18 Contrarian Stock Ideas: From Box To Seaworld
- Analysts at Credit Suisse identified 18 stocks where they "stand apart from the consensus views."
- The 18 picks represent potential opportunities that the market has not yet priced in.
- Of the 18 names, 12 are Outperform rated and six are Underperform rated.
Analysts at Credit Suisse presented in a note on Friday a list of 18 contrarian stock ideas which "stand apart from the consensus view." The list focuses on both rating and earnings projections.
Outperform Rated Ideas
1. Box Inc (NYSE: BOX): The business file sync and share (FSS) market "tends to be sticky" from a dollar renewal point of view, especially given its "more appealing" FSS product against competitors including Microsoft Corporation (NASDAQ: MSFT). Moreover, the analysts have a "positive opinion" on management's vision that can differentiate its offerings in the near to medium term.
2. Boyd Gaming Corporation (NYSE: BYD): Several of the company's new non-gaming amenities in Las Vegas and hotel tower at Delta Downs "make strategic sense" after years of "playing defense." In addition, the "substantially" renovated Borgata hotel and casino should continue to help the property further consolidate the AC market.
3. CF Industries Holdings, Inc. (NYSE: CF): The analysts noted a "distinct appreciation" for the company's North American transportation & logistics capabilities. In addition, there is an "evolving theme" of CF further improving potential netback within its nitrate portfolio in the US and Europe once the company completes the OCI deal in mid-2016.
4. Ingredion Inc (NYSE: INGR): The company is doing a "great job" at managing its cost structure in Brazil and Argentina at a time when the market is "overly concerned" about the company's exposure to the two countries. In addition, the company's investments in specialty starches will "eventually get the company back" to reporting double-digit earnings per share growth in the years ahead.
5. L-3 Communications Holdings, Inc. (NYSE: LLL): Shares are the "cheapest" among the Defense primes on a free cash flow yield. Moreover, the "disposal" of non-core assets is nearing, and recent execution slips are "temporary."
6. LaSalle Hotel Properties (NYSE: LHO): The company has "significant" exposure to the West Coast markets where RevPAR (revenue per available room) growth is "most robust." In addition, the company only has "slightly higher" exposure to the NYC market with no exposure to Houston or Miami.
7. Nationstar Mortgage Holdings Inc (NYSE: NSM): The analysts are "comfortable" with the downside to shares at current levels as the stock is already trading near book value, which offers no credit to Xome.
8. SeaWorld Entertainment Inc (NYSE: SEAS): Recent poor results are due to "multiple issues that coincided at one time," resulting in "significant" earnings underperformance that will "fade over time."
9. SYSCO Corporation (NYSE: SYY): Recent activist involvement could prove to be the catalyst that can yield "much-needed strategic change" as the company has "failed to capture the full power" of its franchise.
10. Wal-Mart Stores, Inc. (NYSE: WMT): The company's management appears to be shifting to a more "active management style" and is likely to initiate a reallocation of capital resources away from "less promising" international divisions such as Brazil and Asia.
11. Weatherford International Plc (NYSE: WFT): The analysts are "confident" in the company's operational and managerial capability and its ability to demonstrate capital discipline even after a failed attempt to raise $1 billion in equity.
12. WisdtomTree Investments, Inc. (NASDAQ: WETF): The analysts are expecting strong organic growth to continue as the company is picking up share of incremental flows within the ETF industry.
Underperform Rated Ideas
1. Aon Plc (NYSE: AON): The analysts suggested that consensus estimates are "overly optimistic" in terms of margin improvement and free cash flow development over the next few years.
2. Dollar Tree, Inc. (NASDAQ: DLTR): The analysts noted that the Street is underestimating the "execution risk" surrounding its acquisition of Family Dollar and the level of investments needed to turn around the "underperforming" asset.
3. Hyatt Hotels Corporation (NYSE: H): As new hotel supply enters the market, the company is likely to underperform given its leverage to owned hotels which will have "more volatility" compared to its peers who primarily manage their hotel properties.
4. Macerich Co (NYSE: MAC): Shares continue trading with an "implicit takeout premium," a thesis that the analysts do not agree with following the recent poison pill measures management implemented.
5. PulteGroup, Inc. (NYSE: PHM): The analysts estimated earnings growth of 2 percent in 2016 will continue lagging other large-cap peers who are expected to generate as much as 19 percent growth.
6. Realogy Holdings Corp (NYSE: RLGY): The analysts are projecting decelerating transaction volume growth along with margin headwinds that will result in sales and EBITDA results coming in below consensus expectations.
Latest Ratings for BOX
|Jan 2017||Wells Fargo||Initiates Coverage On||Outperform|
|Sep 2016||Mitsubishi UFJ||Initiates Coverage on||Neutral|
|Jun 2016||JP Morgan||Downgrades||Overweight||Neutral|
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