3 “big buy” stocks from Wall Street’s top female analysts
Wall Street rightly has a reputation as a “boys club,” but that hasn’t stopped some high-profile women from rising to the top layer of the high street analyst corps. While women as a whole make up less than 1 in 10 The Street analysts, they are well represented among top analysts.
In fact, a study published in the Journal of Accounting Research shows that female analysts make bolder and more precise forecasts than their male counterparts. The author, Dr. Alok Kumar, came to this conclusion after reviewing over 2 million stock forecasts made by 17,240 analysts covering a total of 13,636 stocks.
An in-depth analysis of the TipRanks database shows that the top 50 female high street professional stock analysts have an average success rate of 60.9%, with an average return on their recommendations of 19.5%. In other words, an investor who follows his lead will find that his portfolio outperforms overall markets by a generous margin.
So let’s go a little further. We’re going to pull in the details of three stocks that recently earned “Buy” ratings from the top three female analysts — and are showing consensus strong buy ratings from the rest of the street. These stocks come from a wide range of sectors and offer a variety of incentives to investors. Let’s take a closer look.
Alaska Air (ALK)
The first stock we look at is Alaska Air, the sixth largest airline in North America. Despite its name, the airline is based in SeaTac, Seattle, Washington, although Alaska is the airline’s largest market. Alaska Air serves Alaska, the Pacific Northwest, and points south on the West Coast, connecting them to destinations in the United States and Canada, as well as Mexico and Central America.
The airline has a reputation for keeping its fleet up to date, and earlier this month Alaska Air announced it was “recalibrating” its existing purchase agreement with Boeing, a deal under which Alaska Air was bringing up at 145 737-9 plane. The purchase update will see Alaska Air switch some of the new jetliners to larger-capacity 737-10s, and others to longer-range 737-8s.
The adjustment to fleet expansion comes after a year (2021) in which Alaska Air saw the top line achieve year-over-year gains of 73%. Revenue for 2021 was $6.177 billion, compared to $3.57 billion the previous year. In the last quarter of the year, ALK recorded revenue of $1.9 billion, growing 135% year-on-year. Earnings, which had been deeply negative in 2020, turned positive in 3Q21 and remained positive in Q4. Diluted EPS was reported at 24 cents, up from the $2.55 EPS loss in the prior year quarter. The company said it had $3.1 billion in unrestricted cash at the end of 2021.
The company’s return to profitability is the key point for these stocks, as noted by Cowen analyst Helane Becker. Becker, who is rated 5 stars and ranked in the top 1% of analysts by TipRanks, writes, “We expect Alaska Air to return to sustainable profitability in March, and for that to continue for at least the coming months. ‘summer. We expect the airline to be profitable in March, and as they update their guidance during the quarter, if it is better than expected, that would be a catalyst for stocks.
Becker’s comments confirm his outperform (i.e. buy) rating on Alaska Air, while his price target of $66 implies a roughly 41% year-on-year upside. (To see all of the actions in Becker’s coverage list, Click here)
Although Becker’s comments are bullish, she is not an outlier – 6 out of 7 analysts have rated the stock as a buy, for a strong buy consensus. The stock is selling for $46.67 and has an average price target of $74.43, suggesting an upside of around 59% over the coming year. (See ALK stock analysis on TipRanks)
Pinnacle Financial Partners (PNFP)
Next up is Pinnacle Financial, a Tennessee-based bank with operations in its home state as well as Virginia, North and South Carolina, Georgia and Alabama. Pinnacle offers a full range of banking services, including checking and savings, investments, trust management and mortgages, to individuals and businesses. In addition, customers have access to the bank via an online portal and a mobile application, for a 24-hour service.
In January of this year, Pinnacle released its 4Q21 results, posting revenue in line with results for the past two years, and EPS of $1.71 per share. Net income was down 2% sequentially, but up 20% year over year, and well above the EPS of $1.59 that had been expected. At number one, total revenue was $339 million, up 11% year-over-year. Over the past two years, the bank’s revenue has hovered within a 10% range, between $308 million and $339 million.
