There’s an Opportunity Brewing in These 3 Top-Rated Stocks

There are literally thousands of publicly traded firms on Wall Avenue’s inventory exchanges, tens of hundreds of buyers shopping for and promoting virtually each hour, and extra hundreds {of professional} inventory analysts watching each element of those transactions. It’s sufficient uncooked knowledge that even Mr. Spock would have bother calculating the percentages in his head.

Spock would flip to the Enterprise laptop, which we haven’t obtained – however we do have the Sensible Rating, a complicated knowledge parsing and collation instrument, powered by AI-driven algorithms. The Sensible Rating gathers knowledge on these hundreds of shares, after which charges every inventory in opposition to a set of 8 separate elements which were proven to match up with future outperformance. In the long run, every inventory will get a single-digit rating on a scale of 1 to 10 – with a ‘Good 10’ indicating a inventory that, fairly logically, deserves a re-examination.

So, let’s do this. We’ve opened up the TipRanks database and pulled up the small print on 3 of those top-rated, ‘Good 10’ shares, and gone on to search out out what the analysts should say about them. Right here they’re, with the analyst commentaries.

Phillips 66 (PSX)

The primary identify on our listing is Phillips 66, one of many world’s main oil firms. This agency, with its $44.5 billion market cap, has been reaping the features from oil’s post-pandemic rise and noticed its annual revenues soar from $111 billion in 2021 to $170 billion final yr. Phillips generates these numbers by bringing crude oil, pure gasoline, and pure gasoline merchandise – primarily liquids – to the refineries, after which advertising a variety of refined hydrocarbon merchandise, together with automotive and fuels, gasoline and lubricating oils, petrochemicals, and different industrial chemical compounds.

The corporate at present has 13 lively refineries, and markets its fuels below a number of model names, together with the broadly recognized Conoco, 76, and the eponymous Phillips 66. The truth is, the corporate’s protect emblem is without doubt one of the extra well known branding symbols on US highways. Phillips merchandise are used each out and in of the transportation sector, within the aviation business, in industrial chemical compounds, in agriculture, and within the pharmaceutical enterprise.

In its most up-to-date quarterly report, for 1Q23, Phillips confirmed a slowdown in income era, with the $35.1 billion high line slipping from the $36.6 billion reported within the year-ago interval. On the similar time, the revenues beat expectations by $562.74 million. The underside-line earnings, reported as a non-GAAP EPS of $4.21, had been 65 cents per share higher than the forecasts.

Phillips completed Q1 with deep pockets, together with $7 billion in money and liquid property, in addition to $6.2 billion in ‘dedicated capability’ from its credit score amenities. Within the quarter, the corporate generated $2.5 billion in working money stream, of which $1.2 billion was free money stream. Some $1.3 billion was returned to shareholders in the course of the quarter, via each dividend funds and repurchases.

The div funds deserve a more in-depth look. Phillips elevated its fee earlier this yr, and the final fee despatched, on June 1 for $1.05 per widespread share, represented the second fee on the greater fee. The present dividend, at $4.20 annualized, is yielding 4.3%.

On the Sensible Rating, PSX will get a lift from its basic elements, which embrace a 47.6% return on fairness for the trailing 12 month interval, in addition to from 100% optimistic information sentiment and 95% optimistic sentiment from the monetary bloggers.

Analyst Jason Gabelman, from TD Cowen, is bullish right here, noting Phillips’ general sturdy efficiency in an important business. He writes, “We count on refining operations to enhance and its non-refining publicity to as soon as once more develop into a extra appreciated differentiator. Refinery operations weakened in 2021-22 given elevated deliberate and unplanned upkeep. We anticipate operations to maneuver again to ranges per pre-Covid efficiency, close to best-in-class, together with $7/bbl opex and 93% refinery utilization.”

“Furthermore,” Gableman went on so as to add, “as business refining margins proceed to normalize from peak-cycle 2022 over the subsequent couple years, we anticipate PSX greater non-refining earnings combine and development to develop into a extra appreciated issue.”

Gabelman’s Outperform (Purchase) score comes together with a $123 value goal implying an upside of 27% for the yr forward. (To observe Gabelman’s observe document, click on right here.)

The Sturdy Purchase consensus score on PSX shares relies on 10 current evaluations, with a breakdown of 8 to 2 in favor of Buys over Holds. The inventory’s $97.13 buying and selling value and $121.10 common value goal counsel a one-year upside potential of 25%. (See Phillips 66’s inventory forecast.)

GFL Environmental (GFL)

For the second inventory on our listing, we’ll flip to a sector that most individuals don’t take into consideration, however wouldn’t need to reside with out – waste administration providers. GFL, a Toronto-based firm, is lively throughout Canada, serving industrial, industrial, institutional, municipal, and residential clients. The corporate’s actions embrace disposal of liquid and stable waste, together with common rubbish, recyclables, industrial dumpster assortment, development particles, automotive fluids, hazardous wastes – and that’s solely the start of the listing. GFL even works with soil reclamation.

Waste administration – or rubbish assortment, as we often consider it – is huge enterprise, far greater than most of us ever think about. GFL has a market cap of $13.76 billion in US foreign money, and noticed greater than C$6.76 billion ($5.11 billion) in income final yr. The corporate works from a community of amenities that embrace every thing from materials restoration crops to conventional landfill, and natural processing stations to soil remediation websites.

