The best trade ideas for August 28

U.S. Bancorp (USB) is a U.S. regional bank. The analyst has a $53 price target, implying upside from current levels. Key points are: 1) Q2 results were decent and capital levels are fine, reducing key investor concerns. 2) The acquisition of MUFG Union Bank provides growth opportunities. 3) USB has best-in-class efficiency and returns, though some peers are catching up. 4) The bank should meet capital requirements through regular operations. 5) Conservative underwriting helps insulate USB during downturns. 6) The analyst sees risks from competitive threats in payments, uncertainty around regulations/capital requirements, and few earnings catalysts. 7) Shares are undervalued at current levels.

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Albemarle Corporation (NYSE:ALB) is a global leader in lithium mining. JR research, who downgraded ALB in June following concerns surrounding the nationalization of Chile's lithium industry, now sees another buying opportunity following the stock's pullback after its July peak. Although ALB raised its full-year guidance due to a rebound in lithium pricing, it has recently faced execution risks and a drop in battery-grade lithium carbonate prices in China. However, the strength of Albemarle lies in its low-cost assets in Chile, allowing large-scale lithium mining and reaching global markets, including China, the largest EV market. The company further emphasizes diversified assets in Australia and North America, reducing its reliance on Chile. Despite the volatility associated with lithium prices, Albemarle's potential to produce profitably through price cycles is optimistic. Based on ALB's price chart, JR research suggests a support level at $168, though advises caution at the $250 resistance level. Given the stock's current position, JR research is has upgraded ALB to a “strong buy”

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WesBanco (WSBC) is a regional bank offering various financial services and products. The author believes the stock is undervalued and has a sizable dividend that has grown every year for 12 years. Key points are: 1) WSBC has recovered from its low of $21.2 per share. 2) The company has diverse offerings and solid loan growth. 3) Financials remain strong despite bond losses. 4) Q2 results showed good loan growth, margins, and capital levels. 5) The dividend growth history and current above-average yield are positives. 6) Valuation looks favorable on a P/B basis. 7) Risks include vulnerability to deposit withdrawals, though liquidity is robust. 8) The author sees the worst as likely over given the stock recovery and issues a buy rating with a current discount to the author's price target of over 30%

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TerraVest Industries Inc. is a Canadian-listed compounder that specializes in acquiring and integrating companies in fuel containment, processing equipment, and oil/gas services. The author believes the stock can return 3.5x over 8 years by reinvesting distributable FCF into acquisitions at a 14% ROIC. Key points are: 1) The company has a strong track record of acquiring competitors on the cheap and generating high ROIC. 2) Fuel containment and processing equipment segments are poised to benefit from high oil/gas prices. 3) The fragmented, slowly declining industries it operates in provide an opportunity for cheap acquisitions. 4) Management owns a significant stake and has proven adept at the acquisition strategy. 5) The stock is inexpensive at 11x distributable FCF and can generate outsized returns through reinvestment, debt utilization, buybacks, and multiple expansion.

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Card Factory PLC is a UK-based greeting card retailer. The author believes the stock can return 25% annually for 8 years through EPS growth, dividends, and multiple expansion. Key points are: 1) The stock price has recovered from COVID lows, but enterprise value remains far below pre-pandemic levels due to debt paydown. 2) New CEO has strengthened the balance sheet and implemented a credible growth strategy. 3) The company has high returns on capital and dominates the market despite industry decline. 4) Investments in omni-channel should drive growth. 5) At 8x P/E, the stock is undervalued for its quality. 6) Conservative projections point to 8% EPS growth, 8% dividend yield, and 9% from multiple expansion over 8 years.

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Covestro AG is a German chemical company whose stock has seen strong gains this year, partly due to takeover interest from Abu Dhabi National Oil Company (ADNOC). The author believes ADNOC will likely raise its offer to a price that is 39% above the current price. However, even without a takeover, the author sees fundamentals improving as margins stabilize, the pricing environment gets better, and demand recovers. This suggests Covestro's downturn has troughed and a new business cycle is starting. The author remains bullish on 2024-2025 upside even if ADNOC's takeover fails. Risks include failed takeover talks and a prolonged industry downturn.

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