Zigging When the Market Zags
Being a contrarian investor often means buying stocks that are outside of the current zeitgeist. Many investors would look at a list of new buys in a contrarian’s portfolio and wonder just what, exactly, the contrarian was thinking. “Why don’t you just buy these stocks that are working” is a common thought which is also frequently shared in such examinations.
Contrarian investors need to patiently wait, sometimes painfully, while other stocks surge higher. But, if done right, and maybe with a little help from the impossible-to-time but inevitable market cycles, a contrarian’s stocks produce not only strong gains but also do so at a time when more popular stocks suffer.
This week, we are adding a new name, Barrick Gold (GOLD) as a Buy. This stock is not only out of favor (a classic contrarian trait), but is not infrequently looked upon with doubt, disdain and discredit. The entire gold mining industry isn’t immune to such views, either. But the gold mining industry, and certainly Barrick, has lost the loose-spending and often murky culture of decades ago. Today’s gold mining industry is one of restraint, transparency and financial discipline – hard-earned from the long struggle with chronic low commodity prices and disappointed investors. Barrick’s chairman is a former Goldman Sachs president, hardly someone who would wantonly waste shareholder money. Since taking the chairman’s seat in 2014, his signature achievement, other than buying Randgold Resources that added Mark Bristow to the executive suite, has been slashing costs and paying down Barrick’s entire $13 billion of net debt. We think Barrick has a much better future than the market is assuming.
In addition to making difficult purchases, contrarian investors have to make difficult sales. Last fall, we sold highly popular stocks like Amazon.com (AMZN), Netflix (NFLX), Nvidia (NVDA) and Adobe (ADBE). Since those exits, all four have produced market-lagging returns, with Amazon shares down 3%. Not all of the Sells have turned out so well, though, as Marathon (MPC), Chart Industries (GTLS) and ViacomCBS (VIAC) continued to climb substantially higher.
We recently raised price targets for several stocks. With the economy showing broad strength, the earning power of these names are still probably being underestimated. We hope to capture more of the upside potential in these stocks yet still make timely exits. The headwinds in the equity markets, including rising interest rates, the specter of higher taxes, the unknown pace and depth of the actual economic recovery and generally stretched valuations, are picking up.
Share prices in the table reflect Tuesday (March 16) closing prices. Please note that prices in the discussion below are based on mid-day March 16 prices.
Note to new subscribers: You can find additional color on recent earnings and other news on recommended companies in prior editions of the Cabot Undervalued Stocks Advisor on the Cabot website.
Send questions and comments to Bruce@CabotWealth.com.
UPCOMING EARNINGS RELEASES
None
TODAY’S PORTFOLIO CHANGES
New Buy: Barrick Gold (GOLD)
LAST WEEK’S PORTFOLIO CHANGES (March 10 letter)
Tyson (TSN) – Raising price target from 75 to 82.
JetBlue (JBLU) – Raising price target from 19 to 22.
GROWTH/INCOME PORTFOLIO
Bristol Myers Squibb Company (BMY) is a New York-based global biopharmaceutical company. In November 2019, the company acquired Celgene for a total value of $80.3 billion. We are looking for Bristol Myers to return to and then sustain overall revenue growth, both from resilience in their key franchises (Opdivo, Revlimid and Eliquis) and from new products currently in their pipeline. We also want to see the company execute on its $2.5 billion cost-cutting program.
The market gives Bristol Myers little/no credit for its earnings growth, cash flow production and strong balance sheet. Earnings for 2021 are estimated to increase 16%, although tapering to 6-8% in future years. The company is positioned, backed by management guidance, to generate between $45 billion and $50 billion in cash flow over the three years of 2021-2023. This sum is equal to 35% of the company’s $136 billion market value. The balance sheet carries $16 billion in cash and its debt is only 2x its EBITDA.
There was no significant company news in the past week.
BMY shares ticked up about 2% in the past week and have about 27% upside to our 78 price target. The stock hasn’t moved much in over a year, yet the company continues to generate about $7/share in free cash flow, about $2 of which is paid out in dividends. We remain patient with BMY shares.
The stock trades at a low 8.2x estimated 2021 earnings of $7.49 (up a cent from last week). On 2022 estimated earnings of $8.08 (down 3 cents), the shares trade for 7.6x. Either we are completely wrong about the company’s fundamental strength, or the market must eventually recognize Bristol’s earning power. We believe the earning power, low valuation and 3.2% dividend yield that is well-covered by enormous free cash flow makes a compelling story. STRONG BUY.