Within the first quarter of this yr, GFL boasted revenues of C$1.8 billion ($1.36 billion), beating the Avenue’s C$1.68 billion ($1.27 billion) forecast. The corporate’s backside line of C$0.08 per share got here in C$0.11 forward of expectations. The agency’s income era is on a typically upward trajectory, rising 22% from 2021 to 2022, and the 1Q23 high line was up 28% from the prior-year interval.

The Sensible Rating right here reveals a number of factors for buyers to think about. Technical elements are stable; the 12-month-change momentum got here in at 50.88%, and the straightforward transferring common (20 days over 200 days) is optimistic. The monetary bloggers are 100% bullish, and the hedge funds tracked by TipRanks elevated their holdings right here by 743,000 shares final quarter.

With all of those sound metrics, what caught the attention of 5-star analyst Michael Doumet, of Scotiabank, was this firm’s quick development. Doumet says, “GFL’s development story is effectively understood: it’s executing the playbook its bigger friends executed many years in the past (however is doing so, when business pricing self-discipline is improved)… GFL’s engaging market choice (i.e., >65% in secondary/much less aggressive markets) gives the premise for above-market margin enlargement, and its skill to additional densify its current working areas present it with significant runway to execute accretive M&A. De-leveraging to beneath 4x internet debt earlier than the tip of 2023, with three deliberate divestitures (anticipated to be accomplished earlier than the tip of Q2/23), and extra so past, may support in a optimistic re-rate.”

Trying forward, Doumet places an Outperform (Purchase) score right here, with a C$58 (US$43.87) value goal that means an upside of 17.7% for the subsequent 12 months. (To observe Doumet’s observe document, click on right here.)

It’s clear, from the unanimous Sturdy Purchase consensus score based mostly on 10 optimistic analyst evaluations, that Wall Avenue is bullish on this inventory. The shares are promoting for US$37.28, and the US$43.81 common value goal implies a achieve of 17% on the one-year time horizon. (See GFL’s inventory forecast.)

Tecnoglass, Inc. (TGLS)

Final on our listing, Tecnoglass, is a pacesetter in a specialty market inside the development supplies sector. The corporate gives architectural glass, home windows, and associated aluminum merchandise used within the development business, and its merchandise might be present in every thing from single-family houses to multi-family condominium dwellings to industrial buildings. The agency relies in Colombia, and holds the #1 place within the Latin American marketplace for architectural glass – and the #2 place within the US market.

Tecnoglass boasts an enormous manufacturing facility in its house nation, a 4.1 million sq. foot, vertically built-in, state-of-the-art manufacturing facility that’s able to assembly the wants of greater than 1,000 world clients. Whereas Tecnoglass is lively all over the world, and leads its market in Latin America, some 90% of its income come from gross sales to the US development market, particularly within the fast-growing state of Florida. We must always observe that Florida is carefully linked to Latin America, by a mix of geography and immigration.

The US actual property market – significantly the residential market, was sizzling in 2022, and Tecnoglass noticed a pointy rise in revenues and earnings. On the high line, the corporate’s 2022 income was up 44% year-over-year to hit $716.6 million. Within the final quarterly report, for 1Q23, the upward development continued. The corporate reported a high line of $202.6 million, up 50% y/y and beating the forecast by $11.6 million. The non-GAAP EPS determine, of $1.08 per share, was 18 cents per share higher than had been anticipated – and was greater than double the 53-cent EPS determine reported within the year-ago quarter.

After we have a look at Tecnoglass’s Sensible Rating, we discover highly effective momentum from the technical elements – a 12-month change of 183%. The information sentiment is 100% bullish, as are the monetary bloggers. Optimistic crowd knowledge and rising hedge exercise spherical out the Good 10; final quarter, the hedges elevated their holdings of TGLS by 292,400 shares.

These sturdy development figures caught the attention of Stanley Elliott, 5-star analyst from Stifel. Elliott writes of Tecnoglass, “TGLS has skilled strong development pushed by market share features, new product line expansions (entered residential in 2017), and geographic enlargement, all tendencies we count on will proceed into the foreseeable future. Additional, TGLS has publicity to comparatively engaging parts of the tip market, with almost 90% of gross sales in Florida and almost 30% from R&R. Shares at present commerce at a reduction to its closest peer, which we imagine gives a lovely entry level alternative.”

These feedback assist Elliott’s initiation of protection with a Purchase score and $60 value goal indicating confidence in a 26% one-year achieve. (To observe Elliott’s observe document, click on right here.)

Whereas there are solely 4 current analyst evaluations of this inventory, they’re all optimistic – giving TGLS its Sturdy Purchase consensus score. The shares have a mean value goal of $54.75 and a buying and selling value of $47.56, suggesting a 15% upside for the yr forward. (See Tecnoglass’s inventory forecast.)

To search out good concepts for shares buying and selling at engaging valuations, go to TipRanks’ Greatest Shares to Purchase, a newly launched instrument that unites all of TipRanks’ fairness insights.

Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is vitally vital to do your personal evaluation earlier than making any funding.

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