The Wall Street firms that we follow here at 24/7 Wall St. keep a list for their institutional and retail clients of high-conviction stock picks. These are generally in the companies they not only like on a longer term basis, but those with stocks that usually have big upside to the assigned target price. With the third quarter over, many firms have tweaked their lists of top stocks to account for continued changes in the fourth quarter and into 2021.
In a recent Jefferies research report, the analysts made a big sector move by adding a top industrial stock to the firm’s Franchise Picks list of top stock ideas. Owens Corning (NYSE: OC) is the newest member and the company produces and sells glass fiber reinforcements and other materials for composites, as well as residential, commercial and industrial building materials worldwide.
The company operates in three segments. The Composites segment manufactures, fabricates and sells glass reinforcements in the form of fiber, and its manufactures and sells glass fiber products in the form of fabrics, non-wovens and other specialized products.
The Insulation segment manufactures and sells fiberglass insulation into residential, commercial, industrial and other markets for thermal and acoustical applications. It manufactures and sells glass fiber pipe insulation, flexible duct media, bonded and granulated mineral fiber insulation, cellular glass insulation and foam insulation used in above- and below-grade construction applications.
The Roofing segment manufactures and sells residential roofing shingles, oxidized asphalt materials and roofing components used in residential and commercial construction, and specialty applications, as well as synthetic packaging materials.
The Jefferies team sees significant untapped earnings power being unleashed, with Owens Corning generating $6.50 or more in earnings per share, which is 15% above Wall Street estimates for 2022, and that number is up about 45% from 2019.
Investors in Owens Corning stock receive a 1.38% dividend. The Jefferies price target for the shares is $84, and the Wall Street consensus target is $73.06. The last trade on Thursday was reported at $69.66 a share.
The Jefferies team removed Martin Marietta Inc. (NYSE: MLM) from the Franchise Picks List.
We also screened the Franchise Picks, looking for companies that could be solid stocks to own for the fourth quarter. These four look like conservative ideas for investors to consider now. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Casey’s General Stores
This hot consumer staples stock also resides on the Franchise Picks list. Casey’s General Stores Inc. (NASDAQ: CASY) and its subsidiaries operate convenience stores under the name Casey’s General Store in approximately 10 Midwestern states, including Iowa, Missouri and Illinois.
The company operates approximately 1,930 such stores, as well as two distribution centers through which it supplies grocery and general merchandise items to its stores. Its general store typically carries over 3,000 food and nonfood items. The stores sell regional brands of dairy and bakery products, and approximately 90% of the stores offer beer. Its nonfood items include tobacco products, health and beauty aids, school supplies, housewares, pet supplies and automotive products.
Jefferies has remained bullish for some time and said this:
Aside from the appeal of a consolidator in the highly fragmented c-store segment that is seeing structural tailwinds to fuel margins, we continue to like the company due to its superior food service offering and self help initiatives that should help deliver solid market share gains in its small town footprint and robust EBITDA growth long term.
Shareholders receive just a 0.71% dividend. Jefferies has a $225 price objective, and the consensus price target is $193.20. Casey’s General Stores stock closed at $180.20 on Thursday.
Toys and games rarely go out of favor, and with Christmas right around the corner, the timing to buy looks solid. Hasbro Inc. (NASDAQ: HAS) engages in the provision of children and family leisure time products and services with a portfolio of brands and entertainment properties. The company’s brand names include Littlest Pet Shop, Monopoly, My Little Pony, Nerf, Play-Doh and Transformers.
The Entertainment and Licensing segment conducts movie, television and digital gaming entertainment operations, including the operations of Hasbro Studios and Backflip, as well as engages in the out-licensing of trademarks, characters and other brand and intellectual property rights to third parties for digital gaming and consumer products.
In addition, Hasbro partners with major content owners to license brands for toy and collectible products. The company’s licensing of its own brands to other CP category specialists has directly benefited consumer engagement and profitability. Partnerships with key media brands on a global basis imply multilevel growth. The analysts expect continued franchise economics from investments in films and TV.
Investors receive a 3.28% dividend. The $88 Jefferies price objective compares to the $89.71 consensus estimate. Hasbro stock closed at $82.95.
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.
Top analysts feel that Huntsman now has one of the strongest balance sheets in the chemical sector. Combined with progress reducing cyclical risk, and ample opportunity to grow faster than gross domestic product due to innovation, the future looks strong. Earlier this month Huntsman updated its third-quarter performance noting Polyurethanes earnings are on track to beat the prior discussed range greater than 40%. This is taking Wall Street estimates considerably higher.
Shareholders receive a 2.95% dividend. Jefferies has set a $30 price target. The consensus target is $24.58, and Huntsman stock closed at $22.05 a share.
The Jefferies team loves this off-price retailer, and it is another solid holiday pick for the fourth quarter. TJX Companies Inc. (NYSE: TJX) is the largest global off-price retailer with over 3,000 stores worldwide. It offers brand-name merchandise at a 20% to 60% discount to department and specialty store prices. Its stores generally are known for their treasure hunt experience.
The core TJX customer is a middle to upper-middle income female, between 25 and 54 years old, who is fashion and value conscious. The analysts feel that the “new normal” is positive for the shares of the discount retailer and said this:
In a post-COVID world, TJX is uniquely positioned as the beneficiary of both supply and demand benefits. While the market focuses on the risk from a consumer migration towards e-commerce, our proprietary work shows TJX’s distinctive in-store experience may be the exception to the rule.
The Jefferies price target on TJX Companies stock is $65. The consensus target is $63.24, and the shares were last seen trading at $57.08 apiece.
With the market expensive and the potential for increased volatility from the ongoing pandemic and the political environment, it makes sense for investors to stay conservative. A contested election will not sit well with Wall Street, so better safe than sorry at this point.
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