Lakewood Capital Management recently released its Q2 2020 Investor Letter, a copy of which you can download here. In the letter, among other things, the fund reported a net profit of 10.7% for Q2 2020. You should check out Lakewood Capital’s top 5 stock picks for investors to buy right now, which could be the […]
Auto industry disruptor Nikola (NKLA) will report 2Q earnings today after the bell. In yesterday’s tech rally, the electric heavy-truck maker surged by 22%.Was the surge in anticipation of a “home run” report? Hardly. In fact, results wise there will be very little to tell investors, as Nikola has no product yet and isn’t expected to have anything to sell until the second half of next year at the earliest.However, there were several reasons for the rally. One was a note to investors from Deutsche Bank, in which analyst Emmanuel Rosner added the company to its short-term Catalyst Call Buy List.Rosner recommends investors pull the trigger on NKLA shares in anticipation of updates from Executive Chairman and founder Trevor Milton.Maybe Nikola has little to show for now, but Milton has taken a leaf out of the mercurial entrepreneur playbook. The founder has already exhibited all the hallmarks of an adept showman, with a flair for headline grabbing antics. The latest of which was a tweet reassuring investors as to the health of Nikola’s balance sheet. The savvy move helped push the share price higher, too.So, what does Rosner expect Milton to reveal that instigated the Buy Idea?“We see catalysts occurring with Nikola’s earnings report this week,” the analyst said, “Including: customers for its BEV truck; commercial partner for the hydrogen stations; OEM manufacturing partner; and an updated Badger reservations count . Beyond it, some or all of the above company updates could come in the next couple months. We are targeting a 10-20% return for this Catalyst Call.” It will be interesting to see how much battery power there will be left to push shares higher after yesterday’s surge. To this end, Rosner has a $54 price target on the stock, implying there’s a 42% upside in the cards. Additionally, as mentioned, Rosner’s Hold rating makes a switch to a “short term” Buy. (To watch Rosner’s track record, click here)There’s similar sentiment among Rosner’s colleagues. 2 Buys and Holds each, add up to a Moderate Buy consensus rating. At $56.67, the average price target could provide gains of 55% over the coming months. (See Nikola stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
You can’t always rely on share price appreciation to guarantee a profitable portfolio. Savvy investors know this, and always seek ways to ensure their income stream. Dividends are common, and popular, way to do this, but bring with them some important questions: Is the dividend reliable – does the company pay it out regularly, in full? Does it yield enough to make the investment worthwhile?These are some of the factors that Wall Street’s analysts weigh when they review dividend stocks. And fortunately, they can answer them in positive terms for investors. For while the market conditions aren’t really signaling defensive buying – the S&P 500 has been holding above 3,200 since mid-July, and the NASDAQ has been setting new record highs since June – keeping a reserve of defensive stocks is always a sound strategy to harden your portfolio against the unexpected.With this in mind, we’ve turned to TipRanks database to find three "Strong Buy" dividend stocks with yields starting at 9%, high by any standard, and with potential upsides starting at 14%. These are stocks that will both grow the portfolio and provide a steady income.Hercules Capital (HTGC)We’ll start in venture capital, the engine of so much economic activity. Hercules Capital offers financing services to small, early-stage companies in the technology, life sciences, and financial SaaS sectors, and boasts some $10 billion committed to its investment portfolio.HTGC weathered the corona storm well in the first quarter, reporting strong EPS above the estimates. Q2, however, saw a decline. Investment income fell nearly 2% year-over-year, and EPS dropped to 32 cents, missing the forecast by one cent. Hercules saw a boost from a 5% drop in operating expenses.The quarterly results, while disappointing, were enough to ensure the company’s generous dividend. Hercules has a history of adjusting the payment to keep it line with earnings, but this quarter’s 32 cents per common share was kept stable. The annualized rate, $1.28, gives a yield of nearly 11.1%, which is far better than the 2% average yield found among S&P-listed companies. Hercules has a 13-year history of keeping reliable dividend payments.Tim Hayes, of B. Riley FBR, writes of Hercules, “While lower interest rates weighed on earnings power during the quarter, NII/share covered the $0.32/share quarterly dividend, and we expect the dividend to remain stable in the near-/intermediate