Morgan Stanley Bets on These 3 Stocks; Sees Over 40% Upside
Did the stock market’s epic rally just need a little breather? The last few weeks have seen stocks experience their first meaningful correction since the bull market kicked off in March. Now, the question swirling around the Street is, will the rally pick back up again, or is more downside on the way?According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson, uncertainty regarding the presidential election and stalemate on the next stimulus package could lead to declines in September and October. “On the correction, there’s still downside as markets digest the risk of congressional gridlock on the next fiscal deal. While we think something will ultimately get done, it will likely take another few weeks to get it over the goal line,” he noted.However, Wilson argues the recent volatility in no way signals the end of the current bull market. “We think this correction is just that, a correction in a new bull market. It’s normal for markets to pullback after such an incredible run like we’ve experienced since March. Furthermore, when a new bull market coincides with a new economic cycle, the bull market usually runs for years, not months,” the strategist explained.Taking Wilson’s outlook to heart, our focus shifted to three stocks getting a thumbs up from Morgan Stanley. As the firm’s analysts see over 50% upside potential in store for each, we used TipRanks’ database to get the full scoop.Akero Therapeutics (AKRO)With its innovative medicines designed to restore metabolic balance and halt the progression of NASH, a severe form of nonalcoholic fatty liver disease, Akero Therapeutics wants to address the unmet medical needs of patients from all over the world. Based on the strength of its lead candidate, Morgan Stanley is pounding the table.Representing the firm, 5-star analyst Matthew Harrison tells clients that AKRO’s treatment for NASH, efruxifermin (EFX), has a “best-in-class profile.” EFX is the company’s lead asset and was designed to mimic the biological activity of fibroblast growth factor 21 (FGF21), which regulates multiple metabolic pathways and cellular processes, to reduce liver fat and inflammation, reverse fibrosis, increase insulin sensitivity and improve lipoproteins.According to Harrison, NASH is a complex disease, with patients usually having multiple co-morbidities like obesity, type-2 diabetes, increased triglycerides, increased LDL cholesterol and low HDL cholesterol. “A promising therapeutic solution would not only treat the multiple components of NASH but would also have an acceptable side effect profile given the potential co-morbidities,” the analyst explained.That’s where AKRO’s therapy comes in. “In June, Akero presented best-in-class data from its Phase 2a study. This data indicates that EFX improved the two liver histological endpoints recommended by the FDA along with resulting in weight loss, improving cardiovascular health (increasing good HDL cholesterol, decreasing triglycerides, not raising bad LDL cholesterol), and improving factors related to controlling blood glucose levels. This benefit/risk profile beats the competition,” Harrison stated.Looking at the indication as a whole, Harrison views NASH as a very large opportunity given that roughly 20 million people in the U.S. suffer from the condition.The analyst, however, acknowledges there are commercial hurdles. One of these is the fact that “NASH is currently undiagnosed in all but a very small percentage of the prevalent pool since diagnosis currently requires an invasive liver biopsy.” Therefore, along with demonstrating a positive benefit/risk profile, AKRO will need to find patients and secure payer support should the candidate receive FDA approval, in Harrison’s opinion.That said, Harrison believes AKRO is up for the task. “We believe that given EFX’s clean safety profile and broad-based effects, Akero will likely largely overcome these commercial hurdles,” he commented.Harrison added, “Importantly, since Akero’s treatment is injectable, we only assume the drug will penetrate into the population of the most sick patients where there are currently at least 400,000 patients diagnosed and seeking treatment in the U.S.” To this end, he assigns a 60% probability of success, and estimates unadjusted peak sales for the U.S. and the EU will land at $4.5 billion.Based on all of the above, Harrison rates AKRO an Overweight (i.e. Buy) along with a $70 price target. Should his thesis play out, a potential twelve-month gain of 93% could be in the cards. (To watch Harrison’s track record, click here)Are other analysts in agreement? They are. Only Buy ratings, 6, in fact, have been issued in the last three months. Therefore, the message is clear: AKRO is a Strong Buy. Given the $58.50 average price target, shares could rise 61% in the next year. (See AKRO stock analysis on TipRanks)TransDigm Group (TDG)Next up we have TransDigm Group, which is one of the top producers, designers and suppliers of highly engineered aerospace components, systems and subsystems. Its products are used on nearly all commercial and military aircrafts in service today. Given its ability to weather the COVID-19 storm, Morgan Stanley sees a bright future ahead.Morgan Stanley analyst Kristine Liwag