Everyone knows that you should buy low and sell high if you want to turn a profit in the markets. The trick is finding the bottom, to know when to buy. Jim Cramer, the well-known host of CNBC's 'Mad Money' program, sees the market bottom hitting in the next couple of weeks, making the end of October the right time for investors to buy in.
Referring to some recent predictions by market technician Larry Williams, Cramer says, "The bear market is more or less… toast and, even if the current rally stalls, he's predicting a big move either toward the end of this month or the beginning of November."
And that will lead to the natural question, what stocks to buy as markets hit their bottom? Cramer has some thoughts here, too. In his lightning round, Cramer featured two stocks that he believes look compelling right now.
In fact, Cramer is not the only one singing these stocks' praises. According to the TipRanks platform - they are both rated as Strong Buys by the Street's analysts. Let's take a closer look.
GXO Logistics (GXO)
We'll start on the supply side, where GXO is a mid-cap player in the global contract logistics niche, providing supply chain and warehousing services. The company boasts over 900 warehouse locations in 28 countries, with more than 200 million square feet of space, that generated approximately $7.9 billion in revenue in 2021.
GXO serves customers in a wide range of industries, from agribusiness and automotive to ecommerce and healthcare to the public sector and omnichannel retail, to name a few among many. GXO services include automated sorting and warehouse automation, intelligent robotics, and warehouse digital vision technology.
This company entered the public markets as a spinoff, taking on the contract logistic business of the parent company, XPO Logistics, in August of 2021. Since going public after the spinoff, GXO has seen its quarterly revenues hold in the range between $1.97 and $2.26 billion. In the most recent quarter reported, 2Q22, the company had a top line of $2.2 billion. Adjusted EPS came to 68 cents per diluted share. During the quarter, the company reported $475 million in new business wins, its highest-ever quarterly total, and a sales pipeline of $2 billion.
Despite these successes, shares in GXO are down 60% so far this year. This has opened up an opportunity, according to Cramer, who says of GXO shares, "Buy some here, buy some a little bit lower."
Cramer is hardly the only bull on this stock. Wells Fargo analyst Allison Poliniak-Cusic also takes a distinctly upbeat view of GXO, writing, "We see opportunity for the shares to outperform through cycles with our focus on companies with quality and more defensible business models that are less susceptible to the traditional Industrial cyclicality. We view GXO's scale and disciplined execution as key enablers to grab further market share in an industry benefiting from secular growth driven by ecommerce, warehouse automation, and outsourcing trends."
To this end, Poliniak-Cusic rates GXO an Overweight (i.e. Buy) and sets a price target of $78, suggesting a robust one-year upside of 113% for the shares. (To watch Poliniak-Cusic's track record, click here)
The Wall Street consensus on this logistic company is almost as upbeat. Of the 11 recent analyst reviews, 9 are to Buy against just 2 Holds, for a Strong Buy consensus view, while the $63.64 average price target implies a 73% upside from the current trading price of $36.61. (See GXO stock forecast on TipRanks)
Sociedad Quimica Y Minera de Chile (SQM)
Next up is a Chilean chemical and fertilizer company, providing a range of products, including iodine, potassium, and industrial chemicals as well as a plant fertilizers, on the world markets. SQM is also the world's largest producer of lithium, which is seeing increased demand from the expansion of the electric vehicle sector and its voracious appetite for lithium-ion batteries.
SQM reported its 2Q22 results, which included cumulative results for the first half of the year. Revenues in the first half came to $4.618 billion, and the company reported a bottom line - net income for the first half - of $1.655 billion in US currency. These totals gave an EPS of $5.80 for the first half, a dramatic increase from the $0.55 reported for 1H21. The increase in EPS reflects both higher demand and prices for lithium as well as higher prices for fertilizers due to restricted supply from Russia and Ukraine.
The company is not sitting still on its successes. SQM reports that it is close to achieving 180,000 metric tons of lithium carbonate production capacity, and is working to expand that capacity to 210,000 metric tons.
Shares in SQM have been rising along with the company's revenues and income. The stock has gained over 90% year-to-date, and that caught the eye of Jim Cramer, who said of SQM, "Fertilizer's in short supply and so is lithium. That makes that stock a buy in my eyes."
In coverage for Deutsche Bank, analyst Corinne Blanchard lays out an equally bullish take on SQM, saying of the Chilean mining firm: "We continue to like the SQM story and our investment thesis remains simply based on (1) Incremental volumes over the near and medium-term, (2) Diversified asset base and increased geographic footprint; and (3) Pricing structure with high spot / monthly benchmark exposure..."
"We are confident in the volume growth over the coming years, with our view lithium sales should grow by 20% in 2023/24e. Further capacity is being developed and coming online in Chile next year, and SQM also recently announced it has acquired a converting plant in China, therefore expanding geographic footprint and growing volumes," the analyst added.
Unsurprisingly, Blanchard rates SQM shares a Buy, and her $128 price target indicates potential for 36% share appreciation in the coming year. (To watch Blanchard's track record, click here)
Overall, there are 4 recent analyst reviews on file for this firm, and they are all in agreement that it's a stock to buy, making the Strong Buy consensus rating unanimous. The shares are priced at $94.04 and their $128.75 average price target is practically the same as Blanchard's. (See SQM stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.