One of the things that stock investors love is when a company has a catalyst coming that can boost share price. That can range from a stock buyback program to a merger or take-out, or even a change in the top executives that run the company. Any positive catalyst is capable of ramping a stock’s price higher, especially if the company has had issues that were dampening investor enthusiasm.
A recent Jefferies research report included four companies that are Buy rated at the firm and have catalysts that could move the stocks higher. While not all are the kind that could have a huge take-over effect, they all could give the stocks some movement higher. At the minimum, they could keep investor interest focused on these companies.
This top company was absolutely mauled, but it has rallied big off the February lows. Encana Corp. (NYSE: ECA) engages in the development, exploration, production and marketing of natural gas, oil and natural gas liquids (NGLs) in Canada and the United States. It owns interests in plays such as the Montney in northern British Columbia and northwest Alberta, Duvernay in west central Alberta, Clearwater in central and southern Alberta, Deep Panuke in offshore Nova Scotia, Cadomin/Doig in northeast British Columbia, Horn River in northeast British Columbia and Granite Wash/Doig in northwest Alberta.
Jefferies is bullish on the company and earlier this year elevated the stock to its Franchise Picks portfolio, which represents the highest conviction stocks at the firm. The report noted that the company recently priced a secondary offering, and while that added 12.5% to the share count, Encana will use about half the proceeds to fund its 2017 capital program, including an expansion of production in the Permian Basin, and the other half to pay down debt.
Jefferies has a whopping $13 price target on the stock, and the Wall Street consensus target price is $10.90. The shares closed Wednesday at $9.38.
This company had a merger in the spring that should close soon. FirstCash Inc. (NYSE: FCFS) operates retail-based pawn and consumer finance stores in the United States and Mexico. Its pawn stores lend money on the collateral of pledged personal property, including consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. Those stores also retail previously owned merchandise acquired through pawn forfeitures and over-the-counter purchases from the general public.
The company also engages in melting scrap jewelry, as well as sells the gold, silver and diamonds in commodity markets. Its consumer finance stores provide small unsecured consumer loans, credit services and check cashing services. As of December 31, 2015, FirstCash owned and operated 1,005 pawn stores and 70 consumer loan stores in 14 states of the United States and 29 states of Mexico and Guatemala.
Shareholders recently approved the company’s merger with Cash America, which FirstCash purchased back in April for $994 million in stock in a deal to bring together two of the largest retail pawn shop operators in the United States. Jefferies noted in its report:
We recently met with management. The new entity (post the Cash America close) can continue to grow organically in Latin America, while returning capital more aggressively to shareholders and/or further consolidating the US market. The business is fairly defensive and offers an 8% free-cash-flow yield. Our target assumes a 6% free-cash-flow yield plus the Enova International stake.
The $60 Jefferies price target compares with the consensus target of $54.25 and the most recent close at $46.93.