As fears of high inflation and the threat of recession become the talk of the town, investors are turning to Wall Street experts for guidance, namely Julian Emanuel, Evercore ISI Chief Equity & Quantitative Strategist.
Emanuel sees clues for an impending downturn, pointing out that the last market trough, this past fall, came before overall economic indicators turned south. In his words, “[No] bear market has ever bottomed before the recession started. So from that perspective, we don’t think October was the bottom.”
On the plus side, Emanuel foresees the Fed’s anti-inflationary moves taking hold, and pushing the rate of price increases down to just 3.1% by year’s end – and that will be positive for stocks. He believes that despite a likely ‘shallow and short’ recession, the S&P will gain 6.5%, to hit 4,150 by the close of 2023.
Taking Emanuel’s outlook into consideration, we wanted to take a closer look at two stocks earning a round of applause from Evercore, with the firm’s analysts forecasting over 100% upside potential for each. We’ve used the TipRanks platform to find out what makes them tick. Let’s take a closer look.
Fisker, Inc. (FSR)
First up on the list of Evercore picks is Fisker, the US electric car firm started by Henrik Fisker, who built his reputation designing luxury vehicles for BMW. The Fisker company started production of its first model, the Fisker Ocean, in November of last year, has affirmed plans to produce over 42,000 of the vehicles this year. This production will go towards meeting the more than 63,000 reservations the company has on the Ocean. In addition, also this past November, Fisker introduced the drivable prototype of its second vehicle model, the PEAR. As of October 31 last year, the company had taken 5,000 reservations on the PEAR.
While these developments – the start of production, high rates of reservation, and a second model prototype – all bode well for the company, Fisker remains a speculative investment. The company is still essentially pre-revenue, and will remain so until it begins large-scale vehicle deliveries.
That said, Fisker’s progress toward those deliveries has been strong. The company has a detailed production plan for the Ocean, and is prepping assembly plants in Ohio, Georgia, and India. Ramping up industrial assembly plants is not cheap – but Fisker had cash and liquid assets of $824.7 million as of September 30, 2022 – the end of the last period reported. This cash holding can be weighed against non-GAAP operating expenses, for the full-year 2022, in the range of $435 million to $500 million.
Covering the stock for Evercore, analyst Chris McNally believes FSR presents a compelling risk-reward. McNally rates the stock an Outperform (i.e. Buy) along with a $15 price target that implies ~112% one-year upside. (To watch McNally’s track record, click here)
Backing his bullish stance, McNally writes: “Despite Fisker’s potential to execute on near-term targets while trading at a lower valuation (~6-7x ’25 EPS), the business has continued to be harshly discounted by investors. We see catalysts being start of deliveries ~Feb & ’23 results which we think will beat consensus. With 2023 ASPs of ~$70k on prioritized higher trims, Magna is on track for ~40-45k Ocean unit production (with room to grow to ~120k ‘24), and demand will push reservations to the 65-75k YE target – 50% upside on revenue.”
Overall, the 7 recent analyst reviews on Fisker include 4 Buys and 3 Holds, for a Moderate Buy consensus rating. The stock is selling for $7.08, and its $13.17 average price target suggests a one-year gain of 86%. (See FSR stock forecast on TipRanks)
Altus Power, Inc. (AMPS)
With the second Evercore pick, Altus Power, we’ll shift our focus to the clean energy sector. Altus bills itself as a full-service solar company, offering a wide range of solar energy solutions appropriate for industrial, commercial, and community market scales. Altus provides solar installations for power generations, energy storage, and electric vehicle charging, with the goal of making renewable energy affordable. Since getting started in 2009, Altus has generated over 2.9 billion kWh of solar powered electricity, enough for more than 400,000 homes for one full year.
Altus is always looking to expand its generation capacity, and last month announced a $293 million agreement to acquire 220 megawatts of solar assets, either newly developed or in construction, from True Green Capital Management. The agreement is expected to close during 1Q23, and will bring Altus’s solar and storage assets to a total of 690 megawatts.
This move comes just one month after the November 2022 release of the 3Q22 numbers, which showed a quarterly increase of 100 megawatts in the company’s energy generation portfolio. Altus reported a top line of $30.4 million in Q3, for a robust 51% year-over-year gain. The company runs a net loss, reported in GAAP measures at $96.6 million, but still had over $290 million in unrestricted cash as of the end of the quarter.
Evercore analyst James West is impressed by Altus, and writes: “AMPS has an existing EBITDA positive business supported by long term contracted revenues. The company also has the ability to increase rates across a majority of its contracts as utility rates continue to rise. Given its ownership model, it will continue to roll out new products (storage, EV charging) to complement its core solar offerings.”
Looking ahead, at the possibilities offered by Altus’s business model, West sees reason for optimism. The analyst rates Altus shares an Outperform (i.e. Buy), along with a $15 price target, suggesting a one-year upside potential of ~115%. (To watch West’s track record, click here)
With Altus, we get to a stock that has a Strong Buy rating from the analyst consensus, based on a unanimous 5 Buy reviews. The shares have a current trading price of $6.96 and an average price target of $12, implying an upside this year of ~72%. (See AMPS stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
