Time to Buy These 2 Stocks, Say Analysts — Here’s Why You Should Pay Attention

Wall Street analysts have seen the ‘positive sentiment’ bandwagon, and if they’re not quite ready to jump on, they are at least gathering behind to give it a push. And no wonder – the S&P 500 is up just over 18% so far this year, and the charts are trending upwards. We are in the midst of a sustained rally.

At least one expert, Credit Suisse’s chief US equity strategist Jonathan Golub, is taking an unapologetically bullish stance. Golub’s firm has bumped up its S&P year-end target from 4,050 to 4,700, predicting 3% in additional gains for the index. While significantly slower than the gangbusters first half, Credit Suisse’s new forecast is still upbeat, based on a stronger earnings outlook in Big Tech plus a falling risk of recession in the near term.

“Our base case is that a recession will be averted, inflation will remain sticky near current levels, and monetary policy will tighten incrementally,” Golub said in his note backing up the new S&P forecast.

In this environment, it’s no surprise that some analysts outside of Credit Suisse are also recommending stocks to buy now. It’s time to turn bullish, they’re telling us, and they’re backing that with their stock picks. Here are two of them, with details taken from the TipRanks database.

Plug Power, Inc. (PLUG)

First up is Plug Power, an alternative energy company that offers green solutions to the design and manufacture of zero-emission energy. Specifically, Plug Power works with hydrogen fuel cell systems, from the development and deployment of the fuel cells to the power storage systems to the physical delivery infrastructure necessary to bring fuel cells online for industrial or utility purposes.

Hydrogen fuel cells use electrochemical reactions to generate usable electrical power. The reactions are based on hydrogen – the most common element in the universe, making up 90% or more of all matter, and conveniently highly reactive – so there are no issues with sustainability or clean reaction emissions.

The company produces fuel cells with a wide range of sizes and applications, from utility-scale power generation units to portable cells that can power a warehouse pallet jack. Fuel cells have potential as power units for electrical engines or as reliable backup power generation in urban environments. To date, Plug Power has delivered more than 60,000 power cells for electric mobility uses and is the largest player in North America’s liquid hydrogen market.

Long-term, Plug Power has seen a trend of rising revenue. The company’s most recent financial results, for 1Q23, showed a top line of $210.3 million, for a 49% year-over-year increase – and a $2.52 million beat compared to expectations.

The company’s earnings, however, were not as strong. EPS has been trending downward in recent quarters, and the 1Q23 EPS, a 35-cent per share loss, was 9 cents worse than had been forecast.

Looking ahead, the company’s full-year revenue guidance for 2023 also came in below expectations, in the range of $1.2 billion to $1.4 billion, well below the $2.04 billion consensus estimate.

In addition to these mixed results, Plug has been burning cash in the past year. The company used $277 million in net cash from operations in Q1, compared to $210 million in the prior-year period, and finished the quarter with $1.37 billion in cash and liquid assets on hand, compared to $3.1 billion one year earlier.

There has been good news, however. Earlier this month, Plug announced two important electrolzyer deals for green power hydrogen projects. One project, in Europe, is a secured order for 100 megawatts of PEM electrolzyers, and the second, in Australia, is for two 5 megawatt PEM electrolyzer units in the state of Tasmania.

These new project announcements – and others like them – inform Northland analyst Abhishek Sinha’s view of Plug. The analyst writes, “We believe PLUG is now on a clear path to cash flow generation and the momentum is picking up with every incremental deal announcement. We now have confidence that the company should be able to achieve margin break even by the end of the year and generate cash flow next year. We see PLUG generating higher revenue from its electrolyzer business and achieving better margins… We feel that PLUG is now well positioned for a long run.”

Sinha goes on to give PLUG stock an Outperform (i.e. Buy) rating, with a $22 price target to point toward a 78% one-year upside potential. (To watch Sinha’s track record, click here)

Overall, the 16 recent analyst reviews on PLUG break down 11 to 5 in favor the Buys over the Holds, giving the stock its Moderate Buy consensus rating. The shares are priced at $12.33, and their $18.68 average price target indicates a gain of ~51% for the next 12 months. (See PLUG stock forecast)

Cinemark Holdings (CNK)

Switching gears, we have Cinemark, a major player in the global movie theater industry. Boasting well-known brands such as Century, Tinseltown, and Rave theaters, Cinemark’s reach spans 42 states in the US and 14 countries across Central and South America, totaling 5,833 screens showcasing the latest releases. Cinemark is known for the having highest penetration of Luxury Liner recliner seats in the industry, and important perk to help draw in audiences.

Cinemark is based out of Plano, Texas, and has agreements with several major Hollywood studios. These partnership agreements include Paramount, Disney, Sony, and Warner Bros., and involved the duration of theater screening time before films go to video or streaming. The company got its start under the Cinemark name in 1984, and acquired its major brands through acquisitions in 2006, 2009, and 2012.

The post-COVID economy has been good for Cinemark, and the company’s revenues began picking up sharply in the first half of 2021. In the 1Q23 report, the last released, Cinemark’s $611 million in revenue marked a 33% y/y increase – and beat the estimates by a wide $41.56 million margin. The company did run a let loss for the period, of 3 cents per share, but that result was 28 cents per share better than the forecast.

Three highlights of the 1Q23 report deserve closer attention. First, that Cinemark grew its audience of movie-goers by 43 million, or 30%, year-over-year. Second, that the company’s Q1 box office take was 700 basis points better than the industry average when compared to the pre-COVID 1Q19. And finally, that Cinemark has been increasing its market share – the only major US theater company to do so – when compared to the pre-pandemic average.

The company’s ability to expand its customer base and market share bodes well for revenue going forward, as noted by analyst Eric Wold from B. Riley Financial.

“We not only see meaningful revenue and AEBITDA upside to our 2Q23 estimates, but view CNK as having the best opportunity for upside results vs. consensus estimates in the B. Riley Securities Exhibition Universe… In addition to CNK over-indexing the industry’s post-pandemic box office recovery by a margin ~57% greater than exhibitor peers, we believe quarterly results for the Latin American circuit are more likely to be undermodeled given the quick reversal of that region’s contributions from a headwind to tailwind in recent quarters. We see a path to consolidated 2Q23 revenue and AEBITDA of $860M+ and $190M+ vs. consensus estimates of $850M and $184M,” Wold opined.

In light of his optimism, Wold gives CNK a Buy rating and a $23 price target that implies ~50% potential gain on the one-year time frame. (To watch Wold’s track record, click here)

Overall, Cinemark’s 11 recent analyst reviews include 6 Buys, 4 Holds, and 1 Sell, giving the stock its Moderate Buy consensus rating. The average price target of $19.10 implies a 24% upside potentail from the current trading price of $15.39. (See CNK stock forecast)

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

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.