Is the bear market over? This is the question everyone wants to know.
After a near-historic drop in the first half of the year, the stock market has rallied over the past month, with the S&P 500 up nearly 9%, while the Nasdaq rallied 14%.
JPMorgan’s head of global market strategy, Marko Kolanovic, has an upbeat message for those concerned about the sustainability of the rally.
“Risk markets are moving up despite some disappointing data releases, suggesting that bad news has been predicted/priced in… While the operating outlook remains challenging, we believes the risk-reward for equities will be more attractive as we move through the second half of the year.” Kolanovic ignored.
Against that backdrop, the banking giant’s analysts have pinpointed two names they believe are poised to rise in price – in the order of 40% or more. In fact, the JPM pundits aren’t the only ones praising these stocks. Follow TipRanks Platform – they are rated as Strong Buy by Street analysts. Let’s take a closer look.
Olin (OLN)
We’ll start with Olin, a company that dates back to 1892 when it was a small supplier of explosive powder. Since then, it has grown significantly to become a global manufacturer and distributor of chemical products. In fact, the country is now the world’s largest producer of chlorine and caustic soda and their derivatives, with a market share of ~6%, occupying the No. 1 position in the global caustic soda / caustic soda market.
At the end of last month, Olin released its latest quarterly report – for Q2 2012. Revenue increased 18% year-on-year to $2.62 billion, while the company delivered phased EPS. dilution of $2.76, beating Street’s call of $2.57. But beyond the headline numbers, of particular interest to shareholders, is the company’s acquisitions.
After restoring its balance sheet in 2021, the company is now using its cash flow to benefit shareholders and aggressively shrinking its stock base. The company repurchased 7.4 million shares in Q2, allocating $426.5 million to the effort, and combined with the acquisition in Q1, spent $689.7 million on buybacks in the second quarter. Half a year.
With a newly announced $2 billion stock buyback program that adds to the remaining $362.5 million from a previous program, these purchases inform JP Morgan’s Jeffrey Zekauskas‘price increase.
“We estimate that Olin will spend $1.4 billion this year on share buybacks,” the analyst wrote. “Olin is conducting its share buyback effort with free cash flow and no leverage. We also see no reason why this buyback pattern might not continue at the same rate into 2023 or in the coming years, if Olin’s share price does not move meaningfully higher. That said, we believe Olin is comfortable with a buyback of its stock at least around the mid-$60s based on its public comments. “
Ultimately, Zekauskas rates Olin stock as Overweight (i.e. Buy), while his $85 price target generates a ~67% stock price range. (To see Zekauskas’ record, click here)
Overall, Olin stock has a strong Buy rating from analysts’ consensus, indicating that Wall Street agrees with Zekauskas’ assessment. Rating based on 9 buys and 2 holds in the last 3 months. The stock is selling for $51.01 and the median price target, at $71.91, implies ~41% upside potential. (View Olin stock forecast on TipRanks)
GFL . environment (GFL)
From chemical products, it’s just a short step to waste management services. GFL – short for green for life – provides waste treatment solutions and soil treatment services. The company serves residential, municipal, commercial, industrial and institutional clients across Canada and has clients in more than half of the US states. With more than 19,000 employees, GFL is the fourth largest diversified environmental services company in North America.
The company has been very busy on the acquisition front, making 28 acquisitions since the start of the year, not that it is likely to have a significant negative impact on profitability.
In its recent Q2 report, adjusted EBITDA came in at C$453 million, down ahead of the C$427 million Wall Street expected. Top performance complements the earnings profile; revenue was C$1.708 billion, also above the consensus estimate of C$1.559 billion.
More good news was delivered with the outlook, as the company raised its 2022 revenue forecast by C$400 million mid-term, while increasing its revised EBITDA forecast by $20 million mid-term. .
Although JP Morgan’s Stephanie Yee noting the cost of the impact that is having on margins, she finds other enough positives to keep the bullish argument intact.
Yee wrote: “Leadership continues to see the opportunity for more compelling deals to strengthen the company’s footprint. “While cost constraints have pushed back the company’s path toward higher margins, we still see double-digit overall business growth in 2022 and in single-digit highs in 2023, generating more dollars could work. We also see the stock attractively priced at current levels.”
These comments reinforce Yee’s Overweight (i.e. Buy) rating and $42 price target. If this number is met, investors will have a 47% return a year from now. (To see Yee’s achievements, click here)
What about the rest of the Street? Everyone is on board. The stock boasts a Strong Buy consensus rating, based on 8 Consensus Buys. The forecast shows a 12-month gain of 39%, considering an average price target of $39.65. (View GFL stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are those of prominent analysts only. Content is used for informational purposes only. It is very important to do your own analysis before making any investments.
