Fed Chairman Jerome Powell’s comments about the central bank’s intention to contain 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 rejection of the S&P 500 from its 200-day moving average is a bearish warning, as seasonal performance in September is particularly bad when the index is trending down,” Wald explained.
With September just around the corner, then Wald’s advice is to be cautious, although promising, he thinks things bode well for further down the line. “Against concerns about near-term trading,” the analyst explained, “we still believe the June reset 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 think are ripe for the picking even in an environment that requires investors to be especially astute. We took the couple through TipRanks database to see what the rest of Wall Street thinks of 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 several subsidiaries operating under its umbrella, all providing healthcare solutions to 89 home health and hospice agencies and 48 senior living communities. They are common in the US in various 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 2Q22 report in which it met Street expectations; the company posted revenue of $116.3 million, up 5.4% year-over-year and beating the Street estimate by $4.02 million. adj. EPS of $0.14 met analysts’ target. Promisingly, the company also stuck to its 2022 annual guidance for total revenue between $450 million and $460 million.
Elsewhere, Pennant is regularly busy on the M&A front; after acquiring 15 companies in 2020, it bought 11 home health and hospice agencies last year. There has also been some recent activity; in mid-August, the company announced that 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 the bullish view of Oppenheimer’s Michael Wiederhorn.
In his opening note, the 5-star analyst said, “Overall, we believe PNTG has an attractive growth opportunity due to favorable industry dynamics enhanced by its decentralized organization, local leadership model and M&A opportunity. Also, given some of the industry’s shorter-term concerns, we believe the stock is particularly attractive at current prices. As a result, we will be long-term buyers of PNTG.”
Accordingly, Wiederhorn rates the stock as Outperform (i.e., Buy), while his $22 price target suggests the stock will climb 36% higher over the one-year time frame. (To watch Wiederhorn’s record, Press here)
Looking at the consensus breakdown, 2 other analysts join Wiederhorn in the bull camp, while 2 others remain on the sidelines, all giving the name a consensus rating of moderate buy. On reaching the average target of $19.4, the stock will see a 20% gain in the coming months. (See the Pennant Group stock forecast at TipRankc)
Microvast Holdings (MVST)
Let’s now move away from healthcare and into the field of energy storage. Microvast is a designer and manufacturer of batteries designed to power electric vehicles and stationary systems. Aiming to improve battery performance and reduce material usage, the company touts its “cutting-edge” cell technology and its vertical integration capabilities; Microvast develops modules and packs and also offers battery components (cathode, anode, electrolyte and separator).
The growing need for green energy solutions is a real plus for companies like Microvast and this was reflected in the latest quarterly statement – for 2Q22.
Even with its main export hub in Shanghai on lockdown in the first quarter of Q2, the company delivered a strong performance; revenue grew 93% over the same period last year, reaching $64.41 million. The company also reiterated its 2022 outlook for revenue growth of 35% to 45% year over year.
Margins are also rising again after falling in 2021; Gross profit reached $4.8 million in the second quarter versus a gross loss of $6.8 million in the same period a year ago, representing a 27.8 percentage point increase in gross margin from -20.3% in 2Q21 to 7.5 % in 2Q22.
For Oppenheimer’s Colin Rush, it’s Microvast’s potential to be a “pure play” of battery material optimization.
“We believe the availability of battery materials is a crucial challenge for increased electrification and reduced emissions in the power, heat and transport sectors,” explained the 5-star analyst. “We believe MVST addresses this challenge in key ways: its gradient cathode technology optimizes cost/total material used; experience in cells and packs helps extend cycle life; and the safety profile of its platform helps avoid risks for downstream applications.”
All of the above forms the basis for Rusch’s Outperform (i.e. Buy) rating, while his $8 price target gives room for one-year gains of an impressive 225%. (To watch Rusch’s record, Press here)
Rush has some big expectations, but elsewhere on Wall Street it’s been pretty quiet on the MVST front; in the last 3 months, no other analysts have weighed in with reviews of this stock. (Check out the Microvast stock forecast at TipRanks)
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Disclaimer: The opinions 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.