The old stock market axiom of buying when others are afraid can be applied immediately, according to Ashish Shah, chief investment officer at Goldman Sachs.
Amid concerns that markets will be volatile following Federal Reserve Chairman Jerome Powell’s Jackson Hole policy speech on Friday, Shah thinks that doesn’t mean investors should stay on the sidelines for the moment.
It’s preferable to buy “when there’s fear in the market,” says Shah. “Don’t fall into the trap of buying when there is FOMO,” he added.
Against this backdrop, Shah’s fellow analysts at the banking giant have identified two names they think would be good investment choices in the current environment. In fact, they see them posting gains of at least 90% in the next year. We analyzed both of them in the TipRanks database to see what other Wall Street analysts had to say about them.
Markets will do what it takes, but regardless of fluctuations, you’ll have to get your daily dose of fruits and veggies. This is where Dole enters the picture.
The Dublin, Ireland-based company is the world’s largest producer of fruit and vegetables, with more than 300 diverse products that are distributed in 90 countries. Dole has 74,300 full-time and temporary employees spread across 162 distribution and manufacturing centers, while the company also has multiple packing houses, cold storage plants, salad processing plants, and has 13 ships.
The core business sells fresh and frozen fruits and beverages, and the company’s four segments are divided into Fresh Fruits, Fresh Vegetables, Diversified Fresh Products – EMEA and Diversified Fresh Products – Americas and ROW.
In its latest quarterly report for 2Q22, Dole reported revenue of $2.36 billion, representing a 95% year-over-year increase, but fell $20 million below the consensus estimate. The non-GAAP EPS of $0.44, however, was above the $0.36 expected in the market.
But investors weren’t too pleased with the prospects; Adjusted EBITDA is now expected to be in the range of US$330 million to US$350 million compared to the previous range of US$350 million to US$370 million.
That said, Goldman analyst Adam Samuelson thinks the positives outweigh the negatives. Evaluating the print, he wrote: “While we recognize that the lower guidance and less linear earnings rebound are disappointing, we believe that the underperformance in its smaller business alongside currency headwinds should not fully overwhelm the generally solid performance in the business balance. With equities trading at 10% and 16% FCF yield in our respective 2022 and 2023 estimates, the risk/reward remains attractive in our view, particularly when considering the Fresh Vegetables losses and the sizable increase in working capital. incorporated into this year’s FCF baseline. ”
To that end, Samuelson rates DOLE stock as a buy, and its $17 price target suggests the stock has room to rise 91% over the next year. (To see Samuelson’s history, Click here)
Only one other analyst has recently joined the conversation with a DOLE review and they are also confident of its continued success, resulting in the stock’s moderate buy consensus rating. The average price target is $16, indicating that the stock will increase ~80% in the coming months. (See DOLE stock forecast on TipRanks)
Melco Resorts & Entertainment (MLCO)
The next Goldman pick we’re looking at is Melco Resorts & Entertainment, a casino resort operator with facilities in Asia and Europe. Its flagship casino is the $2.4 billion City of Dreams Macau resort, which has around 511 gaming tables, 572 gaming machines, hundreds of rooms, suites and villas, and all the fancy accompaniments you’d expect from a place so. The company also has other resorts in its portfolio, including Altira Macau, City of Dreams Manila and City of Dreams Mediterranean in Cyprus, as well as Studio City Macau.
It is well known that resorts have suffered greatly during the Covid-19 pandemic, and given that Macau resorts are heavily dependent on Chinese tourism, recent lockdowns in the region have impacted Q2 performance.
Revenue declined 47.7% year-on-year to $296.1 million, while the company posted an EBITDA loss of $13.8 million compared to profit of $56 million. delivered in the previous quarter and profit of US$ 79.05 million in 2Q21.
That said, recent data has been more promising. Between 18 and August, 24 visitors to Macau grew by more than 43% week on week. This obviously bodes well for the business.
However, over the past year, stocks have also taken the brunt of investor fears around Chinese and Hong Kong-based companies delisting if they fail to meet US auditing standards.
But with stocks down 43% year-to-date, while aware of the various headwinds, Goldman Sachs analyst Simon Cheung smells of opportunity.
“While the overall operating environment remains fluid and the timing for resolution of the potential delisting risk is uncertain, we believe MLCO’s fundamentals remain solid relative to some of its peers, namely business recovery outside Macau, fewer short-term liquidity problems after several rounds of refinancing. At the current share price, the valuation of the share looks attractive,” opined Cheung.
You can say it again. Along with Cheung’s buy rating, its $13 target price implies a 125% stock appreciation in one year. (To see Cheung’s background, Click here)
Cheung is the most prominent MLCO bull on the Street and with the addition of 1 Buy and Hold each, analyst consensus ranks this stock as a moderate buy. Overall, there are many advantages designed here; Going by the average target of $9.67, the stock has room for ~68% growth within a year. (See Melco stock forecast on 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.