We all want to buy stocks that “will go up” — and the more they go up, the better. At the same time, things don’t always work out as planned, or at least not right away.
That’s why, when looking for stocks that Wall Street has supreme confidence in, we need to add a bit of secret sauce to our stock screening, and protect our investment by ensuring that even if a stock does not go up, we still get paid.
How do we do that in practice? By screening for stocks highly recommended by professional analysts (“strong buy”), expected to deliver powerful profits (with “target prices” 20% or more above today’s price) — and also paying an above-market dividend yield.
Fortunately, the Stock Screener at TipRanks permits you to do all three of these things at once. Here are three such strong buy-rated suggestions we recently came across.
General Motors: 30.53% Upside, 4.1% Dividend Yield
General Motors stock has been getting a lot of bad press of late, now that the United Auto Workers (UAW) union has called its first strike against the company in more than a decade. And yet, in a recent note, 4-star Morgan Stanley analyst Adam Jonas supported the stock, arguing that GM is in a better financial condition to survive a strike that it’s been in the past.
“While the situation remains fluid and can weigh on the shares short term, we strongly believe labor/strike disruption presents an excellent buying opportunity for GM shares,” Jonas noted.
Barclays analyst Brian Johnson added, “While the UAW has plenty in reserves to fund an extended strike (albeit, with workers receiving significantly less than their normal compensation) our base case is that the walk-out is more of a token strike meant to convey a message to General Motors and the industry, vs a more prolonged event.”
Both Jonas and Johnson reiterated an Overweight rating on GM stock with price targets of $51 and $46, respectively.
Even sitting here on the wrong side of the automotive cycle, GM held its sales decline to less than 2% last quarter — and its profits actually increased 1%!
On average, Street analysts predict GM shares could rise as much as 30.53% over the next 12 months, and with a dividend yield of 4.1%, we agree that GM stock looks attractive.
Nutrien: 26% Upside, 3.6% Dividend yield
Another stock facing negative headlines is Nutrien, one the world’s biggest players in the production and sale of potash, nitrogen, and phosphate fertilizers.
America’s long, wet spring made it hard for farmers to get crops in the ground in time to enjoy a full growing season, and as a result, the fields here in the Midwest today are mostly populated with stalks of awfully short-looking corn. That bodes poorly for farmers come harvest-time — and for their ability to invest heavily in fertilizers and agricultural equipment for next year’s crop. On the other hand, they may not have much choice but to fertilize in 2020 if they’re to make up for crop shortfalls in 2019.
Last month, Bank of America Merrill Lynch analyst Steve Byrne upgraded shares of Nutrien on the belief that agriculture stocks such as Nutrien could make for good defensive plays if the economy turns south. But defense isn’t the only way to play Nutrien. In fact, on average, most analysts who look at the stock see a potential target price as much as 26% above where Nutrien stock trades today. With the stock trading for less than 10 times trailing earnings, and paying a rich 3.6% dividend yield, that looks like a smart call.
Halliburton: 55% Upside, 3.5% Dividend Yield
Rounding out today’s list of stocks beloved on Wall Street, we finally come to a stock that’s actually likely to benefit from recent news headlines: Halliburton.
You’ve all probably heard by now about the (alleged) Iranian missile-and-drone attack, which caused a whole lot of (indisputable) damage to Saudi Arabia’s oilfields, and that sent oil prices spiraling upwards, right? Well, as an oilfield services company, Halliburton stands to directly benefit from investor enthusiasm for oil.
Evercore analyst James West has recently sat down with Jeff Miller, Chairman & CEO and Lance Loeffler, CFO, and left with the impression that the focus of the management team remains committed to improving returns across the company. West noted, “That message has resonated throughout the company and its employees as HAL has quickly adapted to the maturation of US shale development and leverages its stronger competitive position for the emerging international cycle. The strategic focus remains on organically growing share around the wellbore, delivering best in class returns, and improving cash flow levels. HAL is not chasing unprofitable US market share and will stack equipment if returns do not meet its threshold. The size and scale of its US business allows them to drive a sustainable model without sacrificing their leadership position in the market. Internationally, HAL remains well positioned to benefit from improving activity levels, new product launches including its iCruise rollout, and pricing power returning in selective markets.”
Needless to say, this bodes well for Halliburton stock. TipRanks’ data shows an overwhelmingly bullish camp backing this oilfield services provider. The ‘Strong Buy’ stock has amassed 11 ‘buy’ ratings in the last three months, with just three analysts playing it safe with ‘hold’ ratings. The 12-month average price target stands tall at $30.04, marking nearly 55% in return potential for the stock. With a 3.5% dividend yield as well, investors in Halliburton stock can rest assured that even if the stock doesn’t go up — they’re still going to get paid for owning it.
