The market sell-off and the rapidly increasing volatility is making many of the top firms that we cover on Wall Street adjust some of their top recommendations for clients, and with good reason. With less than six weeks left in 2015, and all the indexes underwater for the year except for the Nasdaq, analysts and strategists are looking to bring some winning trades to the table as they try to help investors finish the year on a winning note.
In a new research report, Oppenheimer makes some big changes to its Triple Play stocks selections. The triple-play stocks are rated Outperform. They have a positive MAER rating, which analyzes trends in revisions to the consensus estimates, alongside price and fundamental information. Lastly, the stocks have an attractive technical profile.
The Oppenheimer team has five new Triple Play recommendations, but here we focus on three with outstanding upside potential.
Expedia
Expedia Inc. (NASDAQ: EXPE) has absolutely exploded price-wise over the past year, and more gains are expected, especially after it has picked up the pace in television advertising. Expedia provides travel products and services to leisure and corporate travelers, offline retail travel agents and travel service providers through a portfolio of brands, including Expedia.com, Hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Egencia, Expedia CruiseShipCenters, eLong and Venere.com.
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Oppenheimer sees it as a story of improving execution, that the company is starting to finally match Priceline’s growth metrics. Many analysts feel that as long as the U.S. dollar remains strong, Expedia should be a better online travel stock than Priceline. Expedia’s divestment from eLong and the acquisitions of Orbitz and HomeAway will make year-over-year comparisons difficult. However, over time, Orbitz should increase Expedia’s exposure to the U.S. market and reduce some of the dependence on the overseas business, while HomeAway will give it a firm foothold in the growing holiday rentals market.
Expedia investors receive a 0.85% dividend. Oppenheimer has a $157 target price for the stock. The Thomson/First Call consensus price target is $148.83. Shares closed Friday at $125.20.
Microsoft
This top technology stock should not only do fine in the coming rising rate environment, but it gives investors some degree of mega-cap tech safety. Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of support from portfolio managers, who have added the software giant to their holdings at an increasingly faster pace all of this year.
Numerous Wall Street analysts feel that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, its cloud computing platform offering. Some have flagged Azure as a solid rival to Amazon’s AWS service. Analysts maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger user. The top analysts believe Microsoft continues to make steady progress with its cloud transition and expect Office 365 and Azure to be solid contributors to top and bottom line for the next several years. While not likely to snag the top slot from Amazon, it could add huge incremental revenue for years to come.
With gaming revenues growing at a huge pace, the Xbox continues to gain ever more fans as the ultimate console to own. Microsoft continues to upgrade the popular device, and many think that it could dominate Sony’s PlayStation at some point down the road.
Microsoft investors receive a very solid 2.75% dividend, and the forward valuation remains very compelling. Oppenheimer’s price objective is $56, and the consensus price target is $55.07. The stock closed Friday at $52.84.
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Vantiv
This company has a reasonably solid following on Wall Street and continues to gain acceptance among some of the top money managers. Vantiv Inc. (NYSE: VNTV) is a leading provider of payment processing services and related technology solutions for merchants and financial institutions of all sizes.
Vantiv acquisitions have vaulted it to number two among the nation’s largest payment processors. It had been the third-largest processor the prior year, but it cranked out 28% growth in the number of merchant transactions it processed last year, according to a recent Nilson Report. Vantiv processed 15.5 billion purchase transactions last year. It jumped ahead of Bank of America by more than a billion transactions, but Vantiv still trails front-running First Data.
The company’s third-quarter earnings, minus one-time items, climbed 20% to $0.59 per share as revenue grew 13% to $430.45 million, beating Wall Street expectations on both. The company has become one of the nation’s largest acquirer of PIN debit accounts and, based on the number of transactions, fourth-quarter numbers are projected out to earnings of $0.61 to $0.63 cents per share and $429 million to $437 million in revenue. Both numbers are basically in line with current estimates.
The Oppenheimer price objective is $55, the same as the consensus target. Shares closed Friday at $50.79.
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There is no guarantee that the triple-play formula will work for investors. One thing is for sure, the more positives you can stack up for a stock, the better overall chances for success when they are put into play in the market.
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