||IMPLIED UPSIDE AS OF
AUG. 18 MARKET CLOSE
|Telefónica SA (ticker: TEF)
|Nokia Corp. (NOK)
|Aegon NV (AEG)
|Tencent Music Entertainment Group (TME)
|Polestar Automotive Holding UK PLC (PSNY)
|Telecom Italia S.p.A. (TIIAY)
|iQiyi Inc. (IQ)
|Crescent Point Energy Corp. (CPG)
|Rocket Lab USA Inc. (RKLB)
Telefónica is the leading telecommunications company in Spain. The stock pays an 8.4% forward dividend, the highest on this list and a rarity among stocks priced under $10. Analyst Adrian Ng says Telefónica has made several key restructuring moves to improve its balance sheet and streamline its business, such as exiting Central America and acquiring E-Plus in Germany and GVT in Brazil. Telefónica will also get a cash infusion from its deal to combine U.K. telecom assets in a joint venture deal with Liberty Global PLC (LBTYA). CFRA has a “buy” rating and $4.50 price target for TEF stock, which closed at $3.87 on Aug. 18.
Nokia is a telecom equipment and digital map data vendor that also licenses intellectual property to third parties. Analyst Keith Snyder says 5G network rollouts in North America and China are generating positive momentum for Nokia, and he expects the global 5G network upgrade investment cycle will be larger and longer-lasting than previous cycles. Nokia’s North American mobile network business lost market share in the first half of 2023, but Snyder says the company is confident it can regain that share in the future. CFRA has a “buy” rating and $5.50 price target for NOK stock, which closed at $3.81 on Aug. 18.
Aegon is a Dutch insurance company that offers insurance, savings, pension and investment products and services around the world. Analyst Jeff Lye says Aegon has a strong track record of execution and believes the company is fully capable of reaching its 2023 cash flow and debt reduction targets. Lye says Aegon is focused on strategic assets that generate an attractive return on capital and help reduce volatility in the company’s capital ratio. In addition, he says the recent ASR Nederland NV merger will further improve Aegon’s balance sheet. CFRA has a “buy” rating and $7 price target for AEG stock, which closed at $5.09 on Aug. 18.
Tencent Music Entertainment Group (TME)
Tencent Music Entertainment is a leading online music platform in China and is the parent company of QQ Music, Kugou Music and WeSing. Crackdowns on U.S.-listed Chinese tech stocks by Chinese and U.S. regulators have eased in 2023, but Chinese stocks have continued to lag behind as the post-pandemic rebound in the Chinese economy has fallen short of expectations. Analyst Ahmad Halim says growth in high-margin ad revenue could boost Tencent Music’s profits, and investments in long-form audio and live concerts will grow its user base. CFRA has a “buy” rating and $10 price target for TME stock, which closed at $6.53 on Aug. 18.
Polestar Automotive Holding UK PLC (PSNY)
Polestar Automotive designs and manufactures electric vehicles. The company has two EV models on the market and expects to launch three additional models by 2025. Polestar shares are down 32% year to date through Aug. 18, the worst performance of any stock on this list. Analyst Garrett Nelson says Polestar’s recent weakness is a buying opportunity given his confidence in the company’s future growth prospects. Nelson says Polestar has generated impressive deliveries growth in the past two years, has already achieved gross profitability and is highly exposed to the EV-friendly European market. CFRA has a “buy” rating and $6 price target for PSNY stock, which closed at $3.61 on Aug. 18.
Telecom Italia S.p.A. (TIIAY)
Telecom Italia is the leading fixed-line and wireless telecommunications provider in Italy. The company plans to split off its network business into a separate company. Ng says there is ongoing investor interest in Telecom’s assets, and divestitures and other merger and acquisition deals will likely continue to be a primary focus for the company. Ng says Telecom Italia’s revenues are declining thanks in large part to intense competition in its core markets. However, growth in Brazil is helping offset core market weakness. CFRA has a “buy” rating and $3.50 price target for TIIAY stock, which closed at $2.96 on Aug. 18.
iQiyi is a leading Chinese streaming video platform that is often compared to U.S. streaming platform Netflix Inc. (NFLX). Analyst Jian Xiong Lim says iQiyi has an innovative monetization model. The company’s mix of premium and on-demand content as well as tiered membership services make its platform accessible to a wide range of different customers. Lim says iQuiyi is positioned to turn its first profit in 2023 following five years of heavily investing in growing its subscriber count. Lim projects 10% revenue growth in 2023. CFRA has a “buy” rating and $8.50 price target for IQ stock, which closed at $5.24 on Aug. 18.
Crescent Point Energy Corp. (CPG)
Crescent Point Energy is a Canadian oil and gas exploration and production company that has assets in Western Canada, Utah and North Dakota. Global energy shortages and commodity price inflation led to record energy sector profits in 2022, allowing companies like Crescent Point to reduce debt and improve their balance sheets. Analyst Jonnathan Handshoe says Crescent Point is positioned to generate about 1.1 billion Canadian dollars ($811 million) in free cash flow in 2023, and the stock trades at just 7.1 times his 2023 earnings estimate. CFRA has a “buy” rating and a $8.85 price target for CPG stock, which closed at $8.29 on Aug. 18.
Rocket Lab USA Inc. (RKLB)
Rocket Lab is an aerospace and defense company that specializes in launch services, spacecraft engineering and design, components manufacturing, and other spacecraft management solutions. The stock’s share price has taken off in 2023, gaining 55.4% through Aug. 18. Snyder says Rocket Lab is a top launch provider for customers who have small payloads. Rocket has fewer launch failures than smaller competitors and offers more mission customization than SpaceX and other large competitors. Snyder projects 38.6% revenue growth in 2023. CFRA has a “buy” rating and $8 price target for RKLB stock, which closed at $5.86 on Aug. 18.