stated, “We view TransDigm as the most defensible business model in commercial aerospace.” However, this is not to say the company hasn’t been confronted with serious challenges.Over the past few years, management has had to grapple with how to price its defense business, the sustainability of its pricing strategy in aerospace, the durability of its levered balance sheet and the ability to weather a downturn. That said, Liwag remains optimistic going forward. “TDG has overcome short thesis after short thesis in the past few years and we do not expect these concerns to repeat,” she noted.According to Liwag, TDG’s “ability to hold on to margins during a global pandemic” conveys its operating strength. To this end, her estimate for EBITDA margins is well above the rest of the Street’s. The analyst also points out that the company cut its SG&A expense by $89 million year-over-year in fiscal Q3 2020. “We assume the company will retain at least half of those savings, with the remainder returning in the form of variable selling expenses,” she said.Liwag added, “We are positive on TransDigm, particularly as recovery in global air traffic would be favorable for TransDigm’s core profit maker, the aftermarket. Additionally, we view it positively that TDG has the means to acquire weaker players.”Back in April, management raised $1.5 billion of additional debt to trim liquidity risks and provide an extra cushion. “A large debt load is part of management’s strategy to provide private equity like return for its shareholders. Historically, the company has used debt to acquire businesses with similar attributes to TDG’s portfolio of 90% proprietary products and 75% sole sourced. If passenger air traffic continues to normalize, we would expect TDG to use its incremental capital to acquire struggling businesses that fit its strategy,” Liwag commented.All of this prompted Liwag to leave her bullish call and $772 price target unchanged. This target conveys her confidence in TDG’s ability to climb 48% higher in the next year. (To watch Liwag’s track record, click here)Looking at the consensus breakdown, 7 Buys and 5 Holds have been published in the last three months. Therefore, TDG gets a Moderate Buy consensus rating. Based on the $500.58 average price target, shares are poised to stay range-bound for now. (See TDG stock analysis on TipRanks)Cemex SAB (CX)Cemex counts itself as one of the leading players in the building materials industry, with the company manufacturing and distributing cement, ready-mix concrete and aggregates. As its risk/reward profile has just gotten more positive, now could be the time to snap up shares, so says Morgan Stanley.Covering the stock for Morgan Stanley, analyst Nikolaj Lippmann believes that CX’s bullish guidance for the third quarter and FY20, which was significantly ahead of consensus, was “the catalyst that builds a bridge to a favorable risk-reward shift.” On top of this, the stock is trading at 6.4 2020e EV/EBITDA, which is cheap compared to its historical performance and its peers, according to the analyst.That being said, Lippmann argues “CX is mainly a good, strong deleveraging story with a call option on what could be an exceptional U.S. cement market if the U.S. Congress approves an infrastructure package in 2021… If we get a U.S. infrastructure package beyond 2020, it would add icing to the cake, we think, and take the market from good to possibly great.”Although a large multi-year package is dependent upon the outcomes of the U.S. presidential and congressional elections, even in the base case, Lippmann expects cement to show pricing power in the U.S.It should be noted that Lippmann thinks it’s possible the next year will be relatively uneventful, but in that case, he expects the industry to pause at 90% capacity utilization and grow from there. On top of this, pricing in Mexico has been holding up. This “limits the downside risk materially and helps skew the risk-reward positively,” in Lippmann’s opinion.What else is working in CX’s favor? The cement demand year-to-date has pleasantly surprised Lippmann, with upside seen during the first stage of the pandemic. He points to DIY and Department of Transportation maintenance work during periods of low traffic, and strong residential construction as the drivers of this demand.Everything that CX has going for it convinced Lippmann to rate the stock an Overweight (i.e. Buy). Along with the call, he attached a $6 price target, suggesting 50% upside potential. (To watch Lippmann’s track record, click here)Turning to the rest of the analyst community, opinions are split almost evenly. 6 Buys and 5 Holds add up to a Moderate Buy consensus rating. At $4.16, the average price target implies 4% upside potential. (See Cemex stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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.
Pakistan to save ruined homes of Bollywood greats in Peshawar
The ancestral homes of two Bollywood greats are to be saved from crumbling into ruin in northern Pakistan.
The houses belonged to the families of Raj Kapoor and Dilip Kumar who migrated to India in the years before Pakistan was created from British India in 1947.
Officials in Peshawar say the dilapidated homes are to be bought, restored and turned into museums.
