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Jefferies proposes 2 high-yielding stocks — including one with a 13% yield

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The stock market rollercoaster continues, and stocks have generally fallen this week. The S&P 500 fell 3.5%, and the Dow lost about 870 points. The market decline was driven by uncertainty. Recent economic data has been unexpectedly positive, clouding expectations for next week’s Fed rate decision.

The dual mandates of the central bank, to rein in inflation and adjust unemployment, often conflict with one another, and with inflation high and unemployment low, it’s hard to know what to expect.

The logical move now, for investors wanting to stay in the stock, is to move to a defensive play. This is the premise behind the observation of Jefferies stock strategist Stephen D. Sanctis. He noted, “We were pleased to see a shift in sentiment towards high yielding… Defense is the name of the game these days.”

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With this in mind, Jefferies analysts picked two stocks with high dividend yields, including one that pays as much as 13%, with the right move going forward. These are the traditional defensive plays, because they guarantee a steady return, and with a reliable above-average dividend payout, they can beat inflation as well.

to open TipRanks databaseWe examine the details behind these indicators to discover what else makes them compelling buys.

global ship charterGSL)

The first dividend stock we are looking forward to is Global Ship Lease, an independent proprietor operator in the global shipping industry, with a fleet of 65 small to medium sized container ships, a labor force for the world’s ocean trade routes. These types of vessels carry cargo of almost any type, and make up more than 70% of global container trade. Global Ship generally charters its vessels abroad, receiving a stream of daily charter rates over the life of each vessel’s contract. As of the end of the third quarter of this year, the company had $2.2 billion in lease contracts, and an average of 2.9 years on its leases.

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In early November, GSL released its financial results for the third quarter of ’22, showing gains in both top and bottom earnings. Total revenue came to $172.5 million, up 11.6% from the second quarter — and up 24.4% from the year-ago quarter. These key results are part of a strong trend in 2022 toward increased revenue; For the nine months ended September 30, the company saw revenue increase 63% year-over-year.

On the bottom line, net income of $92 million represents a 41% year-over-year increase. Net income available to common shareholders was $89.6 million, up 42% year-over-year. On a share basis, earnings per share of $2.44 were up 41% from the $1.73 recorded in the third quarter of 21.

The strong gain was supported by the company’s dividend, which was declared at 37.5 cents per common share and paid on Dec. 2. At this rate, the dividend per annum is $1.50 per share and gives a yield of 9.2%. This return is more than four times higher than the average found among S&P companies, and it is 1.5 points higher than the last reported inflation rate.

5-star analyst Jefferies point age Impressed with GSL’s execution in recent months, he wrote: “The company sits in a very strong position with a significant revenue backlog, was bolstered during the quarter by installing 10 vessels on term charters, and has plenty of flexibility going forward… through a conservative approach.” And disciplined, we see GSL as having a great deal of flexibility to take advantage of opportunities that are likely to arise in the future…”

The return is compelling from our point of view because the return is only a quarter of the company’s ongoing free cash flow. The analyst added that management bought back $15.1 million of its outstanding shares during September and October.

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To that end, Nokta assigns a Buy rating here, along with a $25 price target which means there’s room to value approximately 55% of the shares on the one-year timetable. Based on the current dividend yield and expected price estimate, the stock has about 64% of the total yield potential. (To watch Nokta’s log, click here)

Turning now to the rest of the Street, other analysts are on the same page. With 3 Buys and no Holds or Sells, the word on the Street is that GSL is a Strong Buy. Average target price per share is $32.67 and share price is $16.15, for a one-year upside potential of approximately 102%. (See the GSL stock forecast on TipRanks)

Chesapeake Energy (CHK)

Now we’ll turn to the energy industry, Chesapeake is a big player in the hydrocarbon exploration and development segment. The company operates throughout North America, calculating principal assets in several of North America’s most productive natural gas regions, including the Texas Eagle Ford formation, the Marcellus shale in Pennsylvania, and especially the Haynesville formation in Louisiana. At the end of last year, Chesapeake’s proven reserves were primarily natural gas, at 69%, but included significant amounts of natural gas liquids (8%) and petroleum (23%).

Chesapeake’s strong foundation in real assets underpins the company’s strong financial results. Both revenue and earnings have been on an upward trajectory since the second quarter of last year; In its Q3 ’22 report, the most recent report released, the company reported total revenue of more than $4.1 billion. Cash from operations came in at more than $1.3 billion, and net income was $883 million, which means earnings per share of $6.12. On an adjusted basis, income of $730 million resulted in adjusted diluted earnings per share of $5.06, up 112% from the third quarter of 21.

Of particular interest to investors, because it directly supports the company’s dividend policy, Chesapeake reported a quarterly record free cash flow in the third quarter, of $773 million. Chesapeake managed that bottom line even after it returned $1.9 billion from shareholders during the quarter, through a combination of share buybacks and dividend payments.

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The last dividend declared, counting the ordinary and supplemental payments, totaled $3.16 and was paid last December 1st. In the current payment, the dividend per year comes to $12.64 per common share and the yield is an impressive 13.4%. It’s a rare stock that pays a total dividend of more than 6 times the average.

In his coverage of Chesapeake for Jefferies, Lloyd ByrneAnother five-star analyst with Jefferies sees several reasons for continued optimism about the stock, saying, “We continue to like CHK on its valuation, well-positioned assets, solid shareholder returns and continued progress on the Haynesville strategy…CHK has a strong and balanced framework for shareholder returns.” For 2022, CHK will return about $2.3 billion, or about 17% of the current market cap.”

“We believe the company will continue opportunistically adding physical basis/hedges/contracts with defined spreads to its 2023 profile, helping to protect returns in a potentially volatile gas market,” the analyst added.

Looking ahead, Byrne gives CHK a buy rating, with a price target of $150 pointing towards an upside of 56% in the next 12 months. (To watch Byrne’s log, click here)

Overall, Chesapeake has 6 recent ratings from Street analysts, and their opinions include 5 Buys for 1 Hold — for a strong consensus rating on the stock. The stock is currently trading at $146.33, which indicates a one-year upside potential of 53%. (See CHK stock predictions on TipRanks)

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To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best stocks to buya 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.

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.