The Wendy’s Co. logo is seen on a cup displayed for a photograph at a restaurant location in Daly City, California.
David Paul Morris | Bloomberg | Getty Images
Many investors may be concentrating on some of Wall Street’s biggest companies but analysts told clients this week not to overlook these other compelling stocks.
CNBC combed through the most recent stock research to find stocks which analysts say have “overlooked” stories. Stocks include Capri Holdings, Wendy’s, Medtronic, VF Corporation, and TriNet Group.
Fast food chain Wendy’s recently announced it would debut a breakfast menu at its stores nationwide and one analyst thinks it could be a positive catalyst for the company and something investors shouldn’t ignore.
“We are increasingly optimistic on WEN’s upcoming breakfast roll out following channel checks,” BMO analyst Andrew Strelzik said.
“With the focus largely on 2020 estimates comps/cash flow implications, we believe WEN’s attractive post-investment free cash flow potential has been overlooked,” he said. Free cash flow is the cash left over after a company pays for its operating expenses and capital expenditures.
Wendy’s stock is up 2.77% on the week.
Medical device maker Medtronic finally announced that its long awaited robot assisted surgery system would begin to make its debut early next year.
It’s just one of the products in the company’s burgeoning pipeline that analysts at J.P. Morgan called, “deep and often overlooked.”
“As we move through fiscal year 2020 and into fiscal year 2021, we think investors will want to own Medtronic not only for the expected top-line acceleration, but also for the potential upside in the out-years as we believe many of these pipeline catalysts aren’t appropriately modeled by the Street,” they said.
Shares of the company are up 0.58% on the week.
One company’s simply been “overlooked” because it really hasn’t been covered by many analysts, according to Berenberg.
TriNet Group provides businesses with human resource solutions including payroll, benefits, risk management and compliance.
“We believe TriNet’s lack of analyst coverage has meant its solid delivery in recent years may have been overlooked and believe now is a good time for investors to revisit the story,” analyst Sam England said.
TriNet is down 4.99% on the week.
Here’s what analysts say are “overlooked” stock stories:
Jefferies- Capri Holdings, Buy rating
“LT oppty in Asia is being overlooked, while NT investments should drive improved stability, multiple expansion, and higher EPS as JC and Versace account for a greater portion of CPRI profits. This is not appropriately reflected in Street numbers, and we see significant upside ahead.”
According to TipRanks, Capri Holdings scores a ‘Moderate Buy’ consensus from the Street. That comes with an average analyst price target of $47.11 (60% upside potential).
BMO- Wendy’s, Outperform rating
“We are increasingly optimistic on WEN’s upcoming breakfast roll out following channel checks and increase our target price to $24. With the focus largely on 2020E comps/cash flow implications, we believe WEN’s attractive post-investment FCF potential has been overlooked. We estimate WEN could generate 2022E FCF of $315-335 million, achieving that level 1-2 years earlier than we anticipated pre-breakfast and implying upside potential for shares to $23-28.”
According to TipRanks, Wendy’s scores a ‘Moderate Buy’ consensus from the Street. That comes with an average analyst price target of $21.41 (7% upside potential).
J.P. Morgan- Medtronic, Overweight rating
“A major component of our OW thesis on Medtronic is the company’s deep and often overlooked pipeline, with a
number of significant potential catalysts over the coming year that we believe many investors aren’t focused on. As we move through FY20 and into FY21, we think investors will want to own Medtronic not only for the expected top-line acceleration, from ~4% this FY to ~5% in FY21, but also for the potential upside in the out-years as we believe many of these pipeline catalysts aren’t appropriately modeled by the Street.”
According to TipRanks, Medtronic scores a ‘Strong Buy’ consensus from the Street. That comes with an average analyst price target of $117.06 (9% upside potential).
Susquehanna- VF Corporation, Positive rating
“VFC introduced a new logo as well as a new tagline to more aptly articulate the company’s overall direction, while paying homage to the 120- year history. We believe the new tagline better aligns VFC’s business objectives (performance) with its mission to do good for the people of the planet (purpose) and neatly ties together the overall vision for the entire brand portfolio. Further, each brand introduced its own interpretation of purpose. While often overlooked by the Street, we believe positioning/vision/mission statements/tag lines help steer the culture, providing a unique and individual reference point for each brand within VFC’s portfolio.
According to TipRanks, VF Corp scores a ‘Moderate Buy’ consensus from the Street. That comes with an average analyst price target of $101.11 (17% upside potential).
Berenberg- TriNet Group, Buy rating
“We like the business given we expect high-single-digit growth in the PEO market with TriNet focusing on high growth verticals like technology, fintech, and life sciences. We believe TriNet’s lack of analyst coverage has meant its solid delivery in recent years may have been overlooked and believe now is a good time for investors to revisit the story.”
According to TipRanks, TriNet Group scores a ‘Moderate Buy’ consensus from the Street. That comes with an average analyst price target of $80 (37% upside potential).