term given the healthy cash runway amongst portfolio companies and a strong VC backdrop [...] we remain buyers of shares of HTGC, which currently trade at 1.08x 2Q20 NAV."In line with these comments, Hayes rates HTGC a Buy along with a $12.50 price target, which implies a 9% upside from current levels. (To watch Hayes’ track record, click here)Wall Street clearly agrees with Hayes – Hercules has a unanimous Strong Buy analyst consensus rating, based on 9 analyst reviews. The stock is selling for $11.45 and the average price target of $12.57 is in congruent with Hayes’, suggesting a one-year upside of 10%. (See HTGC stock analysis on TipRanks)Global Net Lease (GNL)Next up, Global Net Lease, is a real estate investment trust. REITs are typically dividend champs, due to tax code provisions requiring them to return a high percentage of earnings directly to investors. GNL, with a portfolio built on US and European commercial properties, aims to provide investors with stable dividends and steady portfolio growth potential. While the growth potential has stalled in recent months, due to the ongoing coronavirus crisis, the company’s stock shares are up 94% since hitting bottom in March. Earnings during 1H20, the ‘corona half,’ have been stable, at 44 cents per share for Q1.In an effort to keep the dividend and EPS in line together, the company cut back the quarterly dividend payment during the half. The current dividend is 40 cents per share, making the yield 9.6%. This is impressive on its own, but more so considering that it comes after a 20% cut and while the stock has been gradually gaining ground.Berenberg analyst Nathan Crossett writes, “The strength of GNL’s portfolio through diversification and focus on investment grade tenancy is exemplified by the level of its rent collections during the peak of the pandemic. As of June 2, GNL had collected 96% of the original cash rent due quarter to date for the second quarter; this includes 99% of rent for assets in the United Kingdom and 97% of rent for assets in the rest of Europe.”A REIT with that level of success in rent collection is easily rated a Buy, and Crossett adds a $22 price target, suggesting room for 34% upside growth. (To watch Crossett’s track record, click here)Overall, Global Net Lease has 3 Buys and 1 Hold behind its Strong Buy consensus rating. The stock is selling for $16.43 and has an average price target of $20.17, giving it a 23% upside potential. (See GNL stock analysis on TipRanks)Cherry Hill Mortgage (CHMI)Last on today’s list is Cherry Hill Mortgage, named for its headquarters town in New Jersey. This REIT holds a portfolio of mortgage-based assets rather than direct property ownership. CHMI’s portfolio includes heavy investments in mortgage service rights and mortgage-backed securities.Through the first quarter, Cherry Hill beat the forecasts on earnings. Quarterly EPS in both Q4 and Q1 were from Q3 2019, an impressive feat during a period when most companies were seeing sharp drops sequentially. Q1 EPS came in at 47 cents, compared to a 43-cent expectation.In a nod to the ongoing health and financial crises, CHMI cut back on its dividend payment in Q2. The company set the payment at 27 cents per share of common stock, giving an annualized payment of $1.08 and a yield of 11.7%. That dividend yield compares favorably to most other investments, especially US Treasury bonds which are currently at record low rates.5-star analyst Steven DeLaney, of JMP Securities, likes what he sees in CHMI, viewing the company as fundamentally sound. He writes, “in the wake of the March-April market disruption and 1Q20 results … core earnings and book value held up relatively well despite unprecedented COVID-19-related market volatility. We continue to view the company’s valuation as attractive…”DeLaney’s $10.50 price target supports his Buy rating and suggests a solid one-year upside for the stock of 15.5%. (To watch DeLaney’s track record, click here)Cherry Hill is another company with a unanimous Strong Buy analyst consensus rating, this one based on 3 recent reviews. The stock’s average price target of $11.33 is somewhat more bullish than DeLaney allows, indicating room for a 25% upside in the next 12 months. (See Cherry Hill’s stock analysis at TipRanks)To find good ideas for divided stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Alphabet unit Google's bid to take on Apple and Samsung in the wearable technology market by buying Fitbit hit a hurdle on Tuesday as EU antitrust regulators launched an investigation into the $2.1 billion deal. The move by the European Commission on Tuesday came despite Google's pledge last month not to use the fitness tracker's data for advertising purposes in a bid to address competition concerns. The EU antitrust enforcer said the deal would further entrench Google's dominance in online advertising and that Google's data pledge was insufficient to allay its worries.