After a month of solid gains, that saw the Dow, the S&P 500, and the NASDAQ all hit new record highs, markets have turned down slightly. This short run of losses fits with the general pattern of trading in the past six months: strong gains, a brief pullback that does not completely erase them, followed by another round of gains. Rinse and repeat.
It’s a market environment made for a long-term investors. Brief turn-downs are nothing to fear, but they do put added risk on day trading. But the long-term trends right now appear to be working for investors willing to ‘buy and forget.’ The juxtaposition of periodic losses on an upward trend makes finding the ‘perfect’ stock more important than ever.
Which makes the TipRanks Smart Score a perfect tool. The Smart Score evaluates a series of factors for every stock – eight factors in all – and then distills them into a single-digit rating on a scale of 1 to 10. It lets investors see at a glance where a stock is likely to head, before diving into the details.
With this in mind, we’ve used the TipRanks database to pull up three stocks with a ‘Perfect 10’ from the Smart Score. Unsurprisingly, these are also Strong Buys with considerable upside potential for the coming year. Let’s take a closer look.
Eastman Chemical (EMN)
Tennessee-based Eastman got its start in 1920, and was once a subsidiary of Kodak. Today, the company focuses on materials production, employs over 14,000 people worldwide, conducts business in 100 countries, and brought in $8.5 billion in revenue last year. Eastman boasts an extensive product list, including solvents, resins, acids, glycols and polymers among many others.
Eastman’s products are essential in most of their customer industries – a fact which helped the company to weather the corona crisis. After a mile revenue dip in Q2 of last year, the company’s top line has post three quarters in a row of sequential gains. Revenue in Q4 came in at $2.4 billion, some 3% above consensus and up 7.5% year-over-year. EPS, at $1.99, was up more than 5% yoy. Shares in Eastman are up 42% in the past 12 months, outpacing the 31% gain on the S&P over the same period.
Maintaining its commitment to shareholders, Eastman in May declared a 69-cent common stock dividend. The payment is the third at this level; the company has a recent history of raising the payment between Q3 and Q4 – and has a longer history, going back 12 years, of keeping the dividend reliable. The annualized rate of $2.76 per common share gives a yield of 2.5%, slightly higher than the average found among the S&P 500’s listed companies.
Eastman is sound company, with a diverse product line, and strong market share and branding; of this led Wolfe Research analyst Josh Silverstein to rate the stock as Outperform (i.e. Buy), with a $154 price target implying an upside of ~42% in the next 12 months. (To watch Silverstein’s track record, click here)
Backing his stance, Silverstein writes, “[We] believe the outlook for EMN coming out of the downturn continues to have upside... Driving our view is broad end market exposure with more room for recovery with less cyclicality than peers and opportunity for continued pricing upside that can push sequential EBITDA growth to beat prior peak levels.”
It’s clear from the consensus rating, a Strong Buy based on 10 Buys and 3 Holds, that Wall Street generally agrees with the bullish views on this one. The shares are priced at $108.19 and their $138.31 average price target suggests an upside of 28%. (See EMN stock analysis on TipRanks)
Kinross Gold Corporation (KGC)
The right stock can be a figurative gold mine – but when that stock is in a mining company, it might just be a literal gold mine, too! Kinross is a $7.7 billion gold mining company, based in Toronto, Canada and operating in the US, Russia, West Africa, and Brazil. The company has approximately 30 million ounces in proven and probably gold reserves, and this year saw first quarter gold production of 558,777 ounces.
Kinross shows a clear pattern in its quarterly earnings results, with the lowest top line in Q1 and rising revenues through Q4. The most recent report, for 1Q21, fits this patter perfectly. The $989 million reported was down from Q4’s $1.23 billion – but it was up a noticeable 5.5% year-over-year. The gains come in part from an increase in realized gold price, which was up 13% yoy to $1,787 per ounce.
In the first quarter, Kinross dodged two bullets that could have seriously impeded operations. First, the Round Mountain open pit mine in Nevada showed instability of the northern wall. It was a dangerous situation that delayed some planned mining operations, but has been resolved. And second, in June a fire stopped production at the Tasiast mine and mill in Mauritania. The company has worked with local officials to control the situation and put a timeline on renewed production.
Sometimes, Wall Street’s analysts take an eye-catching action on a stock – and that’s the case here. Credit Suisse analyst Fahad Tariq saw fit to upgrade KGC shares from Neutral to Outperform (i.e., a Buy), writing of the stock, “While we appreciate that YTD the company has faced two major operational hurdles – the Round Mountain pit wall instability and Tasiast fire – we think the impact is mainly limited to 2021, with 2022/23 still looking like strong production years. There could also be upside from a potentially earlier restart of the Tasiast mill vs. the current (somewhat conservative) year-end timeline. In 2022, we expect the company to offset Round Mountain’s lost Phase W ounces with other ore sources, and expect higher grade ounces to be pulled forward at Tasiast…. We also see the stock being supported by buybacks, which could be accelerated in the near-term.”
Tariq gives Kinross shares an $8 price target, implying an upside of ~31% this year. (To watch Tariq’s track record, click here)
With 10 recent reviews on file, including 8 to Buy and just 2 to Hold, Kinross gets a Strong Buy consensus rating from Wall Street’s analysts. The average price target of $9.50 suggest an upside of 55% for the stock, somewhat more bullish than Tariq’s above. The current trading price here is $6.09. (See KGC stock analysis on TipRanks)
Synchrony Financial (SYF)
We’ll wrap up in the financial sector, where Synchrony, the parent company of Synchrony Bank, provides credit, savings, and other consumer banking services. The company is headquartered in Stamford, Connecticut, is FDIC insured, and operated wholly online. Like many online companies, able to provide customer services despite the COVID lockdowns, Synchrony saw strong share gains over the past year, gaining 103% in share price in the last 12 months.
Earlier this month, Synchrony announced that it had renewed the consumer financing program it runs in partnership with TJX Companies (TJX), the parent company of the TJ Maxx department stores. The renewal makes Synchrony the exclusive provider of TJX’s rewards programs. In a related – but potentially much bigger move – Synchrony also partners with Amazon (AMZN) on the Amazon.com Store Card and Prime Store Cards.
Also this month, Synchrony released its 2Q21 financial numbers, showing net earnings of $1.2 billion. This comes out to $2.12 per share, up by 22% from the previous quarter – and light-years ahead of the 6-cent EPS reported in the year-ago quarter. In a key metric, the company reported a 58% yoy gain in new accounts, to 6.3 million.
Evercore ISI analyst John Pancari initiates coverage of Synchrony by noting the companies' strong ties to Amazon, writing, “We acknowledge that despite the scale of the business, the financial contribution of the Amazon deal is likely to be limited by particularly thin pricing - evident in JP Morgan’s apparent willingness to part ways and considering Amazon’s pricing power. Accordingly, we believe the underlying profitability of the Amazon relationship to Synchrony will be heavily predicated on sheer transaction volume, as well as other potential product tie-ins…”
Pancari is bullish, however, rating SYF as Outperform (i.e. Buy), and setting a $56 price target indicating confidence in a ~22% one-year upside. (To watch Pancari’s track record, click here)
This financial services company has picked up no fewer than 16 ratings from the Wall Street analyst corps, including 13 to Buy and 3 to Hold. This gives the stock a Strong Buy consensus view, while the average price target of $55.80 suggests an upside of 24% from the trading price of $44.80. (See SYF stock analysis on TipRanks)
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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.