The city has a vibrant cultural history, and a host of Bollywood’s greatest stars trace their roots there.
Raj Kapoor and Dilip Kumar were born and raised in Peshawar’s oldest and most famous road, Qissa Khwani – or Street of Storytellers – later moving to Mumbai where they became leading actors of their generation.
A host of current and former top Bollywood stars, including Shah Rukh Khan, have roots in the same area of Peshawar’s old city.
Five-star Bollywood connection
Kapoor and Kumar started acting in the 1940s and went on to become two of the biggest stars of the film industry that would eventually become Bollywood. They even starred together in one of their early successes – Andaz, a 1949 film.
Kumar’s gentlemanly roles and Kapoor’s antics captivated generations of cinema-goers. While Kumar was known as the “tragedy king”, often essaying sober and melancholic roles, Kapoor, nicknamed “the showman”, was a performer – joyful, cheeky, charming or pensive, whatever the role demanded.
Kapoor died in 1988. Kumar, who is 97, lives in Mumbai with his wife, Bollywood actress Saira Banu.
Since the 1970s, Peshawar’s cultural heritage has suffered. In recent years, the city became known for militancy and conservatism and the rise of the Taliban saw many local buildings destroyed.
Under the conservation plan, around 1,800 buildings in Peshawar over 100 years old will be acquired and restored by the provincial government.
“The move is part of efforts to restore Peshawar’s traditional culture which fell by the wayside due to the war on terror,” Director of Archaeology and Museums Dr Abdus Sama told BBC Urdu.
Work on a couple of buildings has already begun, he said.
The Kapoor and Kumar homes are both now in the hands of private owners. Not far away is the former family home of current-day Bollywood superstar, Shah Rukh Khan. Officials say the fact that three such major stars and so many others hailed from this tiny corner of Peshawar means the area deserves a Bollywood museum of sorts.
And that’s exactly what they are planning – they want to turn the mansions, both more than a 100 years old, into museums which will house memorabilia on the respective actors, including Shah Rukh Khan.
There will also be a film library, and other elements reflecting Peshawar’s Bollywood connection.
The long road to restoration
The two homes are badly in need of substantial renovation. The ornate Kapoor haveli (mansion) is literally falling apart. Its arched windows and protruding balconies still hint at lost grandeur. The facade of the rather less grand home where Dilip Kumar was born nearby is cramped into a tiny alley and the house itself looks shabby, with once expensive woodwork soiled, cracked and covered in cobwebs.
The Kapoor haveli was built between 1918 and 1922 by Raj Kapoor’s grandfather, Deewan Basheswarnath. He was a police officer in British India, originally from what is today Faisalabad in Pakistan. But he was posted in Peshawar for a long time. His son, Prithviraj Kapoor, who was one of Hindi cinema’s first big stars, starting his career in the silent era, was born in this house. He caught his acting break in Peshawar, where he starred in local plays, before moving to Bombay (now Mumbai) in the late 1920s to make it to the big screen.
His son, Raj Kapoor, was born on 14 Dec 1924 in the same house. He would go on to become one of India’s most prolific and loved stars, directing and producing in his later years.
The family returned to Peshawar often until they sold the house some years before Pakistan was partitioned from India in 1947, says Shakeel Waheedullah, head of the Cultural Heritage Council of Peshawar. The group has been fighting for years to protect the buildings.
He says the house has changed hands on a number of occasions, and even came close to being demolished by the current owner, a jeweller who wanted to build a shopping mall in its place. It was saved when the heritage group intervened.
The building still lost its top two storeys, and the owner faced arrest when the provincial archaeology department stepped in to halt the demolition.
In 1990, Kapoor’s sons – Rishi and Randhir – visited the house. When Rishi died earlier this year, people in Peshawar mourned and they lit candles for his uncle, Shashi, another star, when he died in 2017.
Dilip Kumar’s house was built by his father who was a fruit merchant. Kumar was born in Peshawar as Mohammed Yusuf Khan on 11 December 1922. According to Mr Waheedullah, Kumar’s father suffered substantial business losses in the mid-1920s, forcing the family to move to Bombay in search of better opportunities.
Having re-established the family fortunes in India, Kumar’s father sold his house in Peshawar in 1930 for a sum of 5,000 rupees. The house has since been sold several times and is currently being used as a warehouse.
Kumar visited it in 1988. He wanted to return again in 1997, when he was in Pakistan to receive an award from the government, but he could not because of the large crowds that had already gathered in anticipation of his arrival.
