2 Deep Value, High Yield Stocks With a Double-Digit Upside Value and yield are where you find them, and you will find them with Verizon Communications(NYSE: VZ) and Whirlpool (NYSE: WHR). These stocks trade at discounted valuations relative to the broad market, offer value relative to historical norms, and pay yields well above the average dividend-paying stock. Whirlpool’s reliable payment is the lowest-yielding in this group, about 6.65%, backed up by solid cash flow and efforts to improve operational quality. Today’s takeaway is that these stocks also have improving analyst support and the potential for double-digit upside. With a pivot back to growth in the forecast, these stocks could sustain multi-year rallies as value-improving efforts gain traction. Top traders like Kathy, Philip, Matt and Michael made out like bandits…
"Took 65% profit on VFC today! Thanks!" - Kathy L.
"Made 72% on VFC" - Philip
"VFC was good, made $1,000 bucks" - Matt (estimated starting stake $1K)
"VFC crushed it… Up 114% for a $3,249 profit!" - Michael
It's all thanks to the all-new ProTrader Dashboard…
And today's your chance to become one of the lucky ones to discover it for yourself. Click here to discover this institutional-grade trading tool for yourself. Verizon is on the Cusp of a Major Market Reversal Verizon’s results, outlook and capital returns have its market on the cusp of a significant reversal. The price action over the last eighteen months has this market at a bottom and forming a Head & Shoulders Reversal Pattern supported by analysts' sentiment. Analysts have been lifting their sentiment ratings and price targets over the past twelve months, raising the sentiment rating to Moderate Buy from Hold and stabilizing the price target. The telecom stock yields about 6.75%, trading at less than half the valuation of the average S&P 500 company. The consensus target reported by Marketbeat.com is down YOY but up 500 basis points in the last quarter. At $44, it is more than 10% above the current action and led higher by recent revisions. Numerous revisions after the Q4 earnings release have the market for this stock trading in the range of $45 to $50, putting it at new multi-year highs. In this scenario, the market will confirm a reversal when it breaks above $42.50, opening the door to a $12 to $15 increase in the price action. The sentiment and price action drivers include renewed strength in the consumer business, improved free cash flow, debt reduction, and capital returns. Wireless outperformed in Q4, up 3.2%, as consumer markets returned to growth. Debt reduction left the net-debt-to-adjusted EBITDA down ten bps YOY to 2.6X; additional improvement is expected. The long-term outlook includes marginal top-line growth and incremental earnings improvement, so dividend growth is also expected. The company has already increased payments for nineteen years; a twentieth is expected later this year. Whirlpool’s High-Yield Dividend is Not a Red Flag Whirlpool has an equally high dividend compared to Verizon and is in a similarly good position for its share price to rise. Like Verizon’s market, Whirlpool’s share price trended lower over the last two years but hit rock bottom and is ready to drift higher. Rock bottom is marked by the technical action and the outlook, which is tepid but includes plans to improve cash flow, capital returns, and shareholder value. The issues plaguing WHR today are lingering debt and weak earnings relative to long-term targets. The company acknowledges that the payout ratio is above target but is committed to sustaining payments; it expects the 45% payout ratio to fall over time and is comfortable with trends. Debt is due to the InSinkErator acquisition, which should pay for itself over time. Efforts to alter the ratios and improve growth include selling 25% of its stake in an Indian appliance business, paying $1 billion of debt this year, and plans to improve margin in the US. US margin is forecast to grow more than 300 basis points to 10% by 2026. Analysts' sentiment is improving for Whirlpool and leading the market into a reversal. The sentiment is up to Hold from Reduce with one recent initiation at Buy, and the consensus price target is rising. The consensus target is up 300 basis points following the release, reversing a downtrend that has been in play for over a year. The consensus target is $122, which is significant because it is near the one-year high and at a level that could lead to a more substantial gain over the coming years. Written by Thomas Hughes Read this article online › Featured Stories: |
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