The old stock market axiom of buying when others are afraid could easily apply right now, according to Ashish Shah, chief investment officer at Goldman Sachs.
Amid concerns that markets will be volatile after Federal Reserve Chairman Jerome Powell’s Jackson Hole policy speech on Friday, Shah believes that doesn’t mean investors should stay on the sidelines for now.
It’s better to buy “when there’s fear in the market,” says Shah. “Don’t fall into the trap of buying when there’s FOMO,” he added.
Against this backdrop, Shah’s fellow analysts at the banking giant have identified two names that they believe would make good investment choices in the current environment. In fact, they see them making profits of at least 90% in the next year. We ran both through the TipRanks database to see what other Wall Street analysts had to say about them.
Dole (UNEMPLOYMENT AID)
The markets will do what they need to do, but regardless of the fluctuations you should be getting your daily dose of fruits and vegetables. This is where Dole comes into play.
The Dublin, Ireland-based company is the world’s largest producer of fruit and vegetables, with more than 300 different products distributed in 90 countries. Dole has 74,300 full-time and part-time employees spread across 162 distribution and manufacturing centers, while the company also owns several packing plants, cold storage plants, salad processing plants, and owns 13 ships.
The core business is selling fresh and frozen fruit and beverages, and the company’s four divisions are divided into Fresh Fruit, Fresh Vegetables, Diversified Fresh Produce – EMEA and Diversified Fresh Produce – Americas and ROW.
In its latest quarterly report for 2Q12, Dole reported revenue of $2.36 billion, up 95% year-over-year, but missing the consensus estimate by $20 million. Non-GAAP EPS of $0.44, however, beat the Street’s $0.36 expected.
But investors weren’t too happy with the outlook. adjusted EBITDA is now expected to be between $330 million and $350 million compared to the previous range of $350 million to $370 million.
That said, Goldman analyst Adam Samuelson believes the positives outweigh the negatives. Evaluating the paper, he wrote: “While we acknowledge that the guidance reduction and less-than-linear earnings recovery are disappointing, we believe that the underperformance in its smaller business along with FX headwinds should not fully outweigh the generally solid performance on the business’s balance sheet. With shares trading at 10% and 16% FCF yield on our respective 2022 and 2023 estimates, the risk/reward remains compelling, in our view, particularly when factoring in fresh vegetable losses and significant increase in working capital incorporated into this year’s FCF base. “
To that end, Samuelson rates DOLE shares a Buy, and the $17 price target suggests the stock has room to climb 91% higher in the coming year. (To follow Samuelson’s history, Click here)
Only one other analyst recently chimed in with a DOLE review and they are also bullish on its continued success, resulting in a consensus rating of the stock Moderate Buy. The average price target stands at $16, indicating that the stock will add ~80% in the coming months. (See DOLE Stock Prediction on TipRanks)
Melco Resorts & Entertainment (MLCO)
The next Goldman pick we’re looking at is Melco Resorts & Entertainment, a casino management company with facilities in Asia and Europe. Its flagship casino is the $2.4 billion City of Dreams Macau resort, which features some 511 gaming tables, 572 slot machines, hundreds of rooms, suites and villas, and all the fancy accoutrements you’d expect from one. part. The company also has other resorts in its portfolio such as Altira Macau, City of Dreams Manila and City of Dreams Mediterranean in Cyprus as well as Studio City Macau.
Resorts are known to have suffered badly during the Covid pandemic, and given that Macau’s resorts are heavily dependent on Chinese tourism, the recent lockdowns in the region affected Q2 performance.
Revenue fell 47.7% from the same period last year to $296.1 million, while the company reported an EBITDA loss of $13.8 million, compared to a profit of $56 million delivered in the previous quarter and a profit of 79, 05 million dollars in 2Q21.
That said, recent data has been more promising. From August 18 to August 24, visitors to Macau increased week-on-week by more than 43%. This is obviously good for business.
But over the past year, the stock has also borne the brunt of investor fears about the delisting of Chinese and Hong Kong-based companies if they fail to meet US audit standards.
But with the stock down 43% year-to-date while aware of various headwinds, Goldman Sachs analyst Simon Cheung smells opportunity.
“While the overall operating environment remains fluid and the timing for resolution of the potential write-off risk is uncertain, we believe MLCO’s fundamentals remain solid against some of its peers, e.g. business recovery outside Macao, less liquidity in the short term after several rounds of refinancing. At the current share price, the stock valuation looks compelling,” Cheung said.
You can say that again. Along with Cheung’s Buy rating, the $13 price target implies a one-year upside of 125% for the stock. (To follow Cheung’s background, Click here)
Cheung is the Street’s most prominent MLCO bull, and with the addition of 1 Buy and Hold each, the analyst consensus rates this stock a Moderate Buy. Overall, there are many positives on display here. following the average target of $9.67, the shares have ~68% upside in the one-year time frame. (See Melco stock forecast on TipRanks)
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Disclaimer: The views expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.