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Sienna Miller remembers Chadwick Boseman and ‘astounding’ way he got her paid fairly on ’21 Bridges’
Chadwick Boseman helped get Sienna Miller equitable pay on 21 Bridges by boosting her salary out of his own pocket. The actress remembered her late co-star in a special edition of Empire which honors Boseman’s life and legacy. The Black Panther star died in August after quietly battling colon cancer. He was only 43.
“I didn’t know whether or not to tell this story, and I haven’t yet. But I am going to tell it, because I think it’s a testament to who he was,” Miller shared.
Boseman produced 21 Bridges and was “really active” in trying to get Miller on board.
“He was a fan of my work, which was thrilling, because it was reciprocated from me to him, tenfold. So he approached me to do it, he offered me this film, and it was at a time when I really didn’t want to work anymore,” the actress said. “I’d been working non-stop and I was exhausted, but then I wanted to work with him.”
Negotiations with the studio stalled when Miller’s desired salary wasn’t met.
“This was a pretty big budget film, and I know that everybody understands about the pay disparity in Hollywood, but I asked for a number that the studio wouldn’t get to,” she explained. “And because I was hesitant to go back to work and my daughter was starting school and it was an inconvenient time, I said, ‘I’ll do it if I’m compensated in the right way.’ And Chadwick ended up donating some of his salary to get me to the number that I had asked for. He said that that was what I deserved to be paid.”
Miller declared the gesture “about the most astounding thing that I’ve experienced.”
“That kind of thing just doesn’t happen,” she continued. “He said, ‘You’re getting paid what you deserve, and what you’re worth.’”
“It’s just unfathomable to imagine another man in that town behaving that graciously or respectfully,” Miller added. “In the aftermath of this I’ve told other male actor friends of mine that story and they all go very, very quiet and go home and probably have to sit and think about things for a while. But there was no showiness, it was, ‘Of course I’ll get you to that number, because that’s what you should be paid.’”
Miller and other stars remember Boseman in Empire’s tribute issue, out on Thursday.
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What Does Okta, Inc.’s (NASDAQ:OKTA) Share Price Indicate?
3 Stocks Flashing Signs of Strong Insider Buying
If you really want to know which stocks the experts – and those in the know – are buying, pay attention to what they’re doing. Stock reports, company reviews, and press statements are helpful, but you’ll get significant information from watching what the insiders are up to.The insiders – the corporate officers and board members – have to disclose when they snap up shares to prevent any unfair advantages. Tracking their stock purchases can be a useful strategy because if an insider spends their own money on a stock, it could signal that they believe big gains are in store.So, investors looking for stocks that may be flying ‘under the radar,’ but with potential to climb fast, watching for insider purchases identify some sweet market plays. To make that search easier, the TipRanks Insiders’ Hot Stocks tool gets the footwork started – identifying stocks that have seen informative moves by insiders, highlighting several common strategies used by the insiders, and collecting the data all in one place.Fresh from that database, here are the details on three stocks showing ‘informative buys’ in recent days.TravelCenters of America (TA)We’ll start with a company that you probably don’t think about often, but that does provide an essential service. TravelCenters of America is the largest publicly traded owner, operator, and franchisor of full-service highway rest stops in the US. TA started out operating truck stops for rest, repair, and maintenance, and has since expanded to full-service fueling stations offering both gasoline and diesel, fast-food restaurants, convenience stores, and other rest stop amenities. Their network of rest stops is part of the infrastructure that makes long-distance motor transport, both private and commercial, possible in the USA.As can be imagined, the social lockdowns and travel restrictions during the coronavirus pandemic were not good for TA. The good news is, the worst of the pandemic hit during Q1, and the first quarter is normally TA’s slowest of the year. This year, the first quarter showed a net loss of $1.81 per share. In the second quarter, when warmer weather normally leads to increased driving, the pandemic restrictions were also – at least partially – lifted, and TA reported a sudden turnaround, with a 59 cent EPS profit. Even so, that missed the forecast by almost a dime. The outlook for Q3, normally TA’s strongest of the year, is for EPS of 73 cents.Turning to the insider trades, Adam Portnoy of the Board of Directors has the most recent informative buys. Earlier this month, he purchased over 323,000 shares, laying out more than $5.32 million for the stock. Analyst James Sullivan, of BTIG makes two observations about TravelCenters. First, he points out, “The long-haul trucking industry has an approximate 71% share of total primary tonnage in the U.S. freight industry, making it the