The stock markets have been see-sawing wickedly in recent sessions. The Dow Jones average has seen several daily swings of 1,000 points or more. Fears about the COVID-19 epidemic lie behind the increased volatility; the spread of the virus has shut down factories, slowed supply chains, and reduced consumer spending as governments have instituted quarantines and travel restrictions to combat the disease. While there are hints that workers in southeastern China are beginning to return to the factories, it is clear that the epidemic – now officially a pandemic – has not yet peaked.
Wall Street is nervous, and even anticipated rate cuts by major central banks – the Bank of England and the US Federal Reserve have both acted in that vein – have not allayed the fears. The World Health Organization has said that the Bank moves, and other governmental actions, are both late and insufficient. President Trump spoke live from the Oval Office last night to address the issue, outlining government actions to combat the pandemic, but investors were not impressed. Dow futures are down another 1,000 this morning, and Wall Street is bracing for another rough trading day.
The sell-off in stocks may be panic-fueled, but it is real. The Dow is officially in bear market territory, officially ending the long bull market that characterized the economic recovery. It remains to be seen whether this downturn will be temporary, or extend into a recession. Economic indicators in January and February both showed continued growth, but the reporting periods did not take full account of COVID-19.
Still, every bear market has its success stories, and today’s low prices give investors a chance to buy into some strong stocks at a discount. We’ve checked with the TipRanks Insiders’ Hot Stocks tool, to see what those in the know are picking up. The results are interesting.
Synovus Financial Corporation (SNV)
Our first stock is a financial company. Synovus offers services in the investment, commercial, and retail banking segments, and controls some $45 billion in assets. The bank has 249 branches and 335 ATMs across the Southeast, in the states of Georgia, Alabama, Florida, South Carolina, and Tennessee.
The insider perspective on this company is highly positive. Corporate offices – including directors, the President/COO, and the Chairman of the Board/CEO have all purchased shares in recent days, and the purchases are informative. The combined buys are worth more than $732,000. Kessel Stelling, the Chairman and CEO, made the single largest such buy, picking up 10,000 shares for over $233,000.
The company offers investors a sweet attraction with its dividend. The annualized payment, $1.32, gives a yield of 5.18%, far higher than average – and almost 6x higher than bond yields following the Fed’s rate cut.
Brad Milsaps, writing from Piper Sandler, sees reason for optimism in SNV. He writes, “We still believe that SNV is best positioned among its peers to take advantage of disruption stemming from the Trust MOE, while our hope would be that at least the announcement of SNV's targets will cause investors to revisit the story especially at the current valuation.”
Milsaps reiterates his Buy rating on the stock, and sets a $41 price target, indicating an upside of 106%.
Also bullish is Evercore’s 5-star analyst John Pancari. His $40 price target implies an upside of 100%. Supporting his stance, Pancari writes, “…we view mgmt’s willingness to dig deeper on expenses and step up revenue efforts constructively. This, coupled with solid underlying fundamental trends – i.e. mid-single-digit loan and deposit growth, momentum in fee businesses, and intact credit – should present upside to SNV’s discount valuation over time.”
Overall, Synovus maintains a Strong Buy from the analyst consensus, based on 7 Buys and 2 Holds. The stock is selling for $20.25, and the average price target of $39.33 suggests room for 95% upside growth in the next 12 months.
Cedar Fair Entertainment (FUN)
Next up on our list is an entertainment company, Cedar Fair. The company name is likely familiar to anyone in the Midwest, as its the most famous asset is the Cedar Point amusement park in Sandusky, Ohio. Cedar Fair owns a total of 13 amusement and water parks, along with 5 hotels in the US and Canada.
Two company officers have purchased large blocks of FUN stock recently. Richard Zimmerman, President and CEO, bought 5,000 shares for more than $186,000 earlier this month, while CFO Brian Witherow made a similar purchase at the same time. In the last three months, company insiders have bought up over $1.45 million worth of FUN.
Like Synovus, FUN offers investors a strong dividend. The yield here is notably high – an impressive 12.8%. The annualized payment is $3.74. The company has been raising the quarterly dividends regularly for the past 8 years.
Webush analyst James Hardiman sees plenty of growth potential in FUN, as shown by his Buy rating and $62 price target. His target suggests a whopping 175% upside for the coming year.
Supporting his view, Hardiman writes, “Following some brutal weather conditions during the first five months of the year, FUN has truly flourished since mid-June, helping to make the case that much of the weakness over the last two years has been largely weather related. And while distribution growth has moderated, we would expect valuation to improve as investors gain confidence that the current payout is sustainable.”
Paul Golding, writing from Macquarie, is also bullish on FUN. He writes, “Good stewardship of capital, and thoughtful investment in renovations, cost mgmt systems, and events adds to our bullish thesis that sees regional parks benefitting from the strong US consumer.”
Golding’s $65 price target supports his Buy writing, and implies a 189% upside potential.
All in all, Cedar Fair has 5 Buy reviews and just a single Hold, making the analyst consensus rating a Strong Buy. The stock is selling for $23.57, and the average price target suggests an impressive 107% growth potential.
Steel Dynamics, Inc. (STLD)
We’ll wrap up with domestic industry, a steel company based on Fort Wayne, Indiana. Steel Dynamics has a capacity exceeding 11 million tons annually, and is the third largest producer of carbon steel products in the US.
Two of STLD’s Directors have made large purchases recently, totaling over $120,000. In the past three months, company officers have bought up over $1.33 million worth of stock, with the largest purchase, worth $486,000, made by Senior Vice President Glenn Pushis earlier this week.
Like the other stock in this list, STLD uses the earnings to fund a high-yield dividend. The payment is 25 cents quarterly, and the yield is an impressive 5%. At just 40%, the payout ratio shows that the company can easily afford the profit sharing.
Jefferies analyst Martin Englert sees several points for optimism in Steel Dynamics. He writes, “Product diversification aids stability. Buybacks support better relative valuation. A strong balance sheet and broadly defensive financial and operational characteristics [are positive in our view].”
Englert’s $38 price target implies an upside here of 98%. He rates the stock a Buy.
Steel Dynamics has three recent reviews and all three are buy-side, giving the shares a Strong Buy from the analyst consensus. The stock’s $42.50 average price target suggests an upside of 124% from the current share price of $19.19.