3 Huge Analyst Stock Picks to Buy Now for 2016 Gains

By Lee Jackson Updated Jan 13, 1:09PM EST · Published Feb 16, 9:40AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

3 Huge Analyst Stock Picks to Buy Now for 2016 Gains — © Thinkstock

As we have discussed in detail, the 2016 market sell-off is one that is trading more on worries than reality. With market metrics as bad as the dark days of 2008 and 2009, and investor sentiment and negativity right there as well, savvy investors have a chance now to take advantage of lows in the market not seen in over two years.

In a recent research note from the analysts at SunTrust Robinson Humphrey, the focus in on three stocks to buy that have been marked down huge due to a variety of reasons. While all three are more suitable for aggressive accounts, they still could provide the kind of strong upside move to introduce alpha into suffering 2016 accounts. All are rated Buy at SunTrust.

Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play, and recently it was upgraded by Deutsche Bank and Citigroup. Pioneer Natural Resources Co. (NYSE: PXD) engages in the exploration and production of oil and gas in the United States. The company produces and sells oil, natural gas and natural gas liquids. It has operations primarily in the Permian Basin in West Texas, the Eagle Ford Shale play in south Texas, the Raton field in southeastern Colorado and the West Panhandle field in the Texas panhandle.

This company is a huge player in the Permian basin and the Eagle Ford, and it owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. Wall Street analysts were very positive on the third-quarter results and noted that the company reiterated annual production growth guidance of 15% or more while cutting the number of rigs expected to operate. With a stellar balance and the new capital from a recent secondary offering, the company is poised to remain the number one player in the Permian.
[recirclink id=315073]
Pioneer announced fourth-quarter earnings recently and posted an adjusted loss that was smaller than the Wall Street analysts’ consensus estimate. Revenues also came in slightly higher than street expectations.

Pioneer investors are paid a tiny 0.07% dividend. The SunTrust price target is a stunning $175, and the Thomson/First Call consensus figure is $165.21. Pioneer shares closed trading on Friday at $115.36.

Pennsylvania Real Estate Investment Trust

This top real estate investment trust (REIT) has been hammered, and the SunTrust team sees a ton of value in this income-producing company. Pennsylvania Real Estate Investment Trust (NYSE: PEI) is a publicly traded REIT specializing in the ownership and management of differentiated shopping malls.

Headquartered in Philadelphia, the company owns and operates over 27 million square feet of retail space in the eastern half of the United States with concentration in the Mid-Atlantic region’s top Metropolitan Statistical Areas. Since 2012, the company has driven a transformation guided by an emphasis on balance sheet strength, high-quality merchandising and disciplined capital expenditures.
In early February, Pennsylvania Real Estate Investment Trust announced that comparable sales per square foot for the 12 months ended December 31, 2015, grew by approximately 10% in its mall portfolio, compared to the prior year, to $432 per square foot. Sales growth was reported across all properties in the portfolio. Excluding non-core malls being marketed for sale, and including Springfield Town Center, sales per square foot were $451, marking another milestone for the company.

The SunTrust team feels that the huge 23% sell-off this year is totally unwarranted, and they cite improving metrics, not the least of which is improving leverage to 7.4 times. The analysts also expect that Wall Street will rerate the company, given the extremely high-quality assets in the portfolio.

Investors here are paid a very solid 4.87% distribution, which could include return of principal. The SunTrust price objective is set at $28, and the consensus target price is $19.67. The shares closed Friday at $17.26.

Qlik Technologies

Shares of this top company are down 50% since last fall. The Qlik Technologies Inc. (NASDAQ: QLIK) QlikView Business Discovery platform lets people quickly bring data sources together to create dynamic visual applications that can be navigated and searched intuitively. QlikView uses natural analytics to reflect the way human curiosity researches and processes information, while delivering the enterprise manageability, governance and service offerings organizations require.

The company’s new Qlik Sense product has helped push the company in the business intelligence and analytic market, but the recent earnings were just in line with expectations and guidance was weak, with the company citing soft spending and competition. The long price decline for the stock has continued as well. Some analysts feel that the company could be taking business from Tableau Software, and they hear that spending is positive.

The company reported mixed numbers last week. While achieving solid year-over-year total and licensing revenue growth of 22% and 21%, respectively, on a constant-currency basis, adjusted earnings per share decreased 3%. The stock closed down over 9% on Friday in response, as earnings and 2016 guidance were weaker than analysts expected. The SunTrust analysts note the stock is trading at the lowest valuation since its IPO, and with a strong product upgrade cycle, the firm believes the next generation products will increase the size of deals.

SunTrust has a $25 price target for the stock, but the consensus target is higher at $31.21. The stock closed Friday’s trading at $17.61.
[recirclink id=314739]
Irrational selling often is heightened during times of extreme stock market weakness. Weak hands will sell shares in panic rather than looking at the big picture. All three of these companies have big potential upside and rather limited downside.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.