In a report published Friday, Imperial Capital analyst David Harris presented the top eight equity investment opportunities by its Equity and Industry Analysis team.
The Top Investment Opportunities are as follows:
The top idea in the sector is Gol Linhas Aereas GOL. Imperial Capital rates Gol Linhas as Outperform with a $9.00 price target. The analyst reported that improvements in unit revenues should become more apparent going forward and have offset currency weakness. Harris wrote, “We expect these trends to continue as Gol management remains focused on fine tuning its route network and implementing more sophisticated revenue management tools.”
Imperial Capital noted Callaway Golf's ELY turnaround story. The analyst commented that Callaway's new products are performing well and is “well positioned for a return to profitability following the hiring of Chip Brewer.” Harris emphasized the company's simplified operating model, greater focus on golf clubs and ball, innovation, and reduced cost structure should aid in market share gains. Imperial holds an Outperform rating and $10.50 price target on Callaway.
Harris holds an Outperform rating and $20.00 price target on Checkpoint Systems CKP. The analyst highlighted Checkpoint's investments in national account installs and new sales and profit processes. Imperial Capital expects the anti-theft provider to slim down tracking and inventory, enable core retail technologies more interoperable and competitive, and create a strong recovery base for gross/ operating margins.
The analyst wrote that Equity Lifestyle Properties ELS is an “attractive investment” with manufactured homes and recreational vehicle properties appealing to the aging U.S. population. Imperial Capital reported, “We think there is scope for future outperformance among residential REIT stocks and that ELS offers an interesting alternative to selected apartment names. We think the stability of MH income and the limits on supply merit a premium valuation compared to apartment stocks.” Harris rates Equity Lifestyle Properties as Outperform with a $45.00 price target.
Imperial Capital holds an Outperform rating and $11.50 price target on Great Lakes Dredge & Dock GLDD. Harris noted that Great Lakes is “well-positioned to benefit from a multi-year uplift in marine construction activity that we expect to materialize over the next few years.” The analyst added that the divestiture of the legacy Demolition business (NASDI) should remove an investor overhang on shares and additional catalysts will aid in growth.
Harris has a “positive stance” on Landec LNDC due to the company's healthy growth prospects, market share and distribution growth opportunities for Apio, participation in greenhouse-grown produce, high long-term outlook, and margin expansion opportunities. The analyst holds an Outperform rating on Landec and $16.00 price target.
Imperial Capital rates Penn Virginia PVA as Outperform with an $18.00 price target. The analyst commented that Penn Virginia is now in “full development mode within its Eagle Ford acreage in Lavaca and Gonzales County.” Harris reported on the company's “consistently improving IP rates and lower costs.” Imperial capital further noted inventory upside from downspacing and saw early results of a PVA downspacing pilot as an encouraging factor.
The analyst sees potential upside for Qualys QLYS from new offerings and channel partnerships. Imperial capital commented, “We believe QLYS possesses significant cross-selling and up-selling opportunities, as highlighted by the mix of multi-product customers rising to over 30% in 4Q13, compared with 20% in the prior year. We anticipate QLYS will increasingly benefit from the introduction of new security solutions on its proven cloud platform. The analyst has an Outperform rating and $33.00 price target on Qualys.
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