Crude oil was all anyone could talk about in the tail-end of 2014 and the beginning of 2015 as barrel prices dropped from around $115 to $46. Now that crude oil is starting to recover, Canaccord Genuity analyst John Quealy is looking at related “companies that offer technology and product diversity.” In a report issued to investors on March 2nd, Quealy featured four companies under the industrial goods sector that he believes to have “a much stronger footing for share price appreciation moving through 2015 versus commodity-only driven peers.” He added, “In natural gas technologies… we find related companies taking the time to retool, restructure and refine product offerings throughout the transportation and industrial end-markets.” Highlights from Quealy’s report are as follows:
Darling Ingredients Inc. (NYSE: DAR):
Darling Ingredients produces sustainable natural ingredients from edible and inedible bio-nutrients. The company’s growing platform creates ingredients for pharmaceuticals, food, pet food, feed, fuel, bio-energy and fertilizer industries.
Quealy issued a Buy rating on DAR with a price target of $21, noting “Strategic transformation is underway, as Darling executes through a commodity reset and positions the company into a global growth platform for food, fuel and feed markets.” He added, “We remain constructive on the ultimate opportunity, while the Street likely takes its time to digest the new platform. We expect progress to become more apparent into ‘15 (and investor interest to increase) as operational “noise” subsides (integration, ERP roll-out) and efforts already underway begin to yield tangible results (Canada upgrade, rendering expansion efforts, etc.)”
On average, the top analyst consensus for DAR on TipRanks is Strong Buy.
Renewable Energy Group (NASDAQ: REGI):
Renewable Energy Group produces renewable chemicals with a focus on converting natural fats, oils, and greases into advanced biofuels.
Quealy currently has a Hold rating on REGI with a price target of $11.50. Although the analyst thinks the stock had “A strong finish to the year,” he believes that, “Near term, the RVO remains the primary overhang (with potential multi-year resolution serving as a catalyst), while a new buyback supports the current valuation.” He explained, “While we expect shares to remain volatile given the regulatory and commodity-driven economics of the market, we look to get more constructive as the transformation strategy unfolds and underlying earnings power becomes clearer.”
On average, the top analyst consensus for REGI on TipRanks is Hold.
Fuel Systems Solutions (NASDAQ: FSYS):
Fuel Systems Solutions manufactures and supplies cost-effective alternative fuel components and systems for transportation and industrial applications.
Quealy issued a Hold rating on FSYS with a price target of $11, noting “The ramp of new platforms and products (new high-tech break-pads) remains paramount, as loss of key OEM programs and challenging market conditions present sizable headwinds in ’14.”
On average, the top analyst consensus for FSYS on TipRanks is Hold.
Westport Innovations (NASDAQ: WPRT):
Westport Innovations develops alternative fuel and low-emissions technologies to allow engines to operate on clean-burning fuels. Some of the alternative fuels include compressed natural gas, liquefied natural gas, hydrogen, and biofuels.
Quealy has a Hold rating on WPRT with a $6 price target. He noted, “We continue to see inherent value in the underlying technology platform (even as shares have rallied from recent lows).” In addition, “Macro challenges keep share volatility high, while the Company works to introduce engine platforms and book orders in ‘15+.”
On average, the top analyst consensus for WPRT on TipRanks is Hold.
Overall, John Quealy has a 53% success rate recommending stocks and a +17.0% average return per recommendation.
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