Some traditions are too time-honored to shirk, and on Wall Street, the annual ‘top picks’ are one. Usually made at the very end or very beginning of a year, the Street’s analysts publish reviews on the stocks they believe will show the best performance in coming months – their top picks.
The analysts have been analyzing each stock carefully, looking at its past and current performance, its trends on a variety of time frames, management’s plans – they take everything into account. Their recommendations provide valuable direction for building a resilient portfolio in the new year.
With this in mind, we used TipRanks’ database to identify three stocks which