QEP Resources Inc (NYSE:QEP), TiVo Inc. (NASDAQ:TIVO), and Hanesbrands Inc. (NYSE:HBI) have been in the news recently and have garnered positive analyst ratings. Here is a closer look if higher price targets are warranted:
QEP Resources’ annual gains
QEP Resources Inc (NYSE:QEP) is an oil exploration, production, and midstream field services company. This stock is not your typical oil out-performer. In fact, it has annual gains of 15% only as this is largely known to be a natural gas company. The stock currently trades at $30, but is usually rated as an out-performer by analysts and brokerages. QEP Resources Inc (NYSE:QEP) completed an acquisition of oil and gas properties in the Williston Basin, North Dakota, for an aggregate purchase price of $1.4 billion in September last year.
With the company offering an operational update on its Bakken operations, it is clear the stock will be re-rated as one related to oil business instead of gas operations now. Four of its wells in the region are reported to have averaged initial production rate of 3,598 barrels of oil equivalent per day. This is substantially higher than the average production rates in the region. Naturally, analysts are bullish on the stock. It is available at a reasonable valuation of 16 times its forward earnings and has a debt equity ratio of 1.07.
Legal issues at TiVo
TiVo Inc. (NASDAQ:TIVO) is a producer of set top boxes and software for digital content. The company is better known for its digital video recorders based on a technology which it is vehemently trying to protect. TiVo has been involved in legal battles with pay TV companies claiming infringements of its patented technology. In the past, the company negotiated settlements with DISH Network Corp (NASDAQ:DISH), AT&T Inc. (NYSE:T), and Verizon Communications Inc. (NYSE:VZ) and has agreed to an out of court settlement with Cisco Systems, Inc. (NASDAQ:CSCO), Motorola Solutions Inc (NYSE:MSI), and Time Warner Inc (NYSE:TWX). This dispute was headed for a trial and investors were naturally disappointed by the truce which earned only $490 million for TiVo.
Over the last week, it has lost 18%. However, the company is a net gainer when looked at from an operational perspective. Settlement of the dispute paves the way for more licensing deals which is a factor Piper Jaffray analyst Michael Olson cited for his “Overweight” rating on the stock. Another noteworthy development for investors is the doubling of TiVo’s stock buyback program to up to $200 million and extending the plan for another two years. Since the company’s finances were disturbed by legal expenses in the past, analysts predict the company can leverage the benefits of an expanding subscriber base and can break even next year.
Hanesbrands’ financial performance
Hanesbrands Inc. (NYSE:HBI) is an apparel company which has been posting better results quarter after quarter. The stock has surged more than 40% so far this year and yet commands favorable ratings from analysts. In the quarter ended March 30, the company said its revenue dropped 2.8%, but the real star was a profit of $51.4 million in the three months – a marked improvement from a loss of $26.8 million in the same period last year.
The stock is currently valued at 16.8 times its trailing 12 months earnings, but this metric falls to 12.8 when observed for the next 12 months, indicating expectations of continued improvement in financial performance. The stock has a price to sales ratio of 1.12, which is quite low, although debt equity ratio of 1.7 and price to book value of 5.3 indicate it is no longer attractive from a value perspective and further gains will be solely driven by earnings performance.
Foolish bottom line
On a whole, these stocks from different industries would form a diversified but growth-oriented portfolio. QEP Resources Inc (NYSE:QEP) will most likely see its stock price going up further with every passing quarter on the back of increasing production from Bakken resources. On the other hand, the situation is a bit complicated at TiVo and Hanesbrands Inc. (NYSE:HBI), and much will depend on how they tackle operational issues.
Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article What Makes Analysts Bullish About These Stocks? originally appeared on Fool.com and is written by Jacob Wolinsky.
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