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RBC: 2 Strong Value Stocks to Buy Now

RBC: 2 Strong Value Stocks to Buy Now



Which strategy is a favorite of billionaires like Warren Buffet and Benjamin Graham? Value investing. This tactic, which involves looking for stocks that appear cheap when compared to their competitors on a price-to-earnings basis, hasn’t exactly been a fan-favorite among investors in the last decade. However, during a period riddled with uncertainty as a result of the COVID-19 pandemic, Wall Street pros are seeing merit in this approach.

The analysts from research firm RBC Capital are among those employing this strategy. The firm is one of  TipRanks’ Top Performing Research Firms, landing within the top 10 out of 50 total firms, and it’s known for housing some pretty talented stock pickers.

With this in mind, we wanted to take a closer look at two stocks RBC’s analysts believe represent strong value plays, with each scoring upgrades from the firm in recent days. Running the names through TipRanks’ database, we learned that both have other bulls in their corners, based on all of the ratings received in the last three months. Let’s dive right in.

Clearwater Paper Corporation (CLW)

With manufacturing facilities located throughout the U.S., Clearwater produces consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp. Even though RBC hasn’t always been a fan of the company, the firm believes the tide is turning.

Representing the firm, five-star analyst Paul Quinn notes that CLW could finally be approaching an inflection point, citing its solid performance in its last two quarters as well as positive trends in its end-markets to support this claim.

Looking specifically at the most recent quarter, better-than-expected consumer products results drove CLW’s strong showing, with adjusted EBITDA of $55.4 million flying past Quinn’s $37.9 million call and the $42.1 million consensus estimate. During the quarter, demand was particularly strong, with shipments up 19% compared to historical averages. Management stated demand ticked up at the end of the quarter, and U.S. retail sales gained 90% year-over-year in March. The solid demand is also expected to persist for at least the next few months, even though it might have less of a material impact.

Expounding on this, Quinn said, “Under normal conditions, about a third of tissue is consumed away-from-home, which we expect has at least partially shifted to at-home consumption. In our view, this increased demand is supportive of increased tissue pricing, especially given that input costs are trending upwards (both recycled and virgin). Higher tissue prices would be positive for Clearwater revenue growth and margins.”

Adding to the good news, the paperboard segment also did well in Q1 as consumers stockpiled food, pharmaceuticals and other consumer packaged goods. It doesn’t hurt that two thirds of demand in the industry is fueled by “recession resistant” market segments, according to CLW. Despite the fact that WestRock is expecting to see some demand weakness in certain segments, Quinn argues that CLW has limited exposure in these areas.

Going forward, management believes it can continue this strong execution in the second quarter, guiding for adjusted EBITDA of $45-55 million, which is higher than Quinn’s original forecast. The analyst added, “Although there remains uncertainty due to COVID-19, management expects to see continued elevated demand in tissue as current production rates can surpass volume levels achieved in Q1. Higher volumes are likely to result in cost benefits for the segment as well.”

To this end, Quinn is joining the bulls. In addition to upgrading his rating to Outperform, he also lifted the price target from $20 to $35, implying 21% upside potential. (To watch Quinn’s track record, click here)

Turning now to the rest of the Street, CLW’s Moderate Buy consensus rating breaks down into 2 Buys and a single Hold. Not to mention the $36.50 average price target brings the upside potential to 26%. (See Clearwater stock analysis on TipRanks)

Adient PLC (ADNT)

Spinning off from Johnson Controls, Adient is one of the largest vehicle seating suppliers in the world, producing over 23 million seat systems every year. While there has been somewhat of a dark cloud looming over the company, RBC has been impressed by its ability to hold up during the storm.

