January 3, 2022
These 5 equity analysts made brilliant stock recommendations that returned over 100% to the investors that followed their advice in 2021. These portfolio picks are the result of deep analysis of often overlooked stocks in a variety of industry sectors.
The stock recommendations of Perficient, Inc. (NASDAQ:PRFT), Customers Bancorp (NYSE:CUBI), Diamondback Energy (NASDAQ:FANG), Targa Resources (NYSE:TRGP) and Ulta Beauty (NASDAQ:ULTA) deserve congratulations to these analysts for making 100% returns for their investors.
“TWST: Can you give us close at a few of your top-rated “strong buy” stocks, along with your investment thesis for these? Where is your strongest conviction?
Ms. Nolan: I’ll start with a small-cap name that I’ve been pretty interested in for a while now. It’s a company called Perficient (NASDAQ:PRFT). It has about a $2.2 billion market cap.
They are a digital transformation consulting firm. They’re serving the Global 2000. The reason I think they’re really interesting right now is that the company is picking up a lot of momentum.”
Following Ms. Nolan’s advice gave investors a run from $60 and change per share to well over $150 per share by November and this stock receommendation is still trading over $130 per share today.
“The other bank that I like is Customers Bancorp (NYSE:CUBI).
The stock is trading at 1.28 times tangible book versus the group trading at 1.76 times.
They were one of the largest federal PPP — Paycheck Protection Program — lenders in the country and they’ve got $300 million in unrealized fees that will be realized over the next 12 months.
That will drive tangible book value up from $30 in the first quarter of 2021 to approximately $41 in the next 12 months.
Using a multiple of 1.25 times tangible book at $41, that puts the stock price at $51. There’s 32% upside just with growth in tangible book value.
But in addition to that, they’ve got good levers for margin expansion by lowering deposit costs, they terminated a swap, and they see good loan growth because they’ve expanded into some specialty lending businesses that are more niche focused and not as competitive as traditional C&I — commercial and industrial — lending.
Customers also has good organic growth and should generate solid appreciation in the tangible book value, which would drive the stock price higher…”
Investors who followed Peter Winters stock recommendation advice were rewarded with gains starting from $34 and change on July 19th. CUBI is now trading at over $66 per share by the end of the same year.
“We regard management highly. I think they’re very conscious of the need to increase the value proposition to shareholders, particularly on the capital return side…
Diamondback has been a good operator.
They’ve been able to deliver consistently strong well results. We think that’s a company that is well positioned and has meaningful leverage to higher oil prices.
Every $5 or $10 move in the oil price significantly increases their free cash flow and their earnings.
We also like Diamondback because we think they’re one of the low-cost producers in the basin. In a world where oil prices have pulled back from current levels and potentially stay rangebound, in a band of say, $40 to $60 WTI, we think that the company offers a solid value proposition.
Unlike some of their peers, they don’t need higher oil prices to offer a compelling value proposition to investors.”
And unlike the stock recommendations of his energy analyst peers, this pick from Noah Barrett went from $58 per share in early February to $116 per share in December.
Another energy sector pick, this one substantially downstream from production, is Targa Resources (NYSE:TRGP) the midstream natural gas liquids distribution company. This high performing security was recommended by Seaport Global Securities Sunil Sibal in his February 2021 interview.
This prescient pick set up his investors for success:
“TWST: What are your top investment recommendations right now and why?
Mr. Sibal: As I said, natural gas liquids, NGL, is a theme that I’m positive on. In that regard, I recently upgraded Targa (NYSE:TRGP), which is a premium NGL player. It’s second to Enterprise in terms of its footprint for its handling and exporting NGLs out of the U.S., and it has a pretty strong and integrated platform in the Permian.”
From $28 per share in February, this stock topped out at over $58 per share, and is still trading above $52 per share, along with a dividend.
Our fifth analyst returning over 100% to investors is Adrienne Yih, a managing director at Barclay’s. In her August 7 2020 interview with the Wall Street Transcript Ms. Yih braved the retail sector COVID meltdown to declare that
“…We love Ulta Beauty (NASDAQ:ULTA).
Again, some of these have transient issues right now. Right now, people aren’t wearing makeup as much as they work from home, and if they are going on Zoom calls, that’s a fraction of the time that they would be full time going to work wearing makeup every single day.
And so right now, Ulta Beauty is underperforming because makeup sales are not as robust.
Also, when you’re wearing a mask, there’s not as much of your face to show.
When you think about the drivers of why she’s not buying, when we recover from this, when we go back to the office, I can bet you every woman, girl, Millennial out there is putting a full face back on.
You can see that happening.”
What investors who followed Ms. Yih’s advice saw happening was a stock that went from $200 per share at the beginning of August 2020 go to over $404 per share today.