primary mode of freight transportation.” Sullivan then adds that this opens up opportunity for TA going forward: “The increasing demands of the nation’s large trucking fleets for consolidated service providers that can provide fuel and truck service on a national basis appear likely to drive additional consolidation in the industry.”Sullivan rates TA shares a Buy, and his $34 price target suggests the stock has an impressive 82% upside potential for the coming year. (To watch Sullivan’s track record, click here)Overall, shares in TA are rated a Strong Buy from the analyst consensus, based on 5 recent reviews including 4 Buys and 1 Hold. The shares are selling for $19.24, and the $22.70 average price target implies room for 18% upside growth. (See TA stock analysis on TipRanks)Highwoods Properties (HIW)The next stock is a real estate investment trust. Highwood operates mostly in the Southeast US, but also in Pittsburgh, where it acquires, develops, leases, and manages a portfolio of suburban office and light industrial properties.Where most companies reported heavy losses during the corona crisis, HIW saw revenues in 1H20 remain stable. EPS has grown sequentially into Q1 and remained flat in Q2 at 93 cents. Both quarter beat EPS expectations.Despite the solid financial results, HIW shares have still not recovered from the market collapse of midwinter. The stock is down 27% year-to-date.Through all of this, Highwoods has maintained its dividend, as is common among REITs. The company has a 17-year history of dividend growth and reliability, and the current payment of 48 cents per common share has been stable for the past 7 quarters. At this level, it annualizes to $1.92 and gives a yield of 5.8%.Highwoods’ insider trading has come from Board member Carlos Evans, who purchased 10,000 shares for $337,000 dollars last week. His move was the first informative buy on HIW in the last 6 months.Truist analyst Michael Lewis is impressed by the quality of HIW’s portfolio. He writes, “We continue to believe that HIW’s portfolio is one of the best-positioned among traditional office REITs in light of the COVID-19 pandemic. Rent collections have been excellent and there are no large near-term lease expirations. More broadly, the portfolio should benefit from being focused in drivable, close-in Sunbelt suburbs.”In line with these comments, Lewis rates the stock a Buy. His price target, $45, indicates a 31% potential upside from current levels. (To watch Lewis’ track record, click here)Overall, HIW has a cautiously optimistic Moderate Buy consensus rating from the Street. This breaks down into 2 Buy ratings and 1 Hold. We can also see from TipRanks that the average analyst price target is $43, which implies a ~25% upside from the current share price. (See HIW stock analysis on TipRanks)VEREIT (VER)The last stock on our insider trading list is another REIT. VEREIT is major owner and manager of retail, restaurant, and commercial real estate, with a portfolio that includes over 3,800 properties worth a collective $14.7 billion. The company’s assets are 45% retail and 20% restaurants; the rest is mainly office and light industrial sites. The total leasable square footage is 88.9 million square feet.So VEREIT is a giant in the REIT sector – but size didn’t protect it from the general downturn this year. Share performance has been lackluster, and revenues have been falling off gradually since Q4 of last year. The second quarter results showed $279 million on the top line, the lowest in a year – but the quarter also saw earnings turn back upwards, reaching 17 cents per share.VER cut back on its dividend earlier this year, reducing the payment to 8 cents per share to keep it in line with earnings. That dividend has been maintained, and the next payment is set for mid-October. The current dividend yield is 4.5%, well over double the average found among S&P stocks.The big insider trade on VER comes from Board member and CEO Glenn Rufrano. He spent over $252K on a block of 40,000 shares, pushing the insider sentiment on this stock into positive territory.Covering the stock for JPMorgan, 5-star analyst Anthony Paolone sees an important strength in VER, noting that the company has been successful in collecting rents during the crisis period. “[Its] collections showed good improvement going into July, with 85% collections in 2Q and 91% in July; when considering all the abatements and deferrals, it appears that at this point about 94% of pre-COVID contractual rental revenue has been addressed, and it seems to us that a normalized run rate for this vast majority of the portfolio should take hold in early 2021; the company is making progress in working through the remaining 5-6% of non-collections,” Paolone noted.Paolone gives VER an Overweight (i.e. Buy) rating, and his $8 price target implies a 22% upside for the next 12 months. (To watch Paolone’s track record, click here)All in all, VER has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 5 analysts polled in the last 3 months, 3 are bullish on the stock, while 2 remain sidelined. With an 11% upside potential, the stock’s consensus target price stands at $7.25. (See VEREIT’s stock analysis at TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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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