Fed Chairman Jerome Powell’s comments about the central bank’s intention to curb inflation even if it causes “some pain” spooked markets on Friday. And according to Ari Wald, head of Technical Analysis at Oppenheimer, there are other worrying indicators.
“The S&P 500’s rejection of its 200-day moving average is a bearish warning because September seasonals are particularly poor when the index is trending down,” Wald explained.
With September just around the corner, then, Wald’s advice is to be careful, although promising, he believes things bode well. “Against near-term trading concerns,” the analyst explained, “we still believe the June retracement suggests a longer-term bottom is forming.”
With that in mind, let’s take a look at 2 stocks that Wald’s fellow analysts at the investment firm believe are ripe for the picking even in an environment that requires investors to be particularly discerning. We ran the pair through the TipRanks database to see what the rest of Wall Street has in mind for these names. Here are the details.
The Pennant Group (PNTG)
Let’s start with home health care provider The Pennant Group. This holding company has many subsidiaries operating under its umbrella, all providing healthcare solutions to 89 home health and hospice offices and 48 senior living communities. These are spread across the United States in several states, including California, Wisconsin, Arizona, Washington, Oregon, Texas, and Colorado, among others. Each Pennant business operates independently, having its own management, employees and assets.
Earlier this month, Pennant released its 2Q12 report, in which it met Street expectations. the company reported revenue of $116.3 million, up 5.4% year over year and beating the Street forecast by $4.02 million. Adj. EPS of $0.14 beat analysts’ target. Promisingly, the company also met its 2022 full-year guidance for total revenue between $450 million and $460 million.
Elsewhere, Pennant has been regularly busy on the M&A front. After acquiring 15 companies in 2020, it bought 11 home health and hospital offices last year. There has also been some activity lately. in mid-August, the company announced it had acquired Central Valley, Palm Springs and San Diego, California-based hospice and palliative care provider Ardent Hospice and Palliative Care.
The M&A aspect partly informs Oppenheimer’s Michael Wiederhorn’s bullish view.
In his initial note, the 5-star analyst said: “Overall, we believe PNTG has an attractive opportunity for growth due to favorable industry dynamics, enhanced by its decentralized organization, local leader model and M&A opportunity. Additionally, given some of the industry’s near-term concerns, we believe the stock is highly attractive at current prices. As a result, we would be long-term buyers of PNTG.”
Accordingly, Wiederhorn rates the stock as Outperform (i.e. Buy), while the $22 price target suggests shares will climb 36% higher in the one-year time frame. (To watch Wiederhorn’s record, Click here)
Looking at the consensus breakdown, 2 other analysts join Wiederhorn in the bull camp, while two others remain on the sidelines, all giving this name a consensus rating of Moderate Buy. Going by the average target of $19.4, the shares will see 20% growth in the coming months. (See Pennant Group stock forecast at TipRanks)
Microvast Holdings (MVST)
Let’s now move away from healthcare and into the realm of energy storage. Microvast is a designer and manufacturer of batteries intended to power electric vehicles and stationary systems. Aiming to improve battery performance and reduce material usage, the company promotes cutting-edge cell technology and vertical integration capabilities. Microvast develops modules and packs and also offers battery components (cathode, anode, electrolyte and separator).
The growing need for eco-friendly energy solutions is a real asset for companies like Microvast and this was reflected in its latest quarterly statement – for 2Q12.
Even with its main export hub in Shanghai in lockdown mode during the first half of 2Q, the company delivered a strong performance. Revenue was up 93% over the same period last year to $64.41 million. The company also reiterated its 2022 outlook for revenue growth of 35% to 45% year over year.
Margins are also up again after falling in 2021. Gross profit came in at $4.8 million in the second quarter versus a gross loss of $6.8 million in the same period a year ago, up 27, 8 percentage points in gross margin from -20.3% in 2Q11 to 7.5% in 2Q12.
For Oppenheimer’s Colin Rusch, Microvast has the potential to be a “pure play” in battery hardware optimization.
“We believe that a critical challenge to increased electrification and reduced emissions in the power, heat and transport sectors is the availability of battery materials,” the 5-star analyst explained. “We believe MVST addresses this challenge in key ways: its gradient descent technology optimizes the cost/total hardware used; Cell and packaging expertise helps extend cycle life. and the platform’s security profile helps it mock later applications.”
All of the above forms the basis for Rusch’s Outperform (i.e. Buy) rating, while the $8 price target leaves room for one-year gains of an impressive 225%. (To watch Rusch’s record, Click here)
Rusch has some big expectations, but elsewhere on Wall Street, it’s pretty quiet on the MVST front. In the last 3 months, no other analysts have been contacted with reviews for this stock. (See Microvast Stock Prediction 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.