Cisco Systems (CSCO) generates about 72% of its $48 billion in revenues from equipment sales, including gear that connects and manages data and communications networks. Other revenues are generated from application software, security software and related services, providing customers a valuable one-stop-shop. Cisco is shifting toward a software and subscription model and ramping new products, helped by its strong reputation and its entrenched position within its customers’ infrastructure.
The emergence of cloud computing has reduced the need for Cisco’s gear, leading to a stagnant/depressed share price. Cisco’s prospects are starting to improve under CEO Chuck Robbins (since 2015). The company is highly profitable, generates vast cash flow (which it returns to shareholders through dividends and buybacks) and has a very strong balance sheet.
While fiscal second quarter earnings were bland on the surface, the company looks positioned to start showing revenue growth. With low investor expectations, any revenue growth is helpful. Cisco’s balance sheet remains solid.
There was no significant company news in the past week.
CSCO shares rose 4% in the past week and have about 11% upside to our 55 price target.
The shares trade at a low 15.4x estimated FY2021 earnings of $3.22 (unchanged in the past week. On FY2022 earnings (which ends in July 2022) of $3.43 (unchanged), the shares trade for 14.5x. On an EV/EBITDA basis on FY2021 estimates, the shares trade at a discounted 10.4x multiple. CSCO shares offer a 3.0% dividend yield. We continue to like Cisco. BUY.
Coca-Cola (KO) is best-known for its iconic soft drinks but nearly 40% of its revenues come from non-soda brands across the non-alcoholic spectrum, including PowerAde, Fuze Tea, Glaceau, Dasani, Minute Maid and Schweppes. Its vast global distribution system offers it the capability of reaching essentially every human on the planet.
While near-term outlook is clouded by pandemic-related stay-at-home restrictions, secular trends away from sugary sodas, high exposure to foreign currencies and always-aggressive competition, Coca-Cola’s longer-term picture looks bright. Relatively new CEO James Quincey (2017), a highly regarded company veteran with a track record of producing profit growth and making successful acquisitions, is reinvigorating the company by narrowing its oversized brand portfolio, boosting its innovation and improving its efficiency. The company is also working to improve its image (and reality) of selling sugar-intensive beverages that are packaged in environmentally insensitive plastic. Coca-Cola is supported by a sturdy balance sheet. Its growth investing, debt service and $0.42/share quarterly dividend are well-covered by free cash flow.
Coca-Cola’s subdued near-term revenue and profit outlook is somewhat driven by pandemic-related lockdowns, particularly outside of the United States. Consensus estimates point to 10% revenue and earnings per share growth in 2021. Another overhang is the tax dispute that could cost as much as $12 billion – we don’t see an immediate resolution but consider $12 billion to be a worst-case scenario. Coke will likely continue to generate robust free cash flow in 2021.
There was no significant company news in the past week.
KO shares rose 1% in the past week. The stock has about 25% upside to our 64 price target. While the valuation is not statistically cheap, at 23.8x estimated 2021 earnings of $2.15 (unchanged in the past week) and 21.9x estimated 2022 earnings of $2.33 (up a cent), the shares are undervalued while also offering an attractive 3.3% dividend yield. BUY.
Dow Inc. (DOW) merged with DuPont in 2017 to temporarily create DowDuPont, then split into three companies in 2019 based roughly along product lines. The new Dow is the world’s largest producer of ethylene/polyethylene, the most widely used plastics. Dow is primarily a cash-flow story driven by three forces: 1) petrochemical prices, which are often correlated with oil prices and global growth, along with competitors’ production volumes; 2) volume sold, largely driven by global economic conditions, and 3) ongoing efficiency improvements (a never-ending quest of all commodity companies to maintain their margins).
Dow continues to participate in the economic recovery. For 2021, analysts estimate revenue growth to be 14%, aided by higher prices and volumes. The strong U.S. dollar may be a modest headwind as it makes revenues produced in other currencies less valuable when translated into dollars. Generous free cash flow will partly be used to trim Dow’s debt.
There was no significant company news in the past week.
Dow shares rose 1% this past week and have about 11% upside to our recently raised 70 price target. The shares trade at 17.1x estimated 2022 earnings of $3.69, although these earnings are more than a year away. This estimate ticked up 3 cents in the past week.
