With the Federal Reserve reminding investors yesterday that it can raise or lower asset purchases in its quantitative easing program based on the data, all eyes shift to tomorrow's employment numbers. With the "bad news is good news, and good news is bad news" scenario continuing to play out, investors may want to buy stocks that are beating estimates and raising guidance. In a new research report, the equity team at Deutsche Bank raised price targets and estimates on some of their top names to buy.
Buffalo Wild Wings Inc. (BWLD) has blown away the competition and the short sellers. The company solidly beat estimates, and Deutsche Bank likes the improving margins and same-store sales growth. It raised its price target from $105 to $110. The Thomson/First Call estimate for the stock is at $110 as well.
Aegerion Pharmaceuticals Inc. (AEGR) has been absolutely on fire recently. Aegerion’s drug Juxtapid (lomitapide) is a selective inhibitor of a protein that increases LDL levels in HoFH patients. HoFH, or homozygous familial hypercholesterolaemia, is a rare genetic condition marked by high cholesterol, particularly LDL, as the body is unable to remove LDL, resulting in early cardiovascular disease. Deutsche Bank raises its price target on the stock from $85 to $107. The consensus price target is at $87. Investors need to be aware that this is the company's only drug, and Aegerion has a very limited pipeline.
Entergy Corp. (ETR) generates electricity through various sources, such as gas and oil, nuclear, coal and hydropower. It operates in two segments, Utility and Entergy Wholesale Commodities. Deutsche Bank remains positive on the growth prospects for the company and raised its target from $74 to $75. The consensus target for the stock is at $69.75, and investors are paid a very solid 4.7% dividend.
Armstrong World Industries Inc. (AWI) is another stock benefiting from the home-building boom in the United States. Although the company had a disappointing second quarter, the rest of the year is shaping up to be much better, as U.S. commercial construction is expected to ramp up and add to earnings. Deutsche Bank holds its price target on this stock to buy at $64, while the consensus is at $56.50.
Community Health Systems Inc. (CYH) made a splash yesterday with the purchase of Health Management Associates (HMA). The Deutsche Bank analysts are positive on the accretive aspects of the deal and believe there is compelling earnings power for the combined entity. The price target on the stock is $60, while the consensus target is at much lower at $50.
Orient-Express Hotels Ltd. (OEH) operates in three segments: Hotels and Restaurants, Tourist Trains and Cruises, and Real Estate. It owns, invests in or manages deluxe hotels and resorts, restaurants, tourist trains, cruises and canal boats. The Deutsche Bank price target for the stock is $14, and the consensus target is lower at $12.
American Capital Mortgage Investment Corp. (MTGE) is one of the many mortgage real estate investment trusts (REITs) that have been pounded as rising interest rates compress the spreads on their leveraged portfolios. Deutsche Bank likes its hybrid structure and the steep discount to net asset value. The firm raised its price target from $20.50 to $21.50, while the consensus stands higher at $26. Investors are paid a huge distribution of 17.4%, some of which may be a return of principal.
Amgen Inc. (AMGN) remains a top stock to buy. The biotech giant posted product sales gains across the board and has shown a willingness to acquire other companies to expand its sales and pipeline. The Deutsche Bank price target on the company is at $115, the same as the consensus target. Investors are paid a 1.7% dividend.
Summer's low trading volumes should last through August. With another potential debt ceiling argument a distinct possibility, investors may want to consider taking some profits now and carefully scaling into new positions. The market feels like it wants to go higher, but a correction may have to come before that happens.