2011 is all but gone and research firms are handing out their top picks for 2012. We have been reviewing some of the “Small Cap Stocking Stuffers” from the top small cap ideas for 2012 generated by Credit Suisse and it turns out that some of the stock picks are expected to have upside of 50% or more in the year ahead. The $1.0 to $2.5 billion in market capitalization is called the Small Cap Sweet Spot by Credit Suisse, and the firm’s Favorite Ideas list in this value range features the following: Tenneco Inc. (NYSE: TEN), Western Refining Inc. (NYSE: WNR), Apollo Global Management, LLC (NYSE: APO), Synovus Financial Corporation (NYSE: SNV), and MasTec Inc. (NYSE: MTZ).
Other new additions to this were made but the rest did not have an implied 50% upside. We have offered details on each.
Tenneco Inc. (NYSE: TEN) is in the auto components sector and sports a $1.8 billion market capitalization rate. The stock trades at $29.97 and the firm’s price target is $53.00 as a growth pick, well above the Thomson Reuters consensus price target of $45.10. This gives implied upside of over 70%, but keep in mind that the firm added it to the Top Picks list in June when shares were around $37.50.
Western Refining Inc. (NYSE: WNR) is in the Oil and Gas Refining sector and at $13.29, it has a price target of $20.50 at Credit Suisse and a consensus price target from Thomson Reuters of $18.75. This pick was newly added in December to its best ideas list with an “Outperform” rating and was listed as a value pick.
Apollo Global Management, LLC (NYSE: APO) may seem like a surprise since it is in private equity. Credit Suisse’s $1.5 billion pick in market capitalization currently has a unit price of $12.30 and a market cap of about $1.5 billion. The firm expects that its shares will trade up to $21.00 versus a Thomson Reuters consensus target of $17.77. This pick was added in December with an “Outperform” rating as a value pick and leaves an implied 70% upside if the firm’s projections were correct.
Synovus Financial Corporation (NYSE: SNV) wa surprising to see on the list since very few investors are willing to enter the troubled sector. The market value for this regional banking outfit is currently $1.15 billion based upon a $1.46 share price. This was added as an “Outperform” rating as a value pick in December when shares were about $1.35, but the price target objective from Credit Suisse is $2.25. That leaves 52% upside remaining and the Thomson Reuters price target is also at $2.10.
MasTec Inc. (NYSE: MTZ) is valued at $1.48 billion in the Construction & Engineering sector. The current price of $17.48 leaves “only” 37% implied upside to Credit Suisse’s $24.00 price target. The reason for this inclusion is that the most recent price on the updated list was at $15.11 and that was above the 50% threshold even if this is under the price when added to the best ideas list in September as a growth pick.
JON C. OGG