With the market very rich, and the COVID-19 pandemic still a long way from being over, we decided to sift through the companies that have been absolutely eviscerated as a result of the demolition of the economy and everything related, like travel, lodging, discretionary purchasing, gaming and more.
It makes sense that truly great companies that have been hit almost exclusively because of the pandemic can rebound when we begin to return to normal, let alone to the kind of economy that was chugging along quite nicely before all this started.
We screened the BofA Securities research database and found five companies that offer outstanding upside potential for growth investors who can be patient, looking to next year and even beyond. All are rated Buy at BofA Securities, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Apache
This company was long considered an industry leader but its stock has been battered. Apache Corp. (NYSE: APA) is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids (NGLs). The company has operations in onshore assets located in the Permian and Midcontinent/Gulf Coast onshore regions, and offshore assets situated in the Gulf of Mexico region. It also holds onshore assets in Egypt’s Western desert and offshore assets in the North Sea region, including the United Kingdom.
Apache also has an offshore exploration program in Suriname. As of December 31, 2019, it had total estimated proved reserves of 551 million barrels of crude oil, 186 million barrels of NGLs, and 1.6 trillion cubic feet of natural gas. The company remains an acquirer/exploiter/explorer and a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.
Apache posted a solid second quarter, and the analysts said this:
A solid second quarter sees costs and capex trending down and implies a second half of 2020 cash break-even at $30 a barrel with free cash at the current strip. But overshadowing the quarter was an announced 3rd exploration success at Kwaskwasi further linking Apache’s story to Suriname. Resource scale suggests that story is just getting started but with Suriname still poorly reflected in the company’s share price.
Holders of Apache stock receive just a 0.65% dividend. BofA Securities has a gigantic $26 price target, and the Wall Street consensus target is $17.00. Shares closed trading on Tuesday at $14.65 apiece.
Citigroup
Shares of this top bank have been trading at the lowest levels since 2016. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
Trading at a still very cheap 7.2 times estimated 2020 earnings, this company looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.
Investors receive a 4.00% dividend. The BofA Securities price target is $74, while the posted consensus target is $69.71. Citigroup stock closed at $51.65 on Tuesday.
Darden Restaurants
With phase two opening procedures in place in some areas, the restaurant industry is close to leaving the horror of being shut down except for carryout and delivery. Darden Restaurants Inc. (NYSE: DRI) owns and operates full-service restaurants in the United States and Canada.
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