But looks can be deceiving. Are analysts too wrapped up by short-term factors to look at the bigger picture for these stocks? On the other hand, if just about every analyst suggests a "Buy," there must be something special about these companies, right?
We examine how three stocks with 100% buy ratings blazed onto everybody's buying list and whether you need them for your wealth-building strategy.
AMG data by YCharts
At a market cap of nearly $9.5 billion, Affiliated Managers Group Inc., is an asset management firm with equity investments in a group of boutique investment management institutions.
The 18% price drop over 2015 makes the stock an attractive investment option. No wonder the street is bullish about it. At a forward price-to-earnings of about 12 times, investors are hoping the stock will continue to produce the organic growth rates it's maintained for the past several years.
The stock is trading at valuations cheaper or in line with industry peers like BlackRock Inc. (17.2 times forward earnings),State Street Corp (13.5 times), T. Rowe Price Group Inc. (15.4 times) and Franklin Resources Inc. (12.2 times).
With a net income growth (three-year-average) of 40%, the company is ahead of its industry (13.8%) by a wide margin. Affiliated Managers Group also fares solidly on the return on asset metric, with 7.5% (trailing twelve months) as against industry figures of 1.4%. If we look at the company's return on equity (trailing twelve months), it's all sturdy and reliable with 20.5% compared to 11.4% for the industry.
Analysts estimate Affiliated Managers Group to post 9.7% earnings-per-share growth this year and later zoom to 12.4% over 2016 -- when revenues are likely to show a 5.8% uptick (compared to the flat growth in 2015).
AGN data by YCharts
Allergan plc. (AGN - Get Report)
Botox maker Allergan plc. Is a regular newsmaker for a while now -- the $160 billion proposed mega merger with Viagra maker Pfizer is a massive headline-grabber.
But beyond the glitz of a giant merger, Allergan remains a solid company with great fundamentals. For the past five years, it's delivered positive returns to shareholders with 2012 (43%), 2013 (95%) and 2014 (53%), making Allergan a Wall Street favorite. This year it's up 20% so far.
Specialty pharmaceuticals major Allergan (previously called Actavis) has historically utilized acquisitions to rebuild itself into a bigger and stronger entity. The three-year average revenue growth of 41% is double the industry growth rate (17.7%).
Trading at a forward earnings ratio of about 18 times, among like-sized peers its more expensive than Teva and cheaper than Takeda Pharmaceutical Co Ltd (nearly 44 times forward earnings).
Allergan has over 200 revenue-generating products, and has acquired bio-pharma major Kythera while also extending its cosmetic implants business. The company's also partnering with Amgen on several biosimilars.
In terms of standalone strategy, Allergan is well equipped to stride forward.
DAL data by YCharts
Delta Air Lines (DAL - Get Report)
A 91-year old company, Delta Air Lines is the oldest airline with continuing operations in the United States. The airline (along with its subsidiaries) manages over 5,400 flights daily serving an extensive domestic and international network.
Delta is also looking outwards -- acquiring equity stakes in foreign airlines across several countries, laying the foundations for an expansive global network.
It recently boosted its AeroMexico stakes to 49%. The company is also one of the four founding members of the SkyTeam airline alliance (making a deep impact on how the airline business is run globally).
The stock is trading at nine-times forward earnings, which is cheaper compared to Southwest Airlines Co. (12.1 times),Ryanair Holdings PLC (13.8 times) and International Consolidated Airlines Group SA (13.7 times).
After a dismal 2011, the stock performed well over 2012-to-2014. However, 2015 has been staid with the stock being flat (on a total returns basis) trading at near 52-week highs.
The company's conservative fuel strategy and tailwinds from decreased oil costs have further boosted its growth path. Delta has also been actively reinvesting in its core business, returning excess capital to shareholders.
Analysts suggest Delta's earnings-per-share (EPS) growth for the next five years should hit 24.06% per annum -- better than the previous five-year EPS of 18.03% per annum. That makes Delta a great stock for long-term investors.
By Chiradeep BasuMallick
No comments:
Post a Comment