The stock market has managed to get back on track after a brief correction after several weeks of split market action. Equities have largely shrugged off inflation concerns as they continue to march higher and higher into record territory.
Some analysts have expressed concerns that we may be due for a modest pullback when earnings season begins next week. But, as we have seen several times since the March 2020 bear market, pullbacks tend to be met with dip buyers fairly quickly, and that will likely occur again.
With that in mind, our research team has a few recommendations of stocks to watch this week.
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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.
Housing-related retail stocks have been market leaders over the last several weeks.
Floor & Decor Holdings Inc. (FND) has benefited from consumers investing in their homes among coronavirus lockdowns. Over the past three quarters earnings have grown by an average of 42%.
Analysts believe earnings growth will continue. Full year EPS is seen jumping 29% in 2021, and swelling by a further 26% in 2022.
The Atlanta-based retailer operated 133 warehouse-format stores and two design centers across 31 states at the end of Q4. It specializes in hardwood, tile, wood and natural stone flooring. Floor & Decor also offers decorative accessories and installation services.
Back in February it reported Q4 results that topped views. It opened five warehouse stores during the quarter. It expects to open seven stores in the current quarter.
“Driven by strong transactions and broad-based regional and category growth, our fiscal 2020 fourth-quarter comparable store sales increased 21.6%, the strongest quarterly growth rate of the year,” CEO Tom Taylor said on the earnings call. “For the full year, our fiscal 2020 comparable store sales increased 5.5%, a significant achievement considering the impact of the Covid-19 pandemic on our store operations beginning in late March.”
Last but not least, we have the Albemarle Corporation (ALB). In brief, the North Carolina-based company is in the business of chemical manufacturing. Albemarle’s three key divisions include its lithium, bromine specialties, and catalysts arms. According to the company, it is one of, if not, the largest provider of lithium for EV batteries globally.
If that wasn’t enough, the company’s products also cater to the electronics and communication markets as well. Given its leading position in the EV lithium business, investors would have ALB stock on their radars now. The company’s shares are currently up by over 120% in the past year. With Albemarle’s latest announcement, this trend could continue.
Namely, the company revealed the date for its upcoming first-quarter fiscal. Albemarle will be releasing the financial update on May 5 after the closing bell. With overall investor hype around the lithium market, ALB stock could be worth watching over the next month.
The company has also been making efforts to streamline its portfolio. Back in late February, the company sold its Fine Chemistry Services division for approximately $570 million.
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