PREMIUM: 3 Companies I'm Buying This Week

This article and the views within are from trader Gianni Di Poce. This article is only available to Benzinga Premium subscribers.

1. Resolute Forest Products RFP – 42% Return Potential

What’s Happening

• Resolute Forest Products is a 200 year old wood-product manufacturing company which was born out of the heart of the industrial revolution in 1820. Products include tissue, boards and paper & the company has 40 facilities in the US and Canada.
• Valuation is right for this cashflow-positive stock with the price/sales ratio at 0.3x and the EV/EBITDA ratio at 1.9x. These are my two favorite valuation ratios and both are significantly below the S&P 500 average.
• After experiencing a false-breakout in January, prices are startng to close back above the resistance of a saucer pattern, which could lead to an explosive rally in share price

Why It’s Happening

• The inflation trade remains the strongest-performer of the year, and this stock is classified into the basic materials sector. The stock has benefited from the inflation trade & year-over-year revenue growth is outpacing inflation.
• RFP announced a couple acquisitions lately, which would expand their business. Investors took the news in stride
• There has been some unusual option activity on this stock as reported by Benzinga Pro’s option scanner

Our Action Plan (42% Return Potential)

• I am bullish on RFP as long as the stock remains above $13.00-$13.50. Upside target $21.00-$22.00.

2. Maxar Technologies MAXR – 62% Return Potential
What’s Happening

• Maxar Technologies is a space technology company offering satellite, earth imagery and analytics solutions for commercial and government firms
• The company produces positive operating cash and trades at a fair valuation (10x EV/EBITDA), but beware that revenue growth has been slow
• The stock is starting to breakout from a broadening wedge pattern, and it just closed at its highest weekly level since July 2021

Why It’s Happening

• Maxar is in the headlines as its satellite technology is being used to scope out troop movements in the Russia-Ukraine conflict
• This stock provides a nice blend in exposure between technology and industrials. The latter has already been outperforming, while the former looks like it’s awakening from its slumber

Our Action Plan (62% Return Potential)

• I am bullish on MAXR so long as the stock remains above $31.00-32.00. The upside target is $58.00-$60.00.

3. Owens & Minor OMI – 32% Return Potential
What’s Happening

• Owens and Minor manufactures and distributes healthcare products and PPE. The company operates globally, but revenue is currently concentrated in the United States which poses a growth opportunity
• Prices are on the verge of breaking out from a saucer pattern, and they just closed at their highest weekly level since July 2021
• The current stock price is significantly higher than before COVID despite revenue not growing significantly during the same time period

Why It’s Happening

• The healthcare sector is benefiting from a cylical sector rotation back into this asset class (we all saw the opposite side of this rotation… sell-off in tech)
• OMI recently beat estimates for earnings, reporting EPS of $0.81 versus $0.71 expected
• The company also announced expected 2022 revenue in-line with analyst expectations

Our Action Plan (32% return potential)

• I am bullish on OMI so long as the stock remains above $41.00-$42.00. Upside target $62.00-$64.00.