This top stock to buy offers intriguing potential for value expansion. Huntsman Corp.’s (NYSE: HUN) portfolio of businesses represents a diversified set of chemical products touching an even broader set of end markets.
The company reports across four business segments (Polyurethanes, Advanced Materials, Performance Products and Textile Effects) representing the revenues and profits from the company’s exposure to five primary chemical chains. Across many of these platforms, Huntsman operates a vertically integrated footprint from upstream commodities to downstream derivatives.
Jefferies is very positive on the company and noted this:
The company now has one of the strongest balance sheets in the chemical sector. Combined with progress reducing cyclical risk, ample opportunity to grow faster than GDP due to innovation, we expect this to drive a re-rating in shares. On our sum-of-the-parts, using 6x forward EBITDA for Huntsman’s lower-quality businesses and 9x for the downstream businesses would support $32 a share in late 2020/first half of 2021 The lingering risk of a large M&A transaction remains, though our analysis suggests that even a large transaction could prove to be a net positive over the long-term.
Huntsman pays shareholders a respectable 2.85% dividend. The $32 Jefferies price target compares with the $26.88 consensus target and the most recent close at $22.77.
This is one of the top health care real estate investment trusts, and it may be one of the safest plays for more conservative accounts. Ventas Inc. (NYSE: VTR) is a fully integrated and self-administered equity REIT that acquires, invests and manages a portfolio of health care real estate across the United States, Canada and the United Kingdom.
The company’s diverse portfolio of approximately 1,200 assets consists of senior housing communities, medical office buildings, university-based research and innovation centers, inpatient rehabilitation and long-term acute care facilities, and health systems. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States.
The analysts recently upgraded the shares to Buy and noted this:
Ventas has been dealing with a supply glut in its markets but the data shows a pronounced decline in construction in the company’s markets since first quarter 2019 suggesting a turnaround in results ahead. We conducted various demographic analyses on the portfolios of the Healthcare REITs (population, income, etc.) and the results suggest only modest differences in the portfolio quality among the “Big Three” and implies the 4x valuation discount that Ventas trades to competitors is unwarranted.
Ventas shareholders receive a very strong 5.33% distribution. Jefferies has set a price target of $68. The posted consensus target is $71.69, and the stock closed most recently at $59.47.
These are four strong value plays that all pay significant dividends. One thing is for sure: the market is very rich and decidedly overbought, and it won’t take much to shake out a significant sell-off. Note how the coronavirus threat shook things up on Tuesday. Taking profits on momentum growth and moving some capital to these safer value plays may be a very timely move.
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