The year 2022 has started off on a high note, and there has never been a better opportunity to start expanding your investment portfolio.
The increased risk appetite among investors should continue feeding the surge in the stock market in 2022. Improving vaccination rates, eased supply pressures, rising earnings, and increased consumer spending are expected to further strengthen the market in 2022.
However, there is a risk of volatility, owing to contradictory stories on inflation, the supply chain, and the new COVID-19 variation — Omicron. Additionally, some equity market corrections and pullbacks may limit the possibility of double-digit returns.
Given this backdrop, investors may use TipRanks’ Smart Score System to excise weak stocks and add fresh names to their portfolios.
This technique enables them to do a more thorough investigation of a firm prior to investing in it. The Smart Score tool incorporates eight key traits, including Hedge Fund and Insider trading activity, both of which are usually difficult for investors to access. Each stock is then evaluated on a scale of one to ten, with ten being the best, to assist investors in making more informed decisions.
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 development.
Constellation Brands
Since yesterday, Constellation Brands (STZ), a consumer goods business, has earned a “Perfect 10.” The company produces beverages like beer, wine, and spirits. It includes alcohol brands like Corona, Modelo, SVEDKA Vodka, and more.
The company’s core Beer Business segment has been performing well, thanks to strong consumer demand for its renowned brands. The company’s net sales increased 5% to $2.37 billion in the most recent fiscal second quarter, with the beer business growing 14% year-over-year, while wine and spirits sales fell 18%.
Long-term, the firm intends to invest in Mexico to expand capacity in order to support the predicted future growth of its core, high-end beer portfolio.
The firm is expected to release its next earnings report on January 6. The company’s EPS for fiscal Q3 2021 is estimated to reach $2.81.
On the analyst side, Dara Mohsenian of Morgan Stanley is bullish about the company’s results ahead of the fiscal third-quarter earnings announcement. He writes, “We continue to like STZ as our Top Pick with strengthening above-consensus beer demand.”
As a consequence, Mohsenian maintained a Buy rating on the company and raised the price target to $303 from $254, implying about 19.9% upside potential to current levels.
Constellation Brands has a Strong Buy consensus rating from Wall Street analysts, with 15 recent assessments, including 12 Buys and 3 Holds. The stock is now trading at $252.82 and the average STZ price target of $271.43 implies around 7.4% upside from that level.
Diamondback
Diamondback (FANG) is an energy firm that has been rated a “Perfect 10” since yesterday. The company is an independent oil and gas exploration and production company focused on the Permian Basin.
Diamondback reported solid third-quarter results in November. The company had a profit of $2.94 per share, above Street’s prediction of $2.76 per share. Further, the overall output increased by 41% year-over-year to 239,761 BO (barrels of oil) per day. Meanwhile, the Permian Basin produced 223,000 barrels of oil per day.
Furthermore, the corporation continues to create value for its shareholders through dividend and share repurchase initiatives. Indeed, the company recently repurchased 268,291 shares of ordinary stock and boosted its annual cash dividend by 11.1%.
Commenting on the company’s capital strategy, Diamondback CEO Travis Stice writes, “As we move into 2022, we are still seeing excess oil supply and varying demand recovery profiles across the globe. As such, we remain committed to capital discipline and our plan to return excess Free Cash Flow to our stockholders…By keeping our oil production flat in 2022, we expect to be in a position to maximize Free Cash Flow, grow our dividend, further pay down debt, and overall return more capital to stockholders.”
Following the Q3 results, Gabriele Sorbara of Siebert Williams Shank maintained a Buy rating on the company and a price objective of $152.
The analyst writes, “FANG is positioned with a strong sustainable FCF (free cash flow) yield allowing for an attractive return of capital plan.”
On TipRanks, Diamondback stock commands a Strong Buy consensus rating based on 19 Buys and 2 Holds. The shares are priced at $111.84 and the average FANG price target of $137.38 implies around 22.8% upside from that level.
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Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >
