Raymond James: These 3 stocks are expected to rise over 80%
We are just over a week after the presidential election and the market reaction shows that investors are happy. While the election margins were paper-thin, the will of voters came through: they rejected Donald Trump and his bold, outspoken style, but they also rejected the Democratic Party on politics; The Dems have lost seats in the House of Representatives, are unlikely to take control of the Senate, and have also lost ground at the state level. America’s voters seem fed up with the drama, be it from Donald Trump or the Democratic push to the political left. They want a government that is straightforward. And it looks like they’re getting just that. Given the distribution of power in the White House and in the chambers of Congress, we are immediately reminded of one characteristic of the control and equilibrium system: this deadlock is the result of a narrowly divided electorate. Changes will only take place if one side or the other receives a large majority or a small majority over several terms. Neither is in sight for the time being. The immediate result is a multi-day market rally. The implication is clear: sentiment in the markets has calmed down since the elections, and investors look forward to the government normalizing again in the months ahead. To that end, investors are sure to find solid options in the near future. In a letter from Raymond James, analyst Ric Prentiss recently published three reviews of mid-cap stocks, indicating why he believes they offer high potential returns with more stable markets in the coming year. The stocks all fit a profile: they’re at the lower end of the mid-cap range, with market valuations between $ 2 billion and $ 3 billion; They inhabit the telecommunications ecosystem and, according to Raymond James, all have an upside potential of over 80%. We ran the three of them through the TipRanks database to see what other Wall Street analysts have to say about them. Telephone & Data Systems (TDS) First on our list is Telephone & Data Systems, a Chicago-based company that provides a range of telecommunications services to over 6 million customers. The company offers broadband via cable and landline, wireless products and services, and TV and voice services. TDS operates the fifth largest wireless operator in the country. TDS dramatically exceeded expectations in 2020 despite the ongoing coronavirus. Revenue at $ 1.32 billion is roughly on par with the pre-Corona report ($ 1.34 billion in Q4 2019), while profit rose in Q1 20 and has remained high since then. The result of the third quarter of 66 cents exceeded the forecast by 153%. It was an impressive feat, compounded by the 266% year-over-year growth. TDS kept its dividend payment throughout the year. The payout of 17 cents per common share is 68 cents and offers a return of 3.6%, which is almost double the average return of companies listed on the S&P. TDS has shown strong business over the year, but its weak point was in the fiber and wire rope niche. However, Ric Prentiss of Raymond James glances at the half-full glass and notes, “The WFH guidelines have continued to result in slower approvals from local authorities and utility companies in connection with the construction of air fibers. In some cases, TDS pans to alternatives with better economics. Nonetheless TDS Telecom expanded its fiber optic service addresses by 5% year-on-year and has a better than expected acceptance rate of 30-40% depending on the market. In addition, 34% of wireline customers are now served via fiber, compared to 29% before one Year, TDS expects to accelerate through the remainder of 2020. “Prentiss sees TDS as a strong buy and raised its price target 6% to $ 34. At this level, he sees an upward trend of 81% for the stock over the next few months. (To see Prentiss’ track record, click here.) This stock also has a strong buy rating from analyst consensus based on 3 unanimous buy ratings set in the past few weeks. The price of the stock is at $ 18.73, and the average target of $ 34.83 suggests a year-long move up of 85.5%. (See TDS stock analysis on TipRanks.) ViaSat, Inc. (VSAT) Next, ViaSat is a high-speed satellite broadband provider. The Californian company serves commercial and defense markets and builds on the broad cross-industry need for secure communications. Social lockdown measures put a strain on the company’s business, particularly airline shutdowns. Commercial air travel relies heavily on satellite communications, and that slowdown is still weighing on ViaSat. The headwind is partly offset by a backlog in the services ordered. Revenue has remained stable for the past four quarters, ranging from $ 530 million to $ 588 million. The $ 554 million reported for the third quarter was solidly in the middle of this range. The result has returned to positive territory after turning negative in the second quarter. Third quarter EPS was only 3 cents, but that was a dramatic sequential improvement over the previous 20 cents net loss. In his look at VSAT, Prentiss notes, “Government Systems and Commercial Networks Remain Strong As IFC Business Continues To Navigate Significant Headwinds Related To COVID-19 … On the positive side, social distancing and safer-at-home policies are the Promote use of broadband data in residential areas and increase ARPUs… “Prentiss rates VSAT as outperform (ie buy), while its price target of 63 USD suggests. Overall, ViaSat receives a moderate buy rating from analysts’ consensus based on 3 reviews, including 2 buys and 1 hold . The stock has an average target price of $ 53.33, implying a 12-month upward movement of 59% from the trading price of $ 33.39. (See VSAT stock analysis on TipRanks) EchoStar Corporation (SATS) Last but not least, EchoStar is another satellite operator. This company controls a constellation of communications satellites and provides satcom functions to media and private companies as well as US civil and military government agencies. EchoStar also offers satellite broadband in 100 countries around the world. Overall, EchoStar’s revenue has stabilized at $ 465 million, $ 459 million, and $ 473 million for the past three quarters. While first and second quarter earnings were negative, third quarter results showed net income of 26 cents per share. The sequential improvements in the upper and lower ranges in the third quarter go hand in hand with an increase in the EchoStar’s subscriber base to a total of more than 1.54 million. The company also has a strong balance sheet, with more than $ 2.5 billion in cash on hand and no net debt. On the SATS, Ric Prentiss is optimistic about the short and medium term outlook. He writes: “SATS [has] Strategic optionality at a time when others, especially satellite companies with a higher level of debt, are suffering from a lack of funds due to significant maturities or investment programs. We believe a number of organic and inorganic growth options are being considered, including the future provision of SB and Spectrum after the anchor tenant (s) are set up. Finally, we believe that EchoStar’s recently announced collaboration with Inmarsat to provide capacity for in-flight connectivity should provide high margin cash flow over time, and we realize that the deal is not exclusive. “These comments support another strong Buy rating, and Prentiss’ target price of $ 57 indicates 123% growth for the next year. In terms of other analyst activity, it was relatively calm. 1 buy and 1 hold ratings awarded in the last three months result in an analyst consensus of “moderate buy”. Additionally, the upside potential is ~ 74% due to the average price target of $ 43.50. (See SATS stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.