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SunTrust Out With Top Alpha Generating Ideas: 3 to Buy Now
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One thing Wall Street is almost always guilty of is a herd mentality. Hedge fund managers are extremely guilty of this as they often talk among themselves and then all pile into the same ideas. If they work out that’s great, if not, like Valeant Pharmaceuticals, which many hedge funds got mauled on, then the overcrowded trade can be an albatross of epic proportions.
A new SunTrust Robinson Humphrey research piece includes what the analysts call their 37 Alpha Generation Ideas. What SunTrust asked its analysts to do is to find their ideas that are most out of consensus based on ratings, models, estimates and other metrics. Of the 37 stocks identified, we highlight three here. All are rated Buy at SunTrust.
Bojangles’
This company has a well-received 2015 initial public offering. Bojangles’ Inc. (NASDAQ: BOJA) operates and franchises limited service restaurants in the United States that serve chicken items, made-from-scratch buttermilk biscuits, flavorful fixin’s and iced tea. As of December 27, 2015, the company had 662 system-wide restaurants, including 281 company-operated and 381 franchised restaurants, primarily located in the Southeastern United States.
SunTrust keeps this as a differentiated choice and a top pick, and it notes the very high 6.8% free cash flow. The company also boasts a very low enterprise value to EBITDA multiple of 9.2 times. Some on Wall Street were concerned McDonald’s was taking share as a result of its all-day breakfast roll-out, and they also point to liquidity concerns. SunTrust analyst does not agree with these issues.
The SunTrust price target for the stock is an aggressive $28. The Thomson/First Call consensus figure is much lower at $41.97. The shares closed Thursday at $17.93.
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