Here are seven quality stocks to buy that probably aren’t in your portfolio.
Most long-term investors have large-cap, blue-chip stocks like Apple Inc. (ticker: AAPL), Alphabet Inc. (GOOG, GOOGL) and Microsoft Corp. (MSFT) as part of their core holdings. Even people who own popular market cap-weighted index funds are highly exposed to the same handful of large-cap stocks. Many of the largest companies in the market have been excellent investments over the long term, but that doesn’t mean they are the best investments looking ahead or that they are the only stocks worth buying today. Here are seven stocks CFRA recommends that you probably haven’t heard of based on their relatively low average daily trading volumes.
Markel Corp. (MKL)
Markel is a specialty insurance, reinsurance and investment operations holding company. Analyst Catherine Seifert says improving insurance pricing, accelerating revenue growth and contributions from the company’s noninsurance businesses suggest Markel shares have significant upside. Seifert says Markel has demonstrated superior profitability to the broader insurance industry, and its written premium growth rate in the first quarter was double its peer average. She is projecting at least 13% organic operating revenue growth from Markel in 2021, including 20% revenue growth from Markel Ventures. CFRA has a “buy” rating and $1,350 price target for MKL stock.
Alleghany Corp. (Y)
Alleghany is an insurance, reinsurance and private equity firm. Seifert says she turned bullish on the stock in late 2020 given all three prongs of its business are now firing on all cylinders. COVID-19-related claims appear to have stabilized. In addition, Seifert says improving insurance prices and a surge in private equity deals are two bullish catalysts for Alleghany in the near-term. CFRA is projecting at least 15% operating revenue growth, at least 10% earned premiums growth and at least 200% Alleghany Capital revenue growth in 2021. CFRA has a “buy” rating and $840 price target for Y stock.
WPP PLC (WPP)
WPP is one of the world’s largest communications services companies. Its businesses include advertising, consultancy, media buying and public relations. Analyst Adrian Ng says WPP is facing near-term headwinds, but its exposure to emerging market economies and its aggressive asset disposal initiative have positioned it well for the future. About 30% of WPP’s total sales come from high-growth emerging markets, particularly China. Over the past two years, WPP has raised roughly $4.4 billion from asset sales, which have reduced net debt by more than 80%. CFRA has a “buy” rating and $75 price target for WPP stock.
Bio-Rad Laboratories Inc. (BIO)
Bio-Rad Laboratories produces tools and services focused on scientific research and clinical diagnostics. Analyst Sel Hardy says Bio-Rad is likely facing a downturn in its COVID-19 testing business in the U.S. and Europe in the second half of 2021. However, recent patent settlements with 10x Genomics Inc. (TXG) have removed legal uncertainty. Hardy believes Bio-Rad has a “solid” longer-term growth outlook and says its $2.8 billion revenue target for 2023 is still within reach. Hardy is projecting 13% revenue growth and 33% earnings growth in 2021. CFRA has a “buy” rating and $797 price target for BIO stock.
Forward Air Corp. (FWRD)
Forward Air provides local, regional and national ground cargo transport to other transportation and logistics companies. Analyst Colin Scarola says the company’s 49% revenue growth in the second quarter came off of extremely easy year-over-year comparisons, but Forward Air has grown its business significantly even compared to 2019 pre-crisis numbers. For example, Expedited Freight revenue, which accounts for 84% of total revenue, was up 39% from 2019 levels in the second quarter. Scarola says Forward Air shares are “attractively valued,” and the company has a compelling growth outlook. CFRA has a “buy” rating and $103 price target for FWRD stock.
CGI Inc. (GIB)
CGI is a global information technology consulting company. CGI just reported 28% bookings growth in the second quarter, and analyst David Holt says the company’s demand environment is improving. Holt says CGI’s revenue mix continues to shift favorably toward higher-value managed service agreements, larger-sized deals and new business bookings. Based on the latest trends, CFRA is projecting organic revenue growth will continue to accelerate in the next several quarters. Holt is forecasting 29.2% earnings per share growth in 2021 and 12.8% growth in 2022. CFRA has a “buy” rating and $99.63 price target for GIB stock.
Clearwater Paper Corp. (CLW)
Clearwater Paper produces private label tissue, paperboard and other pulp-based products. Analyst Matthew Miller says the tissue market has been resilient in recent years and Clearwater shares offer investors a compelling risk-reward skew. Miller says he is hopeful Clearwater will benefit from warehouse automation initiatives, international pulp demand and the addition of its new continuous digester. Miller says deleveraging Clearwater’s balance sheet could trigger earnings multiple expansion and unlock significant shareholder value. He is projecting $105 million in free cash flow for Clearwater in 2021. CFRA has a “strong buy” rating and $47 price target for CLW stock.
Seven of the best unknkown stocks to buy:
— Markel Corp. (MKL)
— Alleghany Corp. (Y)
— WPP PLC (WPP)
— Bio-Rad Laboratories Inc. (BIO)
— Forward Air Corp. (FWRD)
— CGI Inc. (GIB)
— Clearwater Paper Corp. (CLW)
