“Upload,” says Raymond James of these 3 strong buy stocks

For more than a year, the markets have been occupied by the Fed with a focus on the course of inflation and the central bank’s countermeasures to rising interest rates.

“With that in mind,” says Larry Adam, chief investment officer at Raymond James, “it’s understandable that the market would analyze each development of these two dynamics in terms of their relevance to the Fed.”

However, with the spotlight focused solely on these factors, Adam believes that increasingly promising economic data isn’t “being greeted as warmly as it would have been in the past.” Consumer spending has remained resilient and, after a lull, mortgage applications are rising while the job market remains strong. While the ‘good is bad’ narrative applies here and could lead to further rate hikes to cool activity and bring inflation down faster, Adam believes it’s ‘important to have economic data on the immediate impact on the next Fed decision to evaluate”.

“In this way,” Adam continues, “long-term investors can conclude that the recent ‘good news’ is indeed ‘good news’ for the economy and markets, especially when the Fed is not ‘overstating’. We still expect only two more 0.25% hikes this cycle (most recently in May).

Looking ahead, Adam forecasts the S&P 500 to hit 4,400 by the end of the year, up 11% from current levels.

With that in mind, Adam’s fellow analysts at Raymond James have identified an opportunity in three stocks that they currently view as Strong Buys. We ran these tickers through the TipRanks database to see if other market experts agree with these decisions. Let’s check the results.

border communication (FYBR)

First up is a telecommunications company, Frontier Communications. This full-service telecommunications company operates in 25 states and serves a total of 3.133 million customers. The company offers a wide range of telecommunications services, including local and long-distance landline telephony, broadband internet, digital television and even computer tech support. Frontier is known for its presence in rural areas, where it’s a key service provider, but it’s also making inroads into more urban areas.

Over the past year, Frontier’s stock performance has been very volatile — even as the company’s business performance has delivered solid results. In fourth-quarter and full-year 2022 results released last week, Frontier reported company-record operating results — for the quarter, Frontier added 76,000 fiber-optic broadband customers and expanded its fiber-optic service to 381,000 locations. For the year as a whole, the company reported a net total of 250,000 new fiber broadband customers – another company record.

Bottom line, the company had quarterly revenue of $1.44 billion, down 6% year over year, but beat Street’s guidance, while earnings per share came in well ahead of $0.63 consensus estimate of $0.20. For 2022 as a whole, revenue was $5.78 billion, up 38% from 2021. The company’s net income of $441 million for the year increased from $414 million a year earlier. Bottom line, Frontier’s diluted earnings per share of $1.80 represented a 7% increase year over year.

Analyst Frank Louthan echoed Raymond James’ view and saw fit to upgrade FYBR from an outperform rating to a strong buy following publication. Explaining his stance, the analyst wrote: “4Q22 saw a continuation of the reversal in fiber sub-adds, a trend that we expect to continue and should bode well for a rise in the share price. We believe the EBITDA turnaround has begun and y/y growth will follow through 2023 as successful marketing ground play drives higher market penetration.”

Matching his strong buy rating, Louthan also gives FYBR a price target of $37, which implies a ~34% gain over the next year. (To see Louthan’s track record, Click here)

Overall, this telecom company has received 5 recent analyst ratings from Wall Street, including 3 buys and 2 holds, for a Moderate Buy Consensus rating. The shares trade for $27.63 and the average price target of $32 suggests upside potential of ~16% in one year. (See FYBR Stock Forecast)


Primo Water Corporation (PRMW)

The second stock on our list, Primo Water, is a pure-play provider of fresh drinking water solutions. The company specializes in large format water supplies – ie bottles holding 3 gallons or more – for water dispensers at the customer’s location. Primo supplies both the dispensers and the bottles and supplies both commercial and private customers. The company had sales of about $2.2 billion last year and $2.07 billion in 2021.

Operating in 21 countries, Primo offers dispensers, bottles, refill services and convenient delivery options. The company can also offer extensive customer support for its products. Water delivery offers customers a number of advantages over standard city and suburban water lines, including cleanliness, fewer contaminants like mercury, lead or arsenic, and less waste from single-use plastic bottles.