Weighing in on ADNT for the firm, analyst Joseph Spak points out that liquidity, on a pro-forma basis for post quarter actions, comes in at around $2.26 billion. In addition, the company is planning on receiving an extra $575 million by full year-end from asset sales that were announced at an earlier date and about $200 million in JV dividends. “So with monthly cash burn down to just $175 million in a production environment similar to April, liquidity profile seems more than sufficient. Post crisis, cash on balance sheet only needs to be $500-$600 million,” the analyst explained.

On top of this, Spak cited CEO Del Grosso’s leadership as inspiring confidence. “Prior to COVID-19, we had seen sequential improvement in margins as signs that ADNT was improving performance through efficiencies, cost reductions, VAVE, and exiting non-profitable programs. Company was on track to beat FY20 targets pre-COVID,” he stated.

Spak doesn’t dispute the fact that managing complexity hasn’t always been one of ADNT’s strengths, but he argues that should manufacturers push back mid-cycle refreshes to save capital, it could result in lower volumes and some program specific delays. This is a good thing for the company as it would decrease system complexity. It could also give management a chance to assess and reduce SG&A even more.

With Spak also telling investors that ADNT will be able to reduce its debt when free cash flow generation resumes, the deal is sealed. Not only does the stock get an upgrade, from Sector Perform to Outperform, but the price target also gets a boost. The new $20 target implies shares could surge 13% in the next year. (To watch Spak’s track record, click here)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

The post RBC: 2 Strong Value Stocks to Buy Now appeared first on TipRanks Financial Blog.

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Tesla rival Stellantis unveils its lowest price electric vehicles

The Big Three automaker unveils details on its low-priced electric vehicles that will be delivered over the next two years.



Electric vehicle manufacturers have realized that the prices of their cars are making it more difficult for many of them to compete against makers of lower-priced internal combustion engine vehicles.

Tesla saw its third quarter deliveries fall below market estimates, prompting Elon Musk's company in early October to lower the list price of the Model 3 from $40,240 to $38,990 and its industry leading seller Model Y has recently fallen from $47,740 to $43,990.

Related: Tesla Japanese rivals debut concept vehicles in latest challenge

Tesla top rival Ford already cut the price of its all-electric Mustang Mach-E by up to $4,000 in May and its F-150 Lightning by about $10,000 in July.

Stellantis revealing entry-level electric cars

Stellantis  (STLA) - Get Free Report has been busy revealing low-priced entry-level electric vehicles that it plans to begin selling in 2024 to compete with French automaker Renault in Europe as well as Chinese EV companies. The company in August said it would unveil a second new entry-level Fiat-branded electric vehicle in July 2024 that will be priced less than €25,000 or about $27,390. The company, however, didn't say when the vehicle might be sold in the U.S.

The company said in June that it will deliver the new Citroën e-C3 electric car to Europe in early 2024. The Citroën e-C3 was expected to have a range of 186 miles on a charge and would be among lowest priced EVs on the market. Stellantis had already said it would bring Fiat's best-selling EV, the Fiat 500e, to the U.S. market in 2024 to compete against Tesla and the growing U.S. EV market.

Citroën e-C3 all-electric subcompact hatchback.


Big Three automaker unveils its low-priced electric vehicles

Stellantis on Oct. 17 revealed its updated all-new, all-electric Citroën e-C3, which is its first European-designed, European-built B-segment, or subcompact, EV hatchback. The new vehicle is now estimated to have a 199-mile range, charging 20% to 80% of capacity in as little as 26 minutes. The EV accelerates 0 to 62 mph in 11 seconds with a provisional top speed of 84 mph for everyday driving and traffic in urban and suburban areas.

The company estimates that the vehicle will be priced below £23,000 ($27,900) in the UK. No word yet if the Citroën e-C3 will roll out in the U.S.

In 2025, Stellantis will offer a Citroën e-C3 with a 200 km- or 124-mile range and priced at €19,990 or $21,068, the company said. That price would be lower than any new EV sold in the U.S. today. General Motors  (GM) - Get Free Report Chevy Bolt's lowest manufacturer suggest retail price is $26,500, while the 2024 Nissan  (NSANY) - Get Free Report Leaf has a starting price of $28,140.

