2 'Strong Buy' Stocks JP Morgan Says Will Jump Over 40%

What to do with the markets today? Although last week ended on a bearish note, we still see a general uptrend, with year-to-date losses strongly moderated and the major indexes climbing out of bearish territory. The key point for now, as has often been the case this year, is volatility.

Covering the markets for JPMorgan, global market strategist Marko Kolanovic tells investors to take advantage of down days and buy the dips. “Buying on weakness has so far given a positive return and works better than, for example, proposals to stay out of the market and start ‘biting’ at 3,500 or 3,300, levels that have not been reached,” Kolanovic explained.

As for the market as a whole, Kolanovic described last month’s inflation data as “quite encouraging” and went on to say, “The decline in July’s CPI is likely to repeat itself in August given lower energy prices in August so far (data release September 13th) and provide room for a market-friendly Fed.”

Looking ahead, Kolanovic predicts the S&P 500 will reach 4,800 by the end of the year, up 13.5% from current levels. His peers among JPM’s stock analysts picked two failed stocks for investors to consider, forecasting 60% or more growth next year. Running tickers TipRanks databasewe learned that each earned a consensus rating of Strong Buy from the rest of the Street.

IHS Holding (IHS)

We will start in the technology sector, where IHS Holding is a telecommunications infrastructure company that works on the development and expansion of wireless communication network towers in Sub-Saharan Africa, the Middle East and Latin America. In total, IHS boasts over 39,000 towers in its portfolio of properties in 11 countries.

IHS is a leading tower operator and supplier in its area of ​​operation and offers solutions for various telecommunications needs including small cell operations, fiber connectivity, rural telephone networks. The company works to realize value and reduce costs, for itself and for its customers, as part of a multifaceted network operation.

In the most recent fiscal quarter, 2Q22, IHS reported a top line of $467.7 million. That’s down from the $763.5 million reported in the previous quarter. Earnings were negative in Q2, coming in at a loss of $177 million. That translates to a diluted EPS loss of 53 cents, a loss 60% higher than last year’s quarter. Despite the loss of earnings, IHS’s cash position has improved modestly over the past 12 months. The company reported $191 million in cash from operations in Q2, compared to $174 million in the prior quarter, and year-over-year cash and liquid assets grew from $541 million to $567 million.

The telecom company’s stock has fallen over the past few months, and since the beginning of the year, the stock is down 48%.

analyst Philip Cusickin his coverage of these stocks for JPMorgan, sees this drop in the stock price as an opportunity for investors.

“At the current 6.5x 2022E EV/EBITDA, we believe IHS stock is significantly undervalued and expect the valuation to improve
over time… We like the strong growth profile in the regions where IHS operates, fueled by high population growth, expanding economic activity, greater penetration and increased usage, and the transition to 4G and eventually 5G. The company has strong operating results, led by its long-standing and experienced management team to deliver results in challenging markets,” Cusick said.

This adds up, according to the analyst, to an Overweight (i.e. Buy) rating – and his $16 price target shows room for significant growth, on the order of ~119%, over the next year. (To watch Cusick’s record, Press here)

Overall, while the stock is down, street sentiment for IHS remains solid. The stock has 7 recent analyst reviews recorded and all of them are positive – for a strong buy consensus. Shares are trading at $7.32, and the average price target of $19 suggests a one-year upside potential of ~160%. (See the IHS stock forecast at TipRanks)

Snap One Holdings (SNPO)

With the second choice of JPM, we will target the smart home sector. Snap One is a leading distributor of smart home technology, offering customers entertainment and networking solutions, home audio, home security and networking, and even remote power management. Smart solutions put all this at the property owner’s fingertips. Snap One’s product lines and installations are available in both the residential and commercial markets. The company operates as a holding company, delivering its products through a network of affiliates and brands.

Smart home technology has grown in popularity over the past few years, and Snap One reported quarterly revenue growth over the past year, but SNPO shares are down 47% so far this year. Several factors influenced the share price. The company’s revenue growth is slowing, while its net loss is increasing.

That’s not to say the current numbers are bad — they’re just not as good as investors would like to see. In 2Q12, the company reported $296.9 million, a 17% year-over-year gain. At the same time, net loss rose 27% year over year to $1.3 million. The company’s cash fell from $40.6 million on December 31, 2021 to $31.3 million on June 30, 2022. Going forward, the company expects full year 2022 net sales to be between $1.16 billion and $1.18 billion , profit on an annual basis from 15% to 17%.

JPMorgan Analyst Paul Chung reminds us that Snap One’s Q2 results beat estimates and goes on to say, “FY22 guidance was reiterated despite the beat, baking in some conservatism given the macro backdrop in our view; although it still assumes close to 20% year-on-year growth; strong guidance in our view when most firms are reducing guidance. Pricing actions in June should provide support to gross margins, combined with a more measured pace of operating expense spending to generate solid profitability and cash flow. Integrator demand feedback remains strong and the higher end user appears relatively more resilient in the current environment.”

To that end, Chung sets a price target of $18, implying a one-year upside of 62%, which supports his Overweight (ie, Buy) rating on the stock. (To watch Chung’s record, Press here)

Overall, this interesting smart home company received 6 recent reviews on Wall Street, and they break 5 to 1 in favor of Buy over Hold, for a strong consensus rating of Buy. Shares are trading at $11.09, and their average price target of $19 suggests a 12-month upside of 71%. (See the SNPO stock forecast at TipRanks)

To find good stock trading ideas at attractive valuations, visit TipRanks’ The best stocks to buya recently launched tool that brings together all of TipRanks equity insights.

Rebuttal: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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