Throughout 2022, Primo sold approximately 1 million dispenser units to customers and saw its revenue grow 7% year over year. The company’s Water Direct and Water Exchange services drove this growth, up 17% year over year. Bottom line, Primo reported adjusted net income for 2022 of $108.2 million, or 67 cents a share. That was a strong annual increase from 2021 numbers of $91 million and 56 cents a share. Looking ahead, Primo expects 2023 revenue to be between $2.3 billion and $2.35 billion.

Pavel Molchanov is tracking this stock for Raymond James, and his recent note is interesting. Molchanov doesn’t see anything spectacular here — but he does see a profitable company with a solid niche in a business with a solid foundation built on consumer needs. The 5-star analyst writes: “Primo’s multi-pronged distribution strategy enables consumers and businesses to obtain high-quality drinking water at a lower price than single-use plastic bottles and eliminates the waste associated with it – hence the sustainability aspect of the story. The recurring revenue model is supported by tuck-in M&A that incrementally raise estimates. While there are few operational catalysts, regulatory action on plastics in jurisdictions like California and Canada should ultimately lead to even greater demand.”

Longer-term higher demand will justify Molchanov’s strong buy rating here, and his $21 price target shows his confidence in a ~39% stock appreciation over the coming year. (To look at Molchanov’s track record, Click here)

The 4 most recent analyst ratings on this stock show an even split, 2 to buy and 2 to hold for a moderate buy consensus rating. PRMW shares are currently priced at $15.12 and the average price target of $19.50 implies upside potential of ~29% in one year. (See PRMW Stock Forecast)


Sunnova Energy International (NOVA)

Last on our list is Sunnova Energy, a provider of residential solar power systems in the US markets. Sunnova is active at every stage of the home solar installation process, from installing roof panels to connecting to the home electrical system and setting up storage batteries, and also offers repairs, modifications and equipment replacements as needed to keep the installation in good working order to keep driving order and up to local code requirements. Customers can even finance the purchase of their solar system with Sunnova and take out maintenance plans and insurance.

Sunnova operates in 40 US states and territories, serving more than 279,400 customers through a network of 1,116 dealers, subcontractors and contractors. The company has expanded its customer base in recent months, adding 33,000 new customers in the fourth quarter of 22. For the full year 2022, the company had 87,000 new customers. Looking ahead, the company expects to add between 115,000 and 125,000 new customers in 2023.

Customer additions led to sales increases last year. In the fourth quarter, Sunnova’s revenue grew $130.6 million year-over-year to $195.6 million. Full year revenue of $557.7 million increased $315.9 million from 2021. The company attributed its gains to increasing the number of solar systems in operation, selling inventory to dealers and other customers, and acquiring in April 2021 Sonnenstrasse.

Chatting again with Pavel Molchanov of Raymond James, who says of Sunnova: “A more decentralized power grid, in which rooftop solar panels play a key role, brings economic benefits and also supports energy resilience, a facet of climate adaptation. Sunnova is one of the top tier players in the residential segment of the US PV market. The current penetration is only 4%. – compared to mid-teen Germany and Australia at almost 25% – and battery adoption is at an earlier stage. The long-term growth story must be balanced with the company’s reliance on vast amounts of outside capital: securitization and tax participation funds.”

Expected growth prospects merit a Strong Buy rating, and Molchanov’s $30 price target implies a ~70% gain over a one-year horizon.

All in all, this solar player has attracted the attention of no fewer than 11 Wall Street analysts, whose ratings drop to 9 buy and 2 hold for a Strong Buy consensus rating. The shares have an average price target of $30.60, suggesting a potential one-year gain of ~74%. (See NOVA Stock Forecast)


To find great stock trading ideas at attractive valuations visit TipRanks’ The best stocks to buya newly launched tool that brings together all of TipRanks’ stock insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important that you do your own analysis before making any investment.

https://finance.yahoo.com/news/load-says-raymond-james-3-004212065.html “Upload,” says Raymond James of these 3 strong buy stocks

Russell Falcon

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