Feeling optimistic the brand new yr will usher in a change in inventory market dynamics and shift sentiment from bear to bull? Nicely, Leon Cooperman has some dangerous information for you.
The billionaire investor has been a fully-fledged bear for some time now and 2023 has carried out little to alter his stance. “Anyone searching for a brand new bull market any time quickly is trying the flawed manner,” Cooperman stated.
In truth, Cooperman thinks there’s solely a 5% probability the S&P 500 sees out 2023 above the 4,400 mark (up 13% from present ranges), believing the inventory market is way likelier to go again down from right here.
Cooperman evidently is aware of a factor or two about investing in bear markets, and if we’re to heed his recommendation, it’s finest to search for ‘secure havens’ to defend from additional incoming volatility.
With this in thoughts, we delved into the TipRanks database and pulled out two shares that analysts imagine provide simply that. Furthermore, the view on Wall Avenue is that each are Sturdy Buys. Let’s see what makes them good shelters from the storm proper now.
Ashland Inc. (ASH)
The primary inventory we’ll take a look at is American chemical compounds firm Ashland. With a presence in 100+ international locations, the corporate provides components and specialty components, offering companies to purchasers in quite a lot of client and industrial sectors, resembling private care, automotive, power, meals and beverage, nutraceuticals, prescribed drugs, and architectural coatings. With a workforce of three,900, the corporate has a market cap of $5.77 billion.
And going in opposition to the final market pattern, Ashland has managed to protect that market cap over the previous yr, with the inventory seeing out 2022 1% into the inexperienced, a much better show than the S&P 500’s losses of 19%.
Delivering sturdy earnings actually helps in beating the market, and that is one thing the corporate’s most up-to-date report – for the fourth quarter of fiscal yr 2022 (September quarter) – managed to drag off. Income climbed by 6.8% year-over-year to $631 million, assembly Avenue expectations whereas adj. EPS improved by 20% to clock in at $1.46 – 5 cents above the $1.41 consensus estimate. Importantly, the corporate supplied a wonderful outlook, with gross sales for FY23 anticipated to be within the vary between $2.5 billion to $2.7 billion in comparison with consensus at $2.39 billion.
Laying out the bull-case, BMO analyst John McNulty explains the myriad causes to again the corporate.
“ASH’s defensive nature (60-65% of their income tied to private care and life sciences) and its offered out positions in a number of product traces ought to assist to insulate the corporate from the macro headwinds anticipated in 2023,” the analyst stated. “Additional, with ASH growing its concentrate on promoting merchandise into functions that discover /admire larger worth from ASH’s merchandise (up-selling), they need to proceed to see optimistic pricing for the portfolio. Lastly, ASH has important stability sheet energy that affords the corporate important flexibility whereas providing traders monetary stability. With all the above in thoughts, ASH ought to present traders a secure haven in 2023 as macro uncertainty continues.”
Accordingly, McNulty charges ASH shares an Outperform (i.e. Purchase), backed by a $139 value goal. Traders might be sitting on good points of ~30%, ought to McNulty’s forecast play out as anticipated. (To observe McNulty’s observe report, click on right here)
General, it’s clear that Wall Avenue agrees with McNulty on the ahead prospects for Ashland. The inventory’s 8 current analyst opinions embody 7 Buys and 1 Maintain, for a Sturdy Purchase consensus indicative of a bullish outlook. The shares are priced at $106.57 and their $131.25 common value goal implies a 12-month upside of 23%. (See Ashland inventory forecast on TipRanks)
AmerisourceBergen Company (ABC)
If current previous efficiency amidst 2022’s bearish developments is something to go by, then AmerisourceBergen’s credentials are exhausting to beat. The American drug wholesale firm fared a lot better than common final yr, producing for traders sturdy returns of 26%.
The corporate is among the world’s largest pharmaceutical service suppliers, targeted each on pharmaceutical producers and healthcare suppliers, and providing drug distribution and consulting companies. In truth, such is its attain, round 20% of all of the prescribed drugs offered and distributed within the U.S. are dealt with by the corporate. Moreover, AmerisourceBergen has a powerful worldwide presence with greater than 150 company-owned places of work unfold throughout the globe.
The very fact the enterprise is seeing sturdy demand even in opposition to the backdrop of an unfavorable macro was clear to see in essentially the most not too long ago reported assertion – for the fourth fiscal quarter of 2022 (September quarter). Income got here in at $61.17 billion, amounting to a 4% year-over-year enhance whereas adj. EPS clocked in at $2.60. Each outcomes beat Avenue expectations. For the 2023 outlook, the corporate known as for income development to be within the 5 to 7% vary whereas it reiterated the F2023 adjusted EPS forecast of $11.45 on the midpoint it set at its June investor day.
This inventory has picked up curiosity from J.P. Morgan’s Lisa Gill, who believes the corporate is ready up properly to cope with the present market setting.
“We stay optimistic on ABC given stable FY22 outcomes and FY23 steering outlook that gives an affordable view right into a difficult setting,” the 5-star analyst defined. “Finally, we imagine the U.S. Healthcare Options enterprise is poised for development on the again of sturdy Rx and specialty volumes (together with oncology and ophthalmology biosimilars), and will proceed to offset FX and inflationary pressures inside the Worldwide enterprise, which is able to subside over time… We additionally imagine the corporate might be a relative secure haven in an unsure financial setting, as we don’t anticipate an affect to demand for prescribed drugs in an financial downturn.”
These feedback underpin Gill’s Obese (i.e. Purchase) ranking on ABC shares, whereas her $191 value goal implies one-year share appreciation of ~15%. (To observe Gill’s observe report, click on right here)
General, ABC at present has a Sturdy Purchase ranking from the analyst consensus, primarily based on 8 analyst opinions, breaking right down to 7 Buys and 1 Maintain. The shares are priced at $165.71 and have a mean value goal of $181.63, suggesting a one-year potential upside of ~10%. (See ABC inventory forecast on TipRanks)
To search out good concepts for shares buying and selling at engaging valuations, go to TipRanks’ Finest Shares to Purchase, a newly launched device that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is vitally necessary to do your personal evaluation earlier than making any funding.