The new Citroën e-C3 will be available in three versions You, Plus and Max. The You version's standard equipment includes LED headlights, Citroën Advanced Comfort Suspension, Active Safety Brake, the new Citroën Head Up Display, ‘My Citroen Play with Smartphone Station’ for infotainment, electric door mirrors, auto lighting, rear parking radar, rear spoiler, cruise control, manual air conditioning, and six airbags.

Plus vehicles include 17-inch alloy wheels, Citroën’s two-tone paint with contrasting roof, decorative roof rails, front and rear skid plates, the 10.25-inch color touchscreen with smartphone mirroring, Citroën Advanced Comfort Seats, auto wipers, power-folding and heated door mirrors, leather-effect steering wheel, 60/40 folding second-row seat, and driver seat adjustment.

The premium Max version additionally has LED rear lights, rear privacy glass, enhanced seat textiles, automatic air conditioning, 3D navigation, wireless charging, rear camera, electrochrome rear-view mirror, and rear power windows.

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Lightning Labs releases Taproot Assets alpha, bringing stablecoins to Bitcoin

Taproot Assets is “how we bitcoinize the dollar and the world’s financial assets,” says Ryan Gentry, director of business development at Lightning…



Taproot Assets is “how we bitcoinize the dollar and the world’s financial assets,” says Ryan Gentry, director of business development at Lightning Labs.

Bitcoin layer-2 infrastructure firm Lightning Labs has released the mainnet alpha of Taproot Assets, a protocol aimed at enabling stablecoins and real-world assets to be issued on the Bitcoin and Lightning Network.

The current version, Taproot Assets v0.3, will provide a “feature-complete developer experience” to issue, manage and explore stablecoins and other assets on the Bitcoin blockchain, according to Ryan Gentry, head of business development at Lightning Labs.

“We believe this new era for Bitcoin will see a myriad of global currencies issued as Taproot Assets, and the world's foreign exchange transactions settled instantly over the Lightning Network.”

“With this release, developers can issue financial assets on-chain in a scalable manner,” Lightning Labs stated on Oct. 18 in a separate post. “Today marks a new era of multi-asset bitcoin.”

This version of Taproot Assets will work by routing through existing Bitcoin liquidity on the Lightning Network.

Gentry says the integration will extend Bitcoin’s network effects and move it one step closer toward “bitcoinizing the dollar.” He added:

“This is how we make bitcoin the global routing network for the internet of money. This is how we bitcoinize the dollar and the world's financial assets.”

Gentry described developer demand for stablecoin applications on Bitcoin as “overwhelming” — particularly given that some stablecoin issuers hold more United States Treasuries than the likes of Germany, South Korea.

“[It] signifies the importance of these assets globally, and gives a sense of scale for the global user demand,” Gentry added.

Related: BitVM wasn’t created to make Bitcoin a pseudo-Ethereum, says developer

Nearly 2,000 Taproot Assets were minted on testnets over the last several months in the lead up to the mainnet alpha launch, according to Gentry.

Alpha launches typically mean the development isn’t in its final state. Lightning Labs said the alpha tag indicates that they expect the community to test it for potential bugs.

Bitcoin Drivechains (through Bitcoin Improvement Proposal-300), Botanix Labs’ Spiderchain and the BitVM are among the other developments in the Bitcoin ecosystem looking to expand Bitcoin’s capabilities.

