favor of eating at home, which led consumers to stock up on essentials, including frozen foods. For Q1, Nomad reported 36 cents EPS, compared to the 31-cent forecast. The 16% beat was accompanied by over $753 million in revenues, 10% above estimates. Looking ahead, analyst see Nomad bringing in $2.6 billion for the current fiscal year.
Covering this stock for Wells Fargo is analyst John Baumgartner. He sees the company making and holding inroads with new customers, as eating habits change: “In addition to stronger demand from core consumers (middle-income households with children), altered consumption habits are drawing consumers both younger/millennial and older, and more affluent households.”
Baumgartner reiterates the stock among his top picks given "a compelling 12-month risk/reward setup." To this end, the analyst rates the stock a Buy along with a $28 price target, which indicates his confidence in a one-year upside of 17%. (To watch Baumgartner’s track record, click here)
Overall, Wall Street agrees with Baumgartner. The analyst consensus here is unanimous; the Strong Buy consensus rating is based on 7 recent Buys. Shares are priced at $20.62, and the $25 average price target suggests room for 21% growth in the coming year. (See Nomad stock analysis on TipRanks)
OneMain Holdings (OMF)
Moving to the financial sector, we come to OneMain. This holding company controls subsidiaries in the consumer finance and insurance industries. Finance products offered by the company include personal loans and insurance for customers who lack access to bank and credit card lending. OneMain operates in 44 states.
The coronavirus economy hit consumers and financers hard. OneMain reported a sharp sequential decline in Q1, with EPS at just 33 cents. This ended 7 straight quarters in a row of earnings beats. The poor results came as OneMain’s customer base, from the lower end of the economic spectrum, had a hard time making payments.
Looking forward, however, as the economy opens up, OneMain’s prospects are also looking brighter. With more potential customers both returning to work and short of funds, the company sees strong prospects for increased business.
Stephens analyst Vincent Caintic writes of the company, “OneMain has gotten more "surgical" in its originations, for example focusing on industries and regions where there are less issues (e.g. no tourism). Certain industries such as construction have begun opening up after initially experiencing a lock-down related slump.”
Caintic named OneMain as a top pick, and in line with this upbeat assessment, Caintic rates the stock a Buy. (To watch Caintic’s track record, click here)
Overall, Wall Street’s analysts are bullish here, and the analyst consensus rating is a Strong Buy. This rating is based on 12 Buys and a single Hold set in recent weeks. Yet, shares are selling for $31.55, while the average price target of $33.08 implies a modest upside of 5%. (See OneMain stock analysis at TipRanks)
Green Thumb Industries (GTBIF)
For the last stock on our list, we head over to the cannabis industry. Since it was legalized throughout Canada in 2018, and as increasing US jurisdictions legalize the substance, cannabis has become big business. Green Thumb, based in Chicago, recently reported an increase in its retail footprint, with its eighth store in Illinois. The new location was its forty-fifth nationally.
Green Thumb offers a variety of cannabis brands, including vapes, pre-rolled cigarettes, edibles, and medicinal products. The company $102.6 million in Q1 revenue, and earnings of $25.5 million. The company also reported a switch to positive cash flow during the quarter.
Benchmark analyst Mike Hickey sees a bright future for Green Thumb. He writes, “We are confident GTI will continue to generate profitable growth, deliver positive free cash flow and maintain a strong balance sheet through disciplined capital allocation. We believe in the long-term cannabis market opportunity and believe GTI’s valuation will eventually reconnect with growth fundamentals [...] GTI remains our top cannabis pick.”
Hickey’s $14 price target supports his Buy rating, and suggests a 56% growth potential this year. (To watch Hickey’s track record, click here)
All in all, Green Thumb has a unanimous consensus view, a Strong Buy based on 7 positive analyst reviews. Shares are affordably priced at $10.27, and the average price target of $17.16 is indicative of a robust 71% upside in the next 12 months. (See Green Thumb stock analysis on TipRanks)
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