We’re now in the last month of the year, which seems to be rather tranquil, after the market was pulled back post-Thanksgiving Day owing to worries about the new coronavirus strain, Omicron.
The three main market indexes — the Dow (DJIA), the S&P 500 (SPX), and the Nasdaq Composite (NDX) — appear to be sustaining a bull run so far this year, gaining 18%, 26%, and 21%, respectively. Also, the fundamentals of the U.S. economy remain solid, with consumer and business spending both remaining strong, despite rising inflation and supply-chain disruption.
So now is the time to start thinking about your investing options and putting together a portfolio for the months and years ahead.
The TipRanks database contains the tools required for this type of financial analysis. Investors may go straight to browsing equities that make a strong case for positive moves by combining the Strong Buy analyst consensus with the Perfect 10 rating from the unique Smart Score methodology.
Using TipRanks’ Top Smart Score Stocks, we selected two stocks that received a “Perfect 10.” These stocks have an average Strong Buy rating and a lot of room for growth.
Coca-Cola
Coca-Cola (NYSE:KO), a beverage business based in the United States, has been rated a “Perfect 10” since yesterday. It distributes non-alcoholic beverages such as soft drinks, water, sports drinks, juice, and even plant-based beverages all over the world.
The demand for Coca-Cola’s products has undoubtedly been stifled by the COVID crisis and growing health concerns, but the company is striving to diversify into other energy or sports beverages.
In October, the business announced strong third-quarter earnings. Both revenue and earnings came in above consensus estimates, with the top-line increasing 16% year-over-year and the bottom line gaining 18% year-over-year.
Coca-Cola CEO James Quincey is optimistic about the company’s future prospects. As a result, the company raised its organic revenue and comparable earnings per share (EPS) growth guidance for 2021.
In addition, Coca-Cola remains committed to repaying shareholders through dividends and stock repurchases.
On the analyst side, yesterday, J.P. Morgan analyst Andrea Faria Teixeira upgraded the rating to Buy from Neutral on the stock and increased the price target to $63 from $49, which implies about 9.1% upside potential to current levels.
The company’s growing sales and attractive valuation continue to impress Teixeira. As the globe continues to recover from the COVID-19 pandemic, she anticipates top-line growth to continue beyond 2022. She also feels Cola’s brand value and asset-light business strategy have aided the company in navigating a challenging cost environment.
In the instance of Coca-Cola and the Internal Revenue Service (IRS) fighting over a tax issue, Teixeira believes that even in the worst-case scenario, KO’s dividend and debt rating are likely to remain secure.
As a result, the analyst believes KO shares have “limited downside potential at these levels” even “if the litigation goes against KO, and we think a resolution either positive or negative would remove this overhang.”
Coca-Cola has a Strong Buy consensus rating from Wall Street analysts, with 8 recent assessments, including 6 Buys and 2 Holds. The stock is now trading at $57.76 and the average KO price target of $62.00 implies around 7.3% upside from that level.
Cenovus Energy
Cenovus Energy (NYSE:CVE) (TSE:CVE), a Canadian oil and natural gas producer, has also received a “Perfect 10” since yesterday.
Last month, the business reported solid third-quarter results. The company earned C$0.27 per share, compared to a net loss of C$0.16 per share in the year-ago quarter. In the third quarter, total upstream production grew to 804,800 barrels of oil equivalent per day (boe/d), up from 471,499 boe/d a year earlier.
During its Q3 results call, Cenovus also increased its dividend and announced a share repurchase plan for up to 10% of its stock.
Last week, Cenovus Energy held its 2021 Investor Day, where it revealed its capital budget for 2022.
The corporation has set a capital investment target of $2.6-$3 billion for 2022. Cenovus Energy also demonstrated its commitment to returning cash to shareholders through buybacks. In 2022, it aims to devote nearly half of its surplus free cash flow to shareholder distributions.
In response, BMO Capital analyst Randy Ollenberger maintained a Buy rating on the company with a $20 price target, implying 67.9% upside potential.
Ollenberger writes, “We believe that Cenovus is well-positioned to generate peer-leading levels of free cash flow relative to its enterprise value that could translate to peer-leading cash returns to shareholders.”
Furthermore, the analyst feels the stock is “attractively valued” at the current levels.
On TipRanks, Cenovus Energy stock commands a Strong Buy consensus rating, based on 13 unanimous Buys. The shares are priced at $11.88 and the average CVE price target of $16.21 implies around 36.4% upside from that level.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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