Buy these stocks in February.
The S&P 500 stumbled out of the gates in the first month of 2021 thanks to a late-month sell-off. Fourth-quarter earnings season got off to a solid start, and the S&P 500 is now up about 70% from its March 2020 lows on optimism about a 2021 economic rebound. Investors who feel like they missed the boat on the rebound need not worry. Just because they missed the 2020 stock fire sale doesn’t mean there aren’t fresh buying opportunities in 2021. Here are nine stocks to buy that were recently upgraded by the CFRA analyst team.
Archer Daniels Midland Co. (ticker: ADM)
Archer Daniels Midland produces food and beverage ingredients and other agricultural products. Analyst Arun Sundaram upgraded Archer Daniels Midland and says the company’s strong fourth-quarter earnings report indicates it is entering 2021 in a strong position. He says global soybean supply constraints coupled with rising demand has produced record margins, which boost the company’s profitability. Sundaram says a recovering food service industry and dry weather in Brazil will likely keep soybean prices elevated for several more quarters. In addition, Chinese demand for U.S. ethanol, soybeans and corn are tailwinds for Archer Daniels Midland. CFRA has a “buy” rating and $61 price target for ADM stock.
Synovus Financial Corp. (SNV)
Synovus Financial is a U.S. regional bank that operates primarily in the Southeast. Analyst Pauline Bell recently upgraded the stock and says the combination of share buybacks, an improving credit outlook and an economic rebound is a winning recipe for investors in 2021. CFRA is projecting earnings per share will grow from $2.41 in 2020 to $3.11 in 2021. Synovus is also attractively valued, priced at just 12 times Bell’s 2021 earnings estimate, and it pays a 3.4% dividend. CFRA has a “buy” rating and $42 price target for SNV stock.
Regions Financial Corp. (RF)
CFRA is one of many firms that has high hopes for bank stocks in 2021, and U.S. regional bank Regions Financial is another one of Bell’s top stock picks. Bell says Regions will benefit from many of the same catalysts driving her upgrade of Synovus, including a resumption of share buybacks, an improving credit outlook and a general macroeconomic recovery. Bell is calling for 85.4% EPS growth in 2021, and Regions shares are attractively valued at only about 8.9 times CFRA’s 2021 earnings estimate. CFRA has a “buy” rating and $21 price target for RF stock.
Tandem Diabetes Care (TNDM)
Tandem Diabetes Care is a pure-play medical device company focused on developing insulin pump technology. Analyst Kevin Huang upgraded Tandem and says the stock trades at a valuation discount to its other diabetes pure-play stocks, such as DexCom (DXCM) and Insulet Corp. (PODD). Huang says Tandem will generate robust earnings and sales growth for at least the next several years on the strength of the company’s superior technology and its rising operating leverage. In addition, he says Tandem has a significant long-term expansion opportunity in international markets. CFRA has a “buy” rating and $111 price target for TNDM stock.
Signature Bank (SBNY)
Bell is extremely bullish on commercial bank Signature Bank, which operates in the New York metro area, Connecticut and San Francisco. Bell says investors shouldn’t sweat the bank’s exposure to commercial real estate loans and is calling for almost 23% EPS growth in 2021. Bell says Signature just reported “remarkable” 20% quarter-over-quarter deposit growth in the fourth quarter, which increases its liquidity. In addition, she says credit costs should decline “substantially” in the next several quarters. Signature trades at only about 13.4 times Bell’s 2021 earnings estimate. CFRA has a “strong buy” rating and $175 price target for SBNY stock.
NextEra Energy (NEE)
NextEra Energy provides investors with the stability of its Florida Power & Light regulated utility business and the excitement and growth potential of its NextEra Energy Resources renewable power business. Analyst Paige Meyer upgraded NextEra because of two primary catalysts. First, she says the company should benefit from aggressive capital spending, particularly on renewable projects. Meyer is projecting NextEra will spend $30 billion on capital projects through 2023. Second, she says NextEra will likely be a major beneficiary of clean energy spending under the Joe Biden administration. CFRA has a “buy” rating and $100 price target for NEE stock.
United Airlines Holdings (UAL)
United Airlines and other airline stocks reported abysmal earnings numbers in the fourth quarter. However, analyst Colin Scarola recently upgraded United and said investors that are willing to buy and hold through 2023 could see tremendous upside. United reported a staggering $7.1 billion net loss and a $25.30 EPS loss in 2020. Scarola is projecting 2021 revenue will still be down about 42% from 2019 levels, but he estimates United will return to profitability in 2022 and demand will be back to pre-pandemic levels by 2023. CFRA has a “buy” rating and $52 price target for UAL stock.
EQT Corp. (EQT)
EQT is the largest U.S. natural gas producer and is highly focused on the Marcellus and Utica shales. Oil stocks were crushed in the past year as travel restrictions and industrial shutdowns ate into oil demand. However, natural gas prices are up nearly 40% from a year ago, and EQT shares are up more than 180% in that time. Analyst Andrzej Tomczyk says U.S. natural gas exports are at record highs while production continues to decline. That dynamic creates a favorable environment for 2021 gas prices. CFRA has a “strong buy” rating and $25 price target for EQT stock.
Infosys provides business consulting, engineering and other information technology outsourcing services. Analyst Hazim Bahari upgraded Infosys and says the company’s 36% digital revenue growth in fiscal 2020 is extremely impressive and was roughly double the overall industry’s mid-teens growth rate. Digital revenue now represents about half of Infosys’ total revenue. In addition, Bahari says the company has a pristine balance sheet, including no debt and $3 billion in cash. Bahari projects revenue growth will accelerate from 7% in fiscal 2021 to 13% in fiscal 2022. CFRA has a “buy” rating and $20 price target for INFY stock.
Good buys in upgraded stocks:
— Archer Daniels Midland Co. (ADM)
— Synovus Financial Corp. (SNV)
— Regions Financial Corp. (RF)
— Tandem Diabetes Care (TNDM)
— Signature Bank (SBNY)
— NextEra Energy (NEE)
— United Airlines Holdings (UAL)
— EQT Corp. (EQT)
— Infosys (INFY)
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