Merrimack Pharmaceuticals. (PRNewsFoto/Merrimack Pharmaceuticals, Inc.)
By Steve Reitmeister, Editor in Chief of TipRanks
At the end of last year I shared my 2019 Stock Market Outlook with TipRanks members where I stated why the bull market will reemerge in the year ahead. I followed that up with an article sharing the stock selection ingredients to outperform. Here is a quick summary of those elements:
- Small and Mid caps
- Risk On / Economically Sensitive Industries
- Value, or at least GAARP (Growth At A Reasonable Price)
I have decided to write a series of articles highlighting stocks with these different ingredients to give investors a decided edge in 2019. Today’s focus is on Value stocks. Here are 3 that make the grade:
Altra Industrial Motion (AIMC)
This manufacturer of industrial transmissions, clutches and brakes actually fits into all 3 categories of stocks ready to outperform. It’s a small cap industrial stock that is definitely in the Risk On camp. Those credentials are a big part of why shares tumbled from a high of $53 to $23 during the correction.
That is a bummer for former shareholders…but a great opportunity for us. We get to swoop in and enjoy a tremendous value proposition as the average analyst has a target price of $46 which marks 64% upside from current levels. And with the earnings outlook undiminished it certainly has a shot to retake the previous high of $53 which is 89% higher.
Along with that we also have positive indications from Bloggers and Insiders. The most impressive TipRanks indicator is the Hedge Fund managers with nearly $100 million in recent share purchases.
I think you see there are lots of good reasons to get in gear and add AIMC to our portfolio. If you need one more it’s the 2.4% dividend yield that will only accelerate our final return.
Marathon Petroleum (MPC)
Let’s start with some important clarification. This is the refining and marketing arm of Marathon that spun off from the exploration part (MRO) back in 2011. This is a much more stable business and not as focused on the daily price of oil to determine earnings outlook and share price value.
Most people think of Marathon gas stations when they focus on the marketing business. Yet the much better growth story is their Speedway brand with over 2,200 locations nationwide. On top of that you have the fact that in the US there has been a shocking underinvestment in oil refining capacity over the past 40 years. This gives much better pricing power to top players like Marathon to squeeze out more profit from each barrel.
Shares got as high as $88.45 before the correction took its toll. Now shares only trade for $65 when the earnings outlook remains stable and the average target price is $96 (47% upside potential).
If that was not good enough we also have a full slate of positive TipRanks indicators in our favor. The Individual Investor sentiment is pushing as strongly positive as you can get. Bloggers are feeling quite bullish too. Insiders and Hedge Fund Managers are also climbing on board which is the strong indications of future upside.
Hopefully you agree with me that there are many good reasons to pump some of these gas shares into your portfolio.
SS&C Technologies (SSNC)
This leading financial software company got a double whammy during the Q4 correction slashing the share price down from a high of $60.97 to as low as $40.96. As you might remember the correction started with a focus on tech stocks. After that, interest rates started to come down hurting the financial sector.
SSNC has rebounded nicely since the post Christmas bounce emerged. Gladly the value proposition still remains with the average target price at $65.86 (36% above current levels). Plus 5 Star Analyst, Mayank Tandon of Needham, sees good reason for shares to rise to $70.
The TipRanks indicators are also flashing positive signals starting with Individual Investor sentiment. Financial Bloggers are also beating the SSNC drum. The most impressive of these Alternative Data signals is hefty buying from Insiders and Hedge Fund managers.
There is simply no sound fundamental reason for shares of such a quality company to be trading for so little. But that is the joy of this correction. We value investors get to step in and take advantage of the missteps by others. They will discover the error of their ways in time. Gladly we will have already downloaded these software shares into our portfolio.
AIMC, MPC and SSNC are just 3 of the stocks I have selected for the Smart Investor portfolio. There you will see many others stocks loaded with positive TipRanks indicators that are primed to outperform in the year ahead. (Discover the Smart Investor portfolio here).
Disclaimer: In general, I own the stocks that I highlight in commentary. When you think about it…why would you ever take advice from an investment professional who wasn’t willing to put his money where his mouth is?