The high 4.4% dividend yield is particularly appealing for income-oriented investors. Dow currently is more than covering its dividend and management makes a convincing case that it will be sustained. HOLD.
Merck (MRK) – Pharmaceutical maker Merck focuses on oncology, vaccines, antibiotics and animal health. Keytruda, a blockbuster oncology treatment representing about 30% of total revenues, holds an impressive franchise that is growing at a 20+% annual rate. To tighten its focus, Merck will spin off its Women’s Health, biosimilars and various legacy branded operations, to be named Organon, by mid-year 2021. These businesses currently generate roughly 15% of Merck’s total revenues yet comprise half of its product roster. We estimate that Organon is worth about $3.75 per MRK share. The spin-off will yield an $8-$9 billion cash inflow to Merck. Longer term, we see the company spinning out or selling its animal health business. Merck has a solid balance sheet and is highly profitable. With the new CEO, we see the company becoming more acquisitive to find additional growth products, which adds both risk and return potential to the Merck story.
Primary risks include its dependence on the Keytruda franchise which will face generic competition in late 2028, possible generic competition for its Januvia diabetes treatment starting in 2022, and the possibility of government price controls.
Merck’s earnings for 2021 and 2022 are estimated to increase by about 10%.
This past week, the company entered into an agreement with Gilead Sciences to co-develop and co-market HIV treatments using Merck’s islatravir and Gilead’s lenacapavir. Both treatments, in the late stages of clinical trials, independently have strong potential, which may be magnified by their combination. For Merck, the agreement is a credible step toward reducing its dependence on Keytruda, which will see competition toward the end of the decade.
For much of this year, we anticipate that the stock will be volatile or remain weak until the effects of the strategic changes are more clearly seen. Longer term, the low valuation, strong balance sheet and sturdy cash flows provide real value. The 3.4% dividend yield pays investors to wait.
Merck shares rose 3% this past week and have about 37% upside to our 105 price target. Valuation is an attractive 11.7x this year’s estimated earnings of $6.52 (unchanged this past week). Increasing estimates should eventually attract quant-driven attention as upward estimate revisions are like catnip to stock-buying machines. Merck produces generous free cash flow to fund its current dividend as well as likely future dividend increases, although its shift to a more acquisition-driven strategy will slow the pace of increases. BUY.
Tyson Foods (TSN) is one of the world’s largest food companies, with nearly $43 billion in revenue. Beef products generate about 36% of total revenues, while chicken (31%), pork (10%), and prepared/other contribute the remaining revenues. It has the #1 domestic position in beef and chicken with roughly 21% market share in each. Its well-known brands include Tyson, Jimmy Dean, Hillshire Farms, Ball Park, Wright and Aidells. Tyson’s long-term growth strategy is to participate in the growing global demand for protein. The company has more work to do to convince investors that its future is brighter, particularly as it is more of a commodity company (and hence has lower margins) compared to its food processor peers. Dean Banks, the new CEO, who previously was an Alphabet/Google executive, is starting to make necessary changes.
Tyson’s fiscal 2021 earnings (ends in September) are estimated to increase about 1%, but accelerate to the 10% range in future years. Fiscal 2021 will be hindered by subdued volumes and pricing. The Prepared Foods segment will likely see higher profits but this is a small segment for Tyson. Faster domestic and neighboring country (Mexico in particular) reopenings should help lift chicken and other meat prices and volumes.
There was no significant company news in the past week.
The stock rose 6% in the past week and have 7% upside to our recently raised 82 price target. While the near-term outlook is mixed, the new management is likely being conservative with its forward guidance.
Valuation is attractive at 13.5x estimated 2021 earnings of $5.70 (estimate is unchanged in the past week). Currently the stock offers a 2.3% dividend yield. BUY.
U.S. Bancorp (USB), with a $70 billion market value, is the one of the largest banks in the country. It focuses is on consumer and commercial banking through its 2,730 branches in the Midwest, southwest and western United States. It also offers a range of wealth management and payments services. Unlike majors JP Morgan, Bank of America and Goldman Sachs, U.S. Bancorp has essentially no investment banking or trading operations. USB shares remain out of favor due to worries about a potential surge in pandemic-driven credit losses and weaker earnings due to the low interest rate environment.