Pinnacle had $38.5 billion in assets at the end of 2021, a total that included $23.4 billion in performing loans. Net interest income was reported at $238.7 million for the quarter, up 8% year-over-year. The company’s strong asset base gave it confidence to raise its dividend in the February statement, from 18 cents a share to 22 cents. At this rate, the payout annualizes to 88 cents per common share and yields a modest 0.9%. The key here is not performance, but reliability; Pinnacle has an 8-year history of maintaining its dividend payouts.
Truist analyst Jennifer Demba, the 82nd analyst out of more than 7,700 rated by TipRanks, lays out bullish cash for Pinnacle: “Strong loan and fee growth and modest LLR releases should offset lower PPP revenue, l non-recurring valuation adjustment. and low double-digit spending growth. BHG’s revenue is expected to grow by +20% this year as the company makes more loans to improve franchise value. Revenue producer hiring this year is expected to exceed the record high of 2021…. equities remain attractive for the growth and profitability profile, in our view.
Standing squarely in the bullish camp, Demba rates the PNFP as a buy, and his $140 price target implies a robust 65% upside for the next 12 months. (To see all actions in Demba’s coverage list, Click here)
Pinnacle has a unanimous Strong Buy consensus rating, based on 4 established positive reviews for the stock over the past few months. The stock is selling at $91.78 and has an average target of $127.50, suggesting a one-year upside potential of around 39%. (See Pinnacle stock analysis on TipRanks)
Energy Transfer (ET)
Last on our list today is Energy Transfer, one of the midstream companies in the hydrocarbon industry. Middlemen move oil and gas extracted from wellheads to a variety of storage facilities and terminals, including tank farms, refineries and import-export centers. Companies typically control extensive networks of transmission assets, and Energy Transfer is no exception. ET’s assets include pipelines and processing facilities, and connect the Gulf of Mexico region to North Dakota, the Great Lakes and the Appalachian gas basins. ET’s operations are concentrated in the states of Texas, Oklahoma, Arkansas and Louisiana.
In recent months, Energy Transfer has taken steps to streamline its operations and prepare for a shift away from carbon-based energy. In January, the company expanded its Alternative Energy Group, which focuses on alternative energy and carbon capture projects. And on March 1, ET announced that it would divest its stake in Energy Transfer Canada. The second move, involving approximately $270 million in cash proceeds for ET, will allow the company to better focus on its U.S. operations and improve its balance sheet.
Oil and natural gas are big business, and ET has reaped high profits in the midstream. In its 4Q21 results, released last month, the company had revenue of $18.66 billion and EPS of 29 cents. These results were respectively 86% and 52% higher year over year. Importantly for investors, ET’s distributable cash flow also increased, rising 17% year-over-year to $1.6 billion.
This last measure is interesting because it finances the payment of the company’s dividend. ET had reduced the payment in November 2020, in response to the corona crisis. The February 2022 dividend marked the first time since then the payout has been increased. The 15% increase in the common stock dividend brought the payout to 17.5 cents per share, or 70 cents on an annualized basis. This gives the dividend a robust 6.7% yield.
RBC analyst Elvira Scotto, the top equity pro on Wall Street according to TipRanks, comes out strongly in favor of investing in ET. She writes, “ET has several growth projects that it expects to complete by year-end 2022 at an average build multiple of 6x, which should also drive 2023 EBITDA. With a stronger balance sheet, ET is poised to return more cash to unitholders through growing distributions. We continue to believe that ET offers investors a compelling value proposition.
Consistent with this bullish stance, Scotto rates the stock as an outperformer (i.e. a buy), and his price target of $14 implies a 34% upside for the next 12 months. (To see all stocks in Scotto’s coverage list, Click here)
Do the other analysts agree? They are. Only buy ratings, 8 in fact, have been issued in the last three months. Therefore, the message is clear: ET is a strong buy. Given the average price target of $13.88, the stock could rise about 33% over the next year. (See ET stock analysis on TipRanks)
To find great stock trading ideas at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock information.
Warning: The views expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.