The best trade ideas for August 29

PayPal operates a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders.

The author of this article is bullish on PayPal, despite recent declines in the company's stock price. According to the author, PayPal has strong performance metrics and profitability which, despite a slowing growth and tough competition, put the company in the undervalued territory. The author likens PayPal's current situation to that of Meta Platforms before its substantial appreciation, and sees a 'META moment' for PayPal unfolding in the near future. They highlight that PayPal is experiencing deep value territory, with JP Morgan recently revising its price target upward from $90 to $100. Using a comparative analysis of EPS growth and forward P/E ratios against other large tech companies, the author states that PayPal stands out for projected earnings growth and attractive valuation. They also see value in PayPal's cash flow, with a favorable Price-to-Free Cash Flow (P/FCF) compared to its peers. The author also believes that the company's strong balance sheet, ongoing share buyback program, and potential as an acquisition target add to its investment appeal. However, they acknowledge the bearish views, which primarily focus on increased competition, slowing revenue growth, and deteriorating transactional metrics.

Click here to read the full article | Read time: 9 mins

Newmont Corporation is the world's second-largest gold mining corporation, producing from various metals and operating in low-risk jurisdictions.

Despite a 40% decrease in share prices over the past three years and recent struggles with operational challenges, the author presents a bullish view on Newmont's (NEM) future. Newmont has strong fundamentals such as producing 1.2 million ounces of gold and 256,000 gold equivalent ounces from various metals in Q2, almost $1 billion in adjusted EBITDA, and solid margins due to higher realized gold prices. The Company has an attractive leverage ratio of 0.7x net debt to adjusted EBITDA. Despite facing challenges like a suspended operation at Peñasquito due to a dispute leading to strike action, the author believes in Newmont's asset quality and limited geopolitical risks. Newmont's major A$28.8 takeover of Australian Newcrest Mining, which brings more exposure to gold and crucially boosts copper resources, positions it well for the future. Newmont also offers a promising income source; in Q2, a dividend of $0.40 per share or $1.60 per share annually was declared, translating to a 4.1% yield. The author’s bullish view on gold prices, primarily based on a belief that the Federal Reserve will be forced to cut rates due to deteriorating economic growth, bodes well for Newmont. If gold prices rise to $3,000 per troy ounce, Newmont might gain $6-$7 billion in incremental free cash flow, warranting a higher valuation. Amidst these factors, the author maintains a long-term risk/reward view expecting very high gains in the next 2-3 years and planning to add NEM to their trading portfolio.

Click here to read the full article | Read time: 5 mins

Disney is a media conglomerate, owning several businesses such as ABC TV network, Disney+, ESPN, Marvel, and various theme parks.

The author projects a $140 price target in 2027, representing 18% IRR from the current $85 price. Key points are: 1) DIS is recovering from COVID impacts and a questionable Fox acquisition that hurt earnings. 2) Cost cutting and DTC breakeven by 2024 can restore pre-2019 profitability. 3) Parks, ESPN, Studios, and Hulu provide growth opportunities. 4) Valuation is reasonable compared to pre-2019 levels. 5) Excess cash deployment will resume in 2024-2027 timeframe. 6) 2027 EPS estimate of $8 with historical 17.5x P/E multiple supports $140 target. Risks are failure to cut costs and grow earnings as projected.

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Boeing is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and telecommunications equipment, primarily serving the aerospace and defense industries.

We see value in the BA shares, viewing China's emerging middle class as a long-term driver of air travel growth. Boeing is among the largest aerospace and defense companies in our coverage universe, and we think it has superior long-term prospects due to its significant backlog and strong presence in the commercial aerospace industry. Further, its profitable Defense segment is a top-five defense contractor. The shares are down almost 45% from their all-time high of $440, set in February 2019. Once the 737 MAX is fully back in the air and Boeing is accelerating production, we see earnings power of $15-$20 per share. It looks like that will be 2025-26 at the earliest. Our 12-month target price is $280.

Click here to read the full article (paywall) | Read time: 3 min

Mama's Creations is a food production company that produces prepared refrigerated foods, mostly in the United States. The food includes meatballs, lasagna, chicken, meatloaf, pasta entrees, and sausage-based meals.

Mama's Creations, formerly MamaMancini's Holdings, has seen four years of double-digit revenue growth due to its convenience food products based on traditional Italian recipes. The company targets FY24 revenues of $102 million, a growth of 9.5%, and has planned efficiencies, including a spiral oven and lower meat prices, to maintain an upper 20% gross margin. The company expects EPS growth of 166% this FY24. The purchase of Chef Inspirational Foods adds cross-selling opportunities and operational efficiencies, supporting company ambition to become a national deli solutions provider. Macro trends suggest consumers are eating more grocery store prepared food, favoring Mama's Creations' market position. Notably, a risk is that consumers may find prices too high and opt to cook from scratch. Despite a somewhat high valuation, earnings growth is expected to support the stock price in the medium term. The company has an estimated PEG of 1, with analysts predicting a one-year price target of $4.63, which indicates a 33% increase over the current stock price.

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StealthGas Inc. is a global conduit for transporting liquefied petroleum gas and other related gas products.

StealthGas Inc. (GASS), a major player in the global shipping industry particularly in the LPG sector, is poised for growth amidst a shifting LPG market influenced by geopolitical tensions and regulatory challenges. Given the company's operational excellence and strategic agility, it's been able to survive difficult market conditions and is well-positioned in the current market dynamics. Despite being historically highly leveraged, recent market changes have enabled GASS to improve its financial situation by decreasing a significant percentage of its debt and experiencing heightened profitability. GASS showcased a record performance in H1 2023 and has managed to reduce its debt substantially while also securing a healthy cash reserve of $48.1 million. The company’s recently instigated strategy includes selling older ships and acquiring newer, more efficient vessels, which is expected to increase GASS's capabilities and also their revenue and profit generation. Despite risks involved in the volatile and capital-intensive shipping market, the company's low leverage, prudent management, new fleet, and market dynamics suggest significant upside potential. Buying into GASS at current prices is backed by a possible reduction in total outstanding shares of 5%, making GASS a buy at current prices. The analysts, hence, rate GASS as a 'Strong Buy' with a price target of $7.

Click here to read the full article | Read time: 6 min