U.S. Bancorp’s 2021 earnings are expected to increase about 24% compared to the pandemic-weakened 2020 results, with future earnings growth of perhaps 8-10%.
USB shares (like most bank shares) continue to trade with the 10-year Treasury yield. Rising interest rates combined with a stronger economy make the bank more valuable. The yield currently sits at 1.60%. For reference, the yield was 1.88% at year-end 2019, just before the pandemic. Short-term interest rates have remained essentially unchanged.
Media attention has recently focused on how banks have set aside too many reserves for bad loans. While we estimate that U.S. Bancorp is over-reserved by as much as $2 billion, the bank’s prudent approach to capital will likely mean that it won’t significantly accelerate its share repurchases or boost its dividend. The bank probably will modestly under-reserve in future quarters, which will artificially boost earnings but legitimately lift its capital ratios.
The shares rose 1% in the past week and have about 9% upside to our 58 price target.
Valuation is a modest 12.7x estimated 2022 earnings of $4.22 (estimate down a cent in the past week). On a price/tangible book value basis, USB shares trade at a reasonable 2.2x multiple of the $24.85 tangible book value. This ratio ignores the value of the bank’s payments, investment management and other service businesses that have low tangible book values but produce steady and strong earnings. For perspective, JPMorgan, considered the highest quality and best-managed bank, with sizeable capital markets operations, trades at 2.4x tangible book value. Currently, USB stock offers an appealing 3.1% dividend yield. BUY.
BUY LOW OPPORTUNITIES PORTFOLIO
New Buy: Barrick Gold (GOLD) – Barrick is one of the world’s largest and highest quality producers of gold. Based in Toronto, Canada, the company has mining operations around the world, with about 50% of production in North America, 18% in Latin America and Asia Pacific, and 32% in Africa and the Middle East. The company also has smaller copper mining operations. Barrick’s market capitalization is about $37 billion, generates strong free cash flow and has a $5.2 billion cash balance that equals its total debt. Barrick’s shares surged in 2019 and early 2020 by the combination of rising gold prices and the arrival of highly capable new CEO, Mark Bristow, who joined Barrick in 2019 when it acquired Randgold Resources, a major South African mining company that he founded. Bristow is highly regarded for his ability to manage portfolios of gold mines, reduce costs and navigate the complicated process of operating mines in less-developed countries that yearn for revenues that gold mines (which obviously can’t be relocated) generate.
Since their 2020 peak at around $2,000/ounce, gold prices have slipped about 15% to about $1,730/ounce. Barrick’s shares have slid over 30% - not completely surprising as mining company stocks will magnify the moves in the underlying commodity. Our thesis is based on two points. First, that Barrick will continue to generate strong free cash flow at current gold prices, continue to improve its operating performance and return much of that free cash flow to investors while making minor but sensible acquisitions. Second, that Barrick shares offer optionality – that if the enormous fiscal stimulus, rising taxes and heavy central bank bond-buying produces stagflation and low interest rates, then gold prices will turn upwards and lift Barrick’s shares with it. Given their attractive valuation, the shares don’t need the second (optionality) point to work – this is extra upside.
Major risks include the possibility of a decline in gold prices, production problems at its mines, making a major acquisition and/or an expropriation of one or more of its mines.
We are setting a 27 price target for Barrick shares, pointing to 30% upside. BUY.
Aviva, plc (AVVIY) – Based in London, England, Aviva is a major European insurance company specializing in life insurance, savings and investment management products. Its market cap is about $21 billion. Long a mediocre company, the frustrated board last July installed Amanda Blanc as the new CEO, with the task of fixing the business. She is aggressively refocusing the company on its core geographic markets (UK, Ireland, Canada), while putting its remaining geographies on the selling block. Recently, Aviva announced the sale of its operations in Turkey, Italy and France. The turnaround also includes improving Aviva’s product competitiveness, rebuilding its financial strength and trimming its bloated costs. The new leadership reduced the company’s dividend, but to a more predictable and sustainable level, along with what is likely to be a modest but upward trajectory.
Aviva reported healthy full year operating profit of £3.2 billion, roughly flat with a year ago but higher than consensus estimates. Management is targeting £1.7 billion in debt reduction in the first half of 2021 and guided to greater than £5 billion in cumulative cash remittances between 2021-2023. As an insurance company, Aviva must retain specified amounts of cash at its subsidiaries – but excess cash above this minimum, after a cushion, can be remitted to the parent company. Cash remittances, particularly when backed by a publicly stated target, indicate surplus financial strength that can be returned to investors.
