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It’s straightforward to get vertigo, when markets get yanked round in a number of instructions directly. The loopy currents we’ve seen in latest weeks have been a recipe for confusion – a bear become a bullish rally, inflation hit a 40+ yr peak after which pulled again, the Federal Reserve made a number of the most aggressive price hikes in its historical past earlier than sounding a dovish observe.
For the common investor, charting a course by means of these waters is a frightening job. It’s in time like this that some skilled recommendation would possibly present a clearer image. Hardly any on the Road come extra extremely regarded than billionaire Steve Cohen.
The legendary inventory picker has constructed Point72 into an enormous of the hedge fund trade, with over $26 billion in complete belongings beneath administration. Utilizing what’s referred to as a multi-strategy strategy which entails inventory market investments in addition to international investments in a number of asset lessons all of sudden based mostly on macroeconomic tendencies, Cohen is taken into account among the best within the enterprise.
With this in thoughts, we’ve opened up the TipRanks database to get the news on two of Cohen’s latest new positions. These are Purchase-rated shares – and maybe extra curiously, each are sturdy dividend payers, with annual yields exceeding 5%. We will flip to the Wall Road analysts to search out out what else may need introduced these shares to Cohen’s consideration.
Highwoods Properties (HIW)
We’ll begin with an unsurprising member of the ‘high-yield dividend membership,’ Highwoods Properties. This firm is an actual property funding belief (REIT), based mostly in Raleigh, North Carolina, holds a portfolio of properties in the very best enterprise districts (BBDs) of rising city areas throughout the sunbelt: Atlanta, Charlotte, Nashville, Orlando, Raleigh, Richmond, and Tampa. As well as, Highwoods additionally has properties in Pittsburgh, Pennsylvania. The corporate owns, develops, leases, and manages its properties, and boasts greater than 27.4 million sq. toes of usable area with a 91.1% occupancy.
These properties have generated constantly sound revenues for Highwoods. The corporate reported $203.8 million on the high line in 2Q22, the newest reported, for a achieve of 9.8% year-over-year. That income line supported a web incomes of $50.5 million, or 48 cents per diluted share. Highwood held web actual property belongings price $4.9 billion on the finish of the quarter, together with money and liquid belongings of $25 million.
Earnings and belongings collectively held up the corporate’s dividend. Highwood declared, on the finish of July, a standard inventory dividend of fifty cents per share, for fee on September 13. This marks the fifth quarter in a row with the dividend at this stage, which annualizes to $2 even and provides an above-average yield of 5.6%. That yield is nearly triple the common discovered amongst S&P-listed firms, and is excessive sufficient to offer some safety from inflation.
All of this makes for an attention-grabbing inventory, at a time when defensive performs are gaining floor, and it’s clear that Cohen would agree. His agency opened its place in HIW by buying 103,061 share. This stake is now price $3.56 million.
What this all comes all the way down to is summed up by Baird analyst Dave Rodgers, who writes: “We count on HIW shares to ship outperformance in opposition to an Underweight Workplace group given the corporate’s extra restricted publicity to tech-oriented enlargement tenants, strong visibility towards re-tenanting wants and a wholesome stability sheet. Leasing for 3Q22 is progressing effectively for the corporate, and its improvement pipeline has restricted threat or, on the very least, bridges the supply hole previous our view of recession timing. Portfolio upgrades and strategic transactions ought to restrict higher FFO progress, however HIW ought to present strong relative near-term risk-adjusted returns.”
Rodgers goes on to offer HIW an Outperform (i.e. Purchase) ranking, together with a $43 value goal that suggests ~25% one-year upside potential. (To look at Rodgers’ observe file, click here)
Whereas Rodgers is overtly bullish, the Road typically takes a combined – although considerably constructive – view of this inventory. The ten latest analyst critiques cut up down the center, with 5 Buys and 5 Holds for a Average Purchase consensus ranking. The shares are buying and selling for $34.53 and their $38.78 common value goal suggests about 10% upside the approaching yr. (See HIW stock forecast on TipRanks)
JOYY (YY)
For the second Cohen decide, we’ll flip to the Chinese language digital market. A famously complicated language, and an authoritarian authorities, have mixed to maintain China’s digital world remoted from the West – however the nation has an city inhabitants of 800 million, a complete inhabitants of 1.4 billion, and a ‘digital’ inhabitants of linked web customers of greater than 1 billion. By scale alongside, the Chinese language web scene is price a re-examination from buyers.
Inside that web scene, JOYY is a serious social media firm, working a number of manufacturers that act to attach customers by means of video codecs. The corporate’s manufacturers embrace the live-streaming Bigo Stay, the short-form video supplier Likee, and the multiplayer social sport networking platform Hago.
JOYY will report its 2Q22 numbers on the finish of this month, however we are able to get an thought of the corporate’s tendencies by trying on the 1Q22 numbers. On the high line, JOYY introduced in $623.8 million, down 3% year-over-year. Nonetheless, web earnings, on a non-GAAP foundation, got here to $20.9 million, a large turnaround from the $24.1 million web loss reported within the prior yr’s Q1. This turnaround was attributed to enhancements in gross margin, extra disciplined advertising efforts, and an general enchancment in working effectivity.
Together with improved working efficiencies, JOYY has amassed a money ‘struggle chest’ totaling greater than $4.47 billion. The corporate can also be cash-positive in operations, producing $592 million in money from ops throughout Q1.
Having turned worthwhile and amassed loads of money, JOYY now has a strong base for its dividend fee. The corporate pays out 51 cents per widespread share, with final fee despatched out on July 6. The annualized fee of $2.04 offers a powerful yield of seven.25%, which is effectively over 3x the common dividend yield.
Steve Cohen has confirmed that he’s impressed by the attributes of JOYY, and he’s accomplished so with a big purchase. His agency picked up 198,000 shares of YY, organising an preliminary place that’s now price $5.3 million.
5-star analyst Fawne Jiang, of Benchmark, additionally counts herself as a fan. Jiang sees an organization with a transparent attraction for worth buyers. The analyst says that YY is a ‘sturdy money play,’ and writes, “YY at the moment has a money stability of $43 per share and will enhance its money stability to ~$70 money per share upon the completion of the YY Stay sale (pending on regulatory approval). The corporate has issued mixture share repurchase plans of $1.2B in 2021 (with $316M repurchase executed in 1Q22). YY pays quarterly dividends with an annual dividend yield of 5%. The group has turned worthwhile in FY21, which successfully lowered issues on potential money burn.”
That’s a bullish posture, and Jiang’s ranking on the inventory is a Purchase. Jiang backs that with a $62 value goal indicating confidence in a strong one-year upside of 131%. (To look at Jiang’s observe file, click here)
General, JOYY has 4 latest analyst critiques, together with 3 Buys and 1 Maintain, making its analyst consensus view a Robust Purchase. The $57.67 common value goal suggests the inventory has ~115% upside potential from its share value of $26.81. (See JOYY stock forecast on TipRanks)
To search out good concepts for shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a newly launched device that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather necessary to do your individual evaluation earlier than making any funding.