In the past two years, investors have seen plenty of companies that made little or no money, burned through available cash and regularly posted disappointing numbers. SPAC conversions, electric vehicle fringe players, sports gambling, over-the-top streaming startups, marijuana companies and a host of other stocks went from heroes to zeroes. Now, 70% of all the initial public offerings from 2021 are trading below their IPO pricing, and that silo has come to a screeching halt in 2022. Practically no deals are coming from the Wall Street bankers.
What should investors do now? Given the current volatility and market conditions, it makes sense to look at value. Nobody knows that arena better than the analysts at Jefferies. They screened their research universe looking for companies poised to offer inventors the kind of metrics that drive stocks higher and said this in a new and comprehensive research report that highlights the firm’s 23 highest conviction stock picks:
Value is back in vogue, and whether it’s due to persistent inflation, the prospect of higher rates or a cyclical-boosting economic backdrop, the outperformance could last for some time. With this in mind, we parsed Jefferies’ coverage universe for stocks that fit a value framework and for which our analysts forecast above-consensus EPS. We offer investment theses for 23 stocks, highlighting what the Street is missing and key catalysts for potential rerating.
They had this to say when discussing the methodology for picking the 23 stocks:
To help identify value stocks that might be uniquely positioned for upside, we searched among Jefferies’ ~1,300 company coverage universe. Qualifying companies are: 1) Buy rated, 2) trade at a lower than S&P 500 sector average forward price to earnings, 3) trade with a higher than S&P 500 sector average forward free cash flow yield and 4) Jefferies earnings-per-share estimates for 2022 and 2023 are higher than consensus.
We screened the 23 stocks, all of which are outstanding ideas, and found six that investors looking to stay long the market, but concerned over the current volatility and geopolitical issues, should consider now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This is a great tech idea for more aggressive investors. Ciena Corp. (NASDAQ: CIEN) provides network hardware, software and services that support the transport, routing, switching, aggregation, service delivery and management of video, data and voice traffic on communications networks worldwide.
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