Aviva’s capital strength is improving, indicated by its Solvency II shareholder cover ratio at 202%. This ratio is based on a complex European regulatory measure of how much capital an insurance company holds compared to a minimum required amount of 100%. The company has stated that it will pay out any capital above a 180% ratio, which could mean a major share repurchase or special dividend to shareholders equal to as much as 15% of the company’s market value.
Stronger capital, higher cash remittances, lower debt and better profits suggest that the company may be able to raise its dividend more aggressively than the stated modest pace.
There was no significant company news in the past week.
Aviva shares were flat this past week and have about 28% upside to our 14 price target. The stock trades at 7.0x estimated 2021 earnings per ADS of $1.56 (increased by 2 cents this past week) and about 88% of tangible book value. AVVIY shares offer an attractive and likely solid and recurring 5.3% dividend yield. BUY.
General Motors (GM) under CEO Mary Barra (since 2014) has transformed from a lumbering giant to a well-run and (almost) respected auto maker. The company has smartly exited many chronically unprofitable geographies (notably Europe) and trimmed its passenger car roster while boosting its North American market share with increasingly competitive vehicles, particularly light trucks. We consider its electric and autonomous vehicle efforts to be near industry-leading. We would say it is perhaps 75% of the way through its gas-powered vehicle turnaround, and is well-positioned but in the very early stages of its EV development. GM’s balance sheet is sturdy, with Automotive segment cash exceeding Automotive debt. Its credit operations are well-capitalized but may yet be tested as the pandemic unfolds.
General Motors is estimated to produce about 14% higher revenues in 2021, but earnings are expected to increase only about 6% (to about $5.21) due to near-term headwinds from tight semiconductor chip supplies. GM Financial will likely continue to be a sizeable profit generator.
Through its majority-owned subsidiary Cruise, GM announced a deal to acquire Voyage. This small company is developing self-driving cars, with an initial emphasis on retirement communities. We see this deal as essentially a research-and-development expense. If Voyage has technology that works in the relatively controlled environments of a retirement community, it may have applicability for uncontrolled urban streets.
GM also said that it is building some trucks without semiconductor-driven fuel management modules, which will reduce the vehicles’ mileage by about 1 mile per gallon. Hopefully GM is pre-building these trucks so that the modules can be immediately added before hitting the showroom floors, or can be added after purchase, rather than selling trucks that would never get the upgrade.
GM shares rose 5% in the past week, supported by the $1.9 trillion stimulus bill and improving Covid data. The shares have 8% upside to our 62 price target.
On a P/E basis, the shares trade at 9.2x estimated calendar 2022 earnings of $6.26 (unchanged this past week). The P/E multiple is helpful, but not a precise measure of GM’s value, as it has numerous valuable assets that generate no earnings (like its Cruise unit, which is developing self-driving cars and produces a loss), its nascent battery operations, its Lyft stake and other businesses with a complex reporting structure, nor does it factor in GM’s high but unearning cash balance which offsets its interest-bearing debt. However, it is useful as a rule-of-thumb metric and we will continue its use here.
Our 62 price target is based on a more detailed analysis of GM’s various components and their underlying valuation. HOLD.
JetBlue Airlines (JBLU) is a low-cost airlines company. Started in 1999, the company serves nearly 100 destinations in the United States, the Caribbean and Latin America. The company’s revenues of $8.1 billion in 2019 compared to about $45 billion for legacy carriers like United, American and Delta, and were about a third of Southwest Airlines ($22 billion). Its low fares and high customer service ratings have built strong brand loyalty, while low costs have helped JetBlue produce high margins. Its TrueBlue mileage awards program, which sells miles to credit card issuers, is a recurring source of profits.
We believe consumers (and eventually business travelers) are likely to return to flying. JetBlue has aggressively cut its cash outflow to endure through the downturn. Although its $4.4 billion debt is elevated, its $2.0 billion cash balance gives the airline plenty of time to recover. JBLU shares carry more risk than the typical CUSA stock.
JetBlue’s revenues currently are projected to take until 2023 to fully recover to their 2019 level. EBITDA (earnings before interest, taxes, depreciation and amortization, which is a measure of cash operating earnings), is estimated to fully recover by 2022. JetBlue has improved its cost structure during the pandemic, helping rebuild profits sooner than revenues.