Magazine: Recursive inscriptions — Bitcoin ‘supercomputer’ and BTC DeFi coming soon

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Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East

Putin, Xi In Beijing Pitch For ‘Alternative World Order’ As Biden Departs A Burning Middle East

As a Rabobank note has highlighted, the main…



Putin, Xi In Beijing Pitch For 'Alternative World Order' As Biden Departs A Burning Middle East

As a Rabobank note has highlighted, the main theme on display during Xi Jinping and Vladimir Putin's Wednesday talks in Beijing was one of "common threats" bringing the two "dear friends" closer, according to a press readout. Observed Rabobank earlier in the day, "Meanwhile, as the Middle East rages and the West recoils, Xi Jinping welcomes Russia’s Putin and a host of Global South leaders, ex-India, to his Beijing Belt and Road Forum to talk about what an alternative world order might look like. The ‘global’ Western press mostly failed to even cover it."

Putin said at a media briefing following the meeting with his Chinese counterpart, "We discussed in detail the situation in the Middle East." He added: "I informed Chairman (Xi) about the situation that is developing on the Ukrainian track, also quite in detail." The Russian leader then emphasized: 

"All these external factors are common threats, and they strengthen Russian-Chinese interaction."

AFP/Getty Images

CNN subsequently called it a "pitch for a new world order" at a moment crisis has gripped the Middle East.

Yet, almost simultaneously, Bloomberg reported that Biden is overseeing a fast unfolding disaster in the Middle East:

President Joe Biden’s 7.5-hour trip to Tel Aviv signaled full US backing for Israel but fell short on another key goal: winning over Arab leaders.

Amid growing signs the conflict may be spinning out of control, Biden made plain that the US will protect its ally, sending a clear message to rivals in the region like Iran to stay out of the fight. With one US aircraft carrier in the area and another on the way, Biden promised a new package of “unprecedented support.”

The Bloomberg headline aptly reads, "Biden’s Whirlwind Israel Trip Fails to Calm Fears of Wider Middle East Conflict." At this time, Lebanon, Jordan, and Egypt are on edge - with Western and Saudi embassies reducing staff and issuing travel advisories. 

Meanwhile, related to Xi's Belt and Road (the purpose of the gathering in Beijing), Putin praised the potential for it to usher in a "fairer, multi-polar world" as Moscow and Beijing grow closer based on "deep friendship"

In his speech at the opening ceremony, Putin hailed Xi’s flagship foreign policy Belt and Road Initiative as “aiming to form a fairer, multi-polar world,” while touting his country’s deep alignment with China.

Russia and China share an “aspiration for equal and mutually beneficial cooperation,” which includes “respecting civilization diversity and the right of every state for their own development model” – he added, in an apparent push back against calls for authoritarian leaders to promote human rights and political freedoms at home.

This is at a moment Putin is "wanted" by the International Criminal Court (ICC) and shunned and sanctioned by the West, while at the same time Global South countries are expressing growing anger at Israel's unrelenting bombing of the Gaza Strip, as the Palestinian death toll soars into the thousands.

Directly related to this, a Thursday UN Security Council resolution brought by Brazil and seeking a ceasefire in Gaza was shot down, given the US was the only "no" vote.

Also missed by the mainstream media was the following pro-China sentiment expressed by a top Palestinian official over a week ago:

China will soon lead the world, and it supports the “Palestinian position, whatever it may be,” according to Fatah’s Central Committee member Abbas Zaki.

In a public address that aired on Palestine TV on Sept. 29, Abbas Zaki called on the United States to “reconsider its stance” with regard to Israel or risk becoming irrelevant. The Israelis, he said, were “sons of bitches,” “murderers” and agents of instability, while the Palestinians are “messengers of peace.”

“I know that there is serious change in Europe and even in the United States,” said Zaki.

But, he added, “do not forget the emerging camp, which is on your side—the Chinese camp. China is going to lead the world, and it proclaims: ‘There can be no stability and progress without the liberation of Palestine, with East Jerusalem as its capital.'”

Putin too, has expressed more sympathies with the Palestinian side, days ago warning Israel of the "catastrophic" death toll its attacks on Gaza will result in. He has also held calls with Arab leaders, seeking to mediate peace and a possible two-state solution.

Tyler Durden Wed, 10/18/2023 - 19:40

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