When reviewing the focus list at any major Wall Street firm, we like to screen the list for the stocks that may provide the biggest upside return for our readers. The focus list at Credit Suisse is like many on Wall Street. It is short in terms of the number of names, but it contains their highest conviction stocks to buy for the next year. We have gone through the updated list to find the stocks to buy that have the largest upside to their current trading levels.
Teradyne Inc. (TER) is the name on the Credit Suisse list with the biggest upside potential. The company came in with strong second-quarter results last week that pounded consensus earnings per share (EPS) estimates. Credit Suisse has a $25 price target on the stock. The Thomson/First Call estimate is at $20.50. A move to the Credit Suisse target would represent an almost 50% gain.
Agrium Inc. (AGU) is a pretty bold call as fertilizer stocks were hammered yesterday on Potash pricing concerns. A Russian fertilizer company suggested yesterday that with new, higher production levels, prices could fall to below $300 per ton. The Credit Suisse price target for the stock is $122, and the consensus number is at $113. Investors are paid a 2.3% dividend. A move to the price target would be a 40% gain for investors, but this is a very risky trade at this point due to recent events.
ADT Corp. (ADT) provides electronic security, interactive home and business automation, and related monitoring services in the United States and Canada. Credit Suisse has a $55 price target for the home alarm company, while the consensus target is $49. Investors are paid a 1.2% dividend. Hitting the target price would be a 30% gain for shareholders.
Oracle Corp. (ORCL) is one of the mega cap tech names that missed earnings in the most recent quarter. The tech giant hopes to roar back with their E-Business Suite 12.1 and other new products. Credit Suisse has a $40 price target on the stock, and the consensus is lower at $36.50. Investors are paid a small 1.5% dividend. Hitting the price target would be a 25% gain for stockholders.
Rowan Companies PLC (RDC) owns and operates a fleet of 35 offshore drilling rigs, comprised of four ultra-deepwater drillships and 31 standard, high-specification and premium jack-up rigs. This fleet is quite well diversified internationally, operating in all major markets for shallow water rigs. Credit Suisse has a $45 price objective, and the consensus target is at $38.50. Hitting the Credit Suisse target would be a 27% gain for investors.
Concur Technologies Inc. (CNQR) is a leading provider of integrated travel and expense management solutions. Last week the company announced new investments by the Concur Perfect Trip Fund, the Company's initiative to allocate $150 million in capital to invest in and nurture emerging companies in the travel and entertainment cloud. Credit Suisse has a $106 price target, and the consensus target is a much lower $82.50. The Credit Suisse target is the highest on Wall Street and would represent a 20% move for shareholders.
Penn National Gaming Inc. (PENN) had a bad second quarter and cut its outlook for the rest of the year. Revenue was up 7%, to $761.4 million, and EBITDA was up 11%, to $211.4 million, but that improvement was the cause of acquisitions and new openings. The Hollywood Casino Toledo, Hollywood Casino Columbus and a 50% joint venture at Hollywood Casino at Kansas Speedway were new openings over the past year, and the company acquired Hollywood Casino St. Louis. The growth is ultimately expected to ignite earnings. Credit Suisse has a $60 price target, while the consensus is lower at $57. Trading to the target would be a 20% gain for investors.
Rockwood Holdings Inc. (ROC), which is the world's largest producer of lithium products, announced Monday it was selling its clay-based additive business to Germany’s Altana A.G. for $635 million. The company is shedding some assets in an effort to increase shareholder value and focus on the core business. Credit Suisse has an $81 dollar price objective, and the consensus target is $74. Investors receive a 2.4% dividend. Hitting the target would be a gain of more than 20% for shareholders.
We have consistently tried to remind our readers that although valuations are still reasonable, the market is perhaps getting overbought. The Credit Suisse names are not horribly overextended, and they may offer investors better upside potential than some of the current momentum stocks or sector laggards.