TSA traffic remains strong. Our informal research into airfares points to elevated prices over the next month or two, suggesting that lower volumes doesn’t necessarily mean lower revenues and profits. Demand even with high prices appears robust this year.
JBLU shares rose 2% this past week and have about 6% upside to our recently raised 22 price target. We are keeping JBLU shares on a short leash.
The stock trades at 10.2x estimated 2023 earnings of $2.03. This estimate ticked up by 3% in the past week. We are watching the 2021 estimated loss per share to quantify near-term conditions. This estimate slipped to $(2.48), worse by 12 cents compared to a week ago. On an EV/EBITDA basis, the shares trade at 6.0x estimated 2023 EBITDA. HOLD.
Molson Coors Beverage Company (TAP) – The thesis for this company is straight-forward – a reasonably stable company whose shares sell at an overly-discounted price. One of the world’s largest beverage companies, Molson Coors produces the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft and specialty beers. About two-thirds of its $10 billion in net revenues are produced in the United States, where it holds a 24% share of the beer market.
Investors’ primary worry about Molson Coors is its lack of meaningful (or any) revenue growth as produces relatively few of the fast-growing hard seltzers and other trendier beverages. Our view is that the company’s revenues are resilient, it produces generous cash flow and is reducing its debt, traits that are value-accretive and underpriced by the market. A new CEO is helping improve its operating efficiency and expand carefully into more growthier products.
Molson is estimated to produce about 5% revenue growth and a 1% decline in earnings in 2021. Profit growth is projected to increase to a 5-6% rate in future years. Weakness this year is closely related to the sluggish reopening of the European economies, along with higher commodity and marketing costs. The company will likely reinstate its dividend later this year, which could provide a 2.9% yield.
There was no significant company news in the past week.
TAP shares lifted 4% in the past week and have about 22% upside to our 59 price target. Earnings estimates remain stabilized with no deterioration again this past week. TAP shares trade at 12.4x estimated 2021 earnings of $3.88 (up a cent this past week).
On an EV/EBITDA basis, or enterprise value/cash operating profits, the shares trade for about 8.6x current year estimates, among the lowest valuations in the consumer staples group and well below other brewing companies.
For investors looking for a stable company trading at a low valuation, TAP shares continue to have contrarian appeal. Patience is the key with Molson Coors. We think the value is solid although it might take a year or two to be fully recognized by the market. BUY.
Sensata Technologies (ST) is a $3 billion (revenues) producer of an exceptionally broad range (47,000 unique products) of sensors used by automotive, industrial, heavy vehicle and aerospace customers. These products are typically critical components, yet since they represent a tiny percentage of the end-products’ total cost, they generally can yield high profit margins. Also, they tend to have relatively high switching costs – vehicle makers are reluctant to switch to another supplier that may have lower prices but lower or unproven quality. Sensata is showing healthy revenue growth (+7% in the fourth quarter), produces strong profits and free cash flow, has a reasonably sturdy balance sheet (debt/EBITDA of about 3.5x) and a solid management team. The company was founded in 1916, owned by Texas Instruments for decades, and returned to public ownership in 2010.
Sensata’s growth prospects look appealing. The company is leveraged to the automobile cycle (about 60% of revenues), which provides cyclical growth, plus added growth as Sensata usually grows faster than the industry. It should benefit from overall economic growth as it serves heavy/off-road (trucking and construction), industrial and aerospace customers. As vehicles become more electrified, Sensata’s products will be used for more applications, further driving revenues. Recently, Sensata acquired Lithium Balance, which provides it with a valuable entre into the electric vehicle battery industry.
Risks include a possible automotive cycle slowdown, chip supply issues, geopolitical issues with China and difficulty integrating its acquisitions.
Revenues this year are projected to increase by about 16%, driven by a cyclical rebound, then taper to a 6% rate in future years. Profit growth of 48% in 2021, also boosted by the recovery, is estimated to taper to about 14% in future years.
There was no meaningful company news this past week.
ST shares increased 6% this past week and have about 19% upside to our 75 price target.
The shares trade at 16.4x estimated 2022 earnings of $3.86 (up 2 cents this past week). On an EV/EBITDA basis, ST trades at 13.1x estimated 2022 EBITDA. BUY.
