A strong way to start the week, with US stocks surging more than 1% on Monday. Big gains were seen across energy and financials, with pending home sales and personal income data quick to cheer investors. And of course, merger Monday lived up to its name, with lots of deals announced before the open, particularly in the health care sector.
UnitedHealth Group Inc. (Ticker: UNH)
The health insurer is buying pharmacy benefits manager Catamaran (Ticker: CTRX) for nearly $13 billion. The all-cash deal will immediately boost earnings. That cheered investors a bit, as they sent UNH shares up 2% intraday. Beta is still below 1x, with sales growth estimates likely to pick up beyond the 7% level now projected by consensus through 2016.
Intel Corp. (Ticker: INTC)
No confirmation yet this week that INTC has inked a deal to buy specialty semiconductor company, Altera (Ticker: ALTR). Altera already has some chip design/production deals with INTC, so a deal should be relatively smooth post-closing should one occur. The current yield is about 3%, with free cash flow yield of $9 billion or 6% on today’s price.
Zillow Group, Inc. (Ticker: Z)
A Benchmark note last week said that fears over Realtor.com’s ability to take away Trulia listings are “overblown” resulting in Z’s stock being undervalued. Most MLS brokerages are working with Z, the sell-side analyst noted, and sales growth warrants a higher target price. The analyst kept his buy rating and $155 target.
Lululemon Athletica, Inc. (Ticker: LULU)
Nomura was recently positive on Lululemon, citing the growing women’s active wear apparel trend internationally. The “productivity gap” between the US and Canadian operations should also narrow, the firm writes. And LULU also enjoys brand loyalty. Nomura continues with its buy rating and $70 target on the stock.
First Solar, Inc. (Ticker: FSLR)
Moving downstream and beyond the yieldco, FSLR has made recent moves into power plant management. The initial push has 40 megawatts of power production under management. The EV/EBITDA is 6x, with shares comfortably above both moving averages. The sales growth is also estimated to accelerate through 2016 to 18%. Earnings estimates have the bottom line growing by 21% to $3.63 a share, yet the multiple is under 17x.
HomeAway Inc. (Ticker: AWAY)
Oppenheimer initiated last week on HomeAway with a buy rating and a $37 price target. The analyst noted a “secular shift” ongoing in the online travel industry, with growth in global GDP helping fundamentals (travel is linked to that growth). Shares are trading just below the 50-day moving average, so any push above that level may give support.
About the author: John Carter has been a full time trader for 15 years, serving over 100,000 subscribers in over 100 countries. For more analysis on high growth stocks visit www.SimplerStocks.com.
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