After another choppy week for investors where we saw volatility make a spring visit, the intensity looks to ramp up next week. Earnings season is at full tilt, and we’ll get results next week from Tesla, Amazon, Alphabet, and Ford, to name a few of the headliners.
As the stock market continues to prosper, there is growing concern over what possibility might exist that could result in a reversal of fortunes. One of the crucial elements in the market’s performance is the investor confidence in what the Federal Reserve is doing.
The federal government continues to push for more and more fiscal stimulus, whether it pertains specifically to infrastructure spending or spending to support social welfare. Not to mention, the impact of the passage of the $1.9 trillion stimulus bill right after President Biden got sworn in is just beginning to impact the economy.
Volatility is to be expected with this week’s earnings line up, but for now the odds seem to be stacked in favor of the bulls.
As always, our research team is scouring the markets for potential opportunities. Here are a few recommendations for this week.
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Hamilton Lane (HLNE) is an alternative investment management firm providing innovative private markets services to sophisticated investors worldwide. There are numerous reasons why the stock of this private-market investment firm is a great growth pick right now.
Looking back at the numbers for HLNE – revenue grew by 15.2% in the last fiscal year and grew by 29.36% over the last three fiscal years. Furthermore, Operating Income grew by 23.24% in the last fiscal year and grew by 13.56% over the last three fiscal years.
Another thing to consider is earnings growth. The historical EPS growth rate for Hamilton Lane is 9.6%, but the more important aspect to consider is projected growth. The company’s EPS is expected to grow 26.2% this year, crushing the industry average, which calls for EPS growth of 16.6%.
Hamilton Lane looks attractive from a sales growth perspective as well. The company’s sales are expected to grow 19.5% this year versus the industry average of 4.6%. The company also has an impressive asset utilization ratio. Right now, Hamilton Lane has a sales-to-total-asset of 0.54, compared to the industry average of 0.35. This says a lot about the level of efficiency within the company.
Considering these factors, Hamilton Lane looks well positioned for outperformance, which means it may be a good bet for growth investors.
HLNE sports a 1.38% dividend yield and is scheduled to report earnings on May 27th.
Shares in Chart Industries (GTLS), which manufactures cryogenic equipment for industrial gasses such as liquefied natural gas (LNG), are riding the global secular trend toward sustainable energy.
The market certainly likes GTLS‘ commitment to greener energy. The mid-cap stock is up more than 410% over the past 52 weeks – analysts expect a torrid pace of profit growth over the next few years to keep the gains coming. Indeed, the Street forecasts compound annual EPS growth of more than 34% over the next three to five years.
Analysts say the company’s unique portfolio of technologies gives it an edge in a growing industry. To that end, they applauded its $20 million acquisition of Sustainable Energy Solutions in December because it bolsters the company’s carbon capture capabilities.
“In the context of the decarbonization megatrend, Chart is a one-of-a-kind play on the global shift to more gas-centric economies,” writes Raymond James analyst Pavel Molchanov in a note to clients. “There is upside potential from large liquefied natural gas projects. Notwithstanding the lingering headwinds from the North American energy sector, we reiterate our Outperform [Buy] rating.”
Stifel, which chimes in with a Buy rating, says GTLS deserves a premium valuation given its outsized growth prospects.
“With potentially a decade or more of high single-digit to low double-digit revenue growth, more recurring revenue, accelerating hydrogen opportunities, and the potential big LNG surprise bounces, we expect shares could trade north of 30 times normalized earnings,” writes analyst Benjamin Nolan.
The stock currently trades at nearly 30 times estimated earnings for 2022, per S&P Global Market Intelligence. This mid-cap stock may seem to be trading at a lofty valuation, but with a projected long-term growth rate of more than 34%, one could argue GTLS is actually a bargain.
Raymond James and Stifel are very much in the majority on the Street, where 12 analysts rate GTLS at Strong Buy, four say Buy, one has it at Hold and one says Sell.
Synnex Corp. (SNX) is a provider of IT supply chain services. It offers a range of distribution, logistics, and integration services to the technology industry. The company, through its Technology Solutions segment, distributes peripherals, information technology (IT) systems, consumer electronics (CE) and complementary products. It also provides systems design and integration solutions. Synnex distributes over 30,000 technology products from manufacturers around the world and provides technology solutions to more than 20,000 resellers and retail customers.
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SNX has merged with Tech Data, one of the world’s largest technology distributors, at a value of $7.2 billion, including net debt. The combined company, with estimated pro forma annual revenues of $57 billion, will provide expansive reach across products, services, and geographies to accelerate technology adoption.
In February, SNX was named Samsung 2020 Mobile Distribution Partner of the Year based on total sales volume. And since March 10, SNX has collaborated with Hewlett Packard Enterprise Company (HPE) to offer HPE GreenLake cloud services to reseller partners through its Stellar Marketplace.
SNX’s revenue for its fiscal year 2021 first quarter, ended February 28, 2021, was $4.94 billion, which represents an improvement of more than 21% year-over-year. The company’s gross profit increased 19.4% year-over-year to $304.57 million.
Non-GAAP earnings figures can sometimes provide a more accurate measure of a company’s financial performance. SNX’s non-GAAP operating income was $156 million for the quarter, which represents an improvement of more than 35% year-over-year.
A consensus EPS estimate of $1.91 for the current quarter, ending May 31, represents an improvement of 4.4% year-over-year. Also, SNX surpassed consensus EPS estimates in each of the trailing four quarters.
Should you invest in Hamilton Lane right now?
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