These 3 Stocks Are Great Long-Term Picks, Say Analysts
The stock market is a game for the long haul. As Warren Buffett has said, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”
Buffett would probably argue that investors should stick to their guns despite the correction we’re seeing today. The NASDAQ is down 13% so far this year, while the S&P is just a whisker north of correction territory, at a 9% loss.
Yes, we have market headwinds right now – but the long-term trend has been bullish, and Wall Street’s analysts are confident that this trend can continue.
We can get a good idea of that confidence by shifting our focus down, from the macro picture to the micro details, and looking at three stocks that the analysts are recommending for the long-term. According to the TipRanks database, these are Buy-rated equities with considerable upside potential. Let’s find out what the analysts have to say.
We’ll start with BlackRock, currently the world’s largest asset management company with more than $10 trillion in total AUM. BlackRock has been in business since 1988, and offers services for clients of all stripes, from institutions to financial advisors to governments to high-net-worth individuals to small-scale retail customers. The company boasts that no matter the scale of the client, it can promote financial well-being and investment access. BlackRock offers financial services in 38 countries, and in 82 languages.
The largest financial service companies can leverage their sheer size to generate outsized returns, and that is clear from BlackRock’s recent revenues. The company reported $5.18 billion at the top line in 4Q21, making the third quarter in a row with revenues exceeding $5 billion. Earnings in Q4 came in at $10.42 per share, above the expected $10.16.
In a key metric for investors – especially for long-term investors, seeking stocks that will generate regular returns – BlackRock returned $3.7 billion in to shareholders in 2021. That total includes $1.2 billion worth of share repurchases, as well as a reliable dividend currently set at $4.88 per common share. This annualizes to $19.52, and gives a yield of 2.5%.
Among the bulls is Deutsche Bank’s 5-star analyst Brian Bedell, who describes BlackRock as having ‘unparalleled breadth and depth to support long-term organic growth.’
Getting into detail, Bedell writes of the company: “We model long-term product organic growth of 6% in 2022 & easing to 5% over the long-term (6% including cash mgmt.), this remains slightly above mgmt’s long-term targets of 5% organic AuM & base fee growth. We also note that about 2 points of the organic growth this quarter came from a $49bn insurance active fixed income mandate. Very importantly, we think BLK’s demonstrated breadth and depth of product capabilities, combined with alignment of several strong secular industry growth trends, gives us confidence BLK can generate industry leading or at least well above average organic AuM and fee growth, helping to support double digit EPS and a persistently high valuation.”
Bedell’s comments back up his Buy rating, and his $1,125 price target implies a one-year upside of 41%. (To watch Bedell’s track record, click here)
Overall, the bulls are running for BlackRock. The stock has 9 recent reviews, with an 8 to 1 breakdown favoring the Buys over the Holds. Therefore, the message is clear: BLK is a Strong Buy. The stock is priced at $795.47, and its $1,006.56 average price target suggests it has room to run ~27%. (See BlackRock stock forecast on TipRanks)
The Beauty Health Company (SKIN)
Next up is the Beauty Health Company, the owner of the HydraFacial skin care and cosmetic brand, along with 9 others. The company has worked its products into the space between medical skin care and beauty products, developing a marketing approach that stresses beauty through promoting healthy skin. The company boasts that it has sold over 19,000 HydraFacial delivery systems, supporting millions of treatments annually.
Closing out 2021, Beauty Health announced changes in upper management, along with Q3 revenue growth. In personnel, the company has a new President and CEO in Andrew Stanleick. Turning to results, SKIN reported total net sales of $68.1 million, up 2.4% from Q2 and nearly double the 3Q20 value. Looking ahead, the company raised expectations for fiscal 2021, suggesting to investors that full-year revenue will come in at the high end of the guidance, near $255 million.
This company’s sound position in the skin care and beauty sector leads Piper Sandler analyst Korinne Wolfmeyer to take a bullish stance. While acknowledging that current market conditions act as a headwind on the stock, she believes it is well-placed for strong growth over the long term.
“Overall, 2022 should be a transformational year with a new CEO and new product launches, as well as continued investments in marketing, R&D, and infrastructure that should be complete by the end of the year and set 2023 up to be a year of solid growth and margin expansion… [We] continue to be fans of the long term trajectory and encourage investors to trust management’s strategic imperatives and keep holding/building positions,” Wolfmeyer opined.
These comments support Wolfmeyer’s Overweight (i.e. Buy) rating, while her $31 price target suggests the stock will gain an impressive 135% by year’s end. (To watch Wolfmeyer’s track record, click here)
Overall, Beauty Health has 4 recent analyst reviews on record, including 3 to Buy and 1 to Hold, making the analyst consensus a Strong Buy. SKIN shares have an average price target of $32.50, implying an upside of 156% from the current share price of $12.67. (See SKIN stock forecast on TipRanks)
Sportsman’s Warehouse (SPWH)
Last on our list is Sportsman’s Warehouse, a Utah-based outdoor gear and clothing chain operating in 25 states. The company offers a full range of equipment for hunting and camping, from rifles and fishing rods to tents and camp stoves to clothing and boots.
The company has seen solid sales numbers during the pandemic crisis, especially in 2021 as the economy reopened. Consumers were in a mood to spend, and also mindful of social distancing corona restrictions – and they turned toward outdoor leisure. SPWH saw its most recent quarter, 3Q21, hit $401 million in total revenue, the second quarter in a row of sequential growth and up 4% yoy. The company typically posts its best numbers in Q4, as customers use the holiday season to stock up on supplies they’ll need when springtime comes.
Looking ahead to the Q4 numbers, the company released optimistic preliminary data earlier this month for the final 8 weeks of 2021. That period saw net sales of $299.6 million, flat yoy but up 59% from the same time in 2019. E-commerce crew modestly, by 2.5%, while same-store sales in Footwear and Optics/Electronics/Accessories were up 15.7% and 6.75% respectively. The company finished 2021 with no long-term debt and total liquidity of $216 million. That number includes both $57.4 million cash and the rest in available short-term borrowing.
The cash total brings us to the company’s main recent news, as it includes a one-time payment of $55 million from Great Outdoors Group. That firm, the parent of Bass Pro Shops and Cabela’s, had made an offer last year to acquire Sportsman’s Warehouse; the proposal fell through when it became clear that the required Federal regulatory approval would not be forthcoming. SPWH received the $55 million payment on termination of the merger agreement. Yet, the stock is down 40% since news broke of the dropped merger.
In the eyes of Craig-Hallum’s 5-star analyst Ryan Sigdahl, the current low share price is an opportunity for investors.
“The better-than-expected preliminary FQ4 results announcement, as well as certain FY22 expectations and long-term targets provide helpful visibility and bolster our view that SPWH is a must-own specialty retailer at this valuation. The company has a viable long-term path to significantly expand its store count with attractive new-store economics, and is competing against peers that have de-emphasized SPWH’s core firearms and ammo categories. Shares trade at an attractive absolute and relative valuation,” Sigdahl opined.
To this end, Sigdahl gives SPWH a Buy rating to go along with this bullish outlook, and quantifies it with a $20 price target to indicate potential for 96% upside in the year head. (To watch Sigdahl’s track record click here)
All in all, the Moderate Buy consensus view on SPWH is based on 2 positive reviews set in recent months. The shares are trading for $10.20 after their recent drop, and the $20 average price target matches Sigdahl’s. (See SPWH stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.