Best stock ideas for September 19

UGI Corporation emerges as a strong investment choice amidst utility sector challenges. Their commitment to exiting underperforming European ventures, a dominant stance with AmeriGas Propane in the US LPG market (it's America's top liquified petroleum gas retailer), and strategic responses to issues like the Russo-Ukrainian War position them favorably. Adding allure is a compelling 6.34% dividend yield, a testament to their consistent 36-year dividend growth streak. A compelling earnings multiple of 8.6x and a determined fair value of $38.50 (against the current price of $24.09) underscore its undervalued status. Their undervalued status, strong dividend growth, and above-average yield underscore its appeal as a long-term investment.

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The author is bullish on Teck Resources Limited (NYSE:TECK), primarily due to two potential catalysts. First, the possibility of an acquisition by Glencore. Even though the buzz regarding this interest has subsided, the author believes Teck's recent actions demonstrate their intention to streamline their operations by shedding their coal business to become a pure-play copper firm. The second catalyst is the increasing demand for copper in the next two years, with insufficient supply to meet it, due to its indispensable role in the electrification and sustainable energy transition worldwide. Despite a reduction in copper production guidance for 2023, the company reaffirms its 2024 production goal. With copper prices firming up and wider global growth returning, copper demand is expected to further increase, offsetting relatively subdued growth from China. The author anticipates a stocks's re-rating higher to 40% to 50% by the end of 2024, even if the anticipated catalysts don't pan out, suggesting that the downside risk of the investment is limited.

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This lengthy article presents a bullish view on auto dealer Lithia Motors stock. The analyst believes Lithia has strong growth runway ahead, fueled by acquisitions, new segments like its online Driveway brand, and geographic expansion including the recent Pendragon deal to enter the UK (Pendragon is the UK’s 3rd largest dealer). Lithia's aggressive 2025 revenue and EPS targets ($50 billion and $55-$60 per share, respectively) are seen as bullish, powered by its successful, ongoing acquisitions and expansion tactics. The analyst sees Lithia's focus on rural markets as an advantage, providing pricing power and protection from competition. Expansion into metro areas and new segments give further growth potential. Lithia's used car strategy boosts margins by targeting high mileage value vehicles. And its service business creates customer loyalty and pricing power. Risks include high leverage and execution risk around the aggressive growth targets. But the analyst believes Lithia's narrow economic moat, growth opportunities, and long runway outweigh the risks.

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The author asserts that investment in AI and continued focus on its existing applications such as Facebook, Instagram, WhatsApp, Messenger (collectively referred to as Family of Apps) have revamped Meta's relevance. AI-recommended content has increased engagement significantly, with overall time spent on the Family of Apps rising by 7%. A strong track record of developing and nourishing networks underscores Meta's potential for consistent growth. Furthermore, Whatsapp's capacity for monetization is highlighted, as it grew to a revenue of $9 billion annually as of Q3 2022. The cultural and organizational improvements made by the company, i.e., building higher quality products faster are also considered as positive indicators for the company. Meta's financial health appears to be robust, with revenue rising faster than expenses. The potential risk identified by the author is that Meta's influence on users' brain activity, akin to tobacco, may evolve into a headwind in time. The author is bullish on Meta due to its expansive network, AI deployment capabilities, and robust financial health, but urges investors to recognize the potential risks.

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The article discusses the trajectory of Rémy Cointreau, reflecting on the company's 17% fall in share prices since May 2023. A pertinent hump was a 35% organic sales decline in Q1 FY24 due to inventory movements related to COVID disruption, but this was expected. However, the report suggests that this decline will be followed by a rapid recovery, with respective sales growth expected each quarter of FY24. Despite facing some challenges such as higher interest expenses and currency fluctuations that may result in an 8% EPS drop in FY24, the long-term prospects look favorable, predicated on a gradual increase in sales and allowance for margin expansion. Importantly, Rémy Cointreau has completed its planned rise in marketing spend, enabling easier future margin expansion. The author sees strong long-term EPS growth ahead. They highlight Rémy Cointreau's 2.3% dividend yield, and argue its valuation is reasonable at 25x 2023 EPS given 10%+ forecast EPS growth. Overall, they recommend buying Rémy Cointreau stock.

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Jaime M. Katz, a Senior Equity Analyst, issued an update to Brunswick's investor day, maintaining a $118 fair value estimate and reiterating a positive outlook despite trimming down some underlying metrics in line with Brunswick's revised lower 2025 goals. The company's 2027 goals include $8.7 billion in sales, a 16% operating margin, and $15 in EPS, all of which are ahead of Katz's 2027 forecast. Katz anticipates sales and EPS to increase modestly by 2027 but maintains a 15% operating margin expectation. However, a slower improvement in category spending leads to a more modest outlook for the next 18 months, drawing attention to softness in fiscal 2023 sales and potential industry headwinds. Additionally, Katz highlights that Brunswick's future growth hinges on a rebound in industry demand between 2025-27, hedging its bets due to limited visibility two years out. Nevertheless, Katz underscores Brunswick's potential to grow faster than the market over time by leveraging its strong ecosystem, which includes Navico and engines selling into boats to drive repower and used boat sales. Brunswick's strong balance sheet, potential acquisitions, and significant long-term growth initiatives further instill Katz's confidence, outweighing possible threats from competitors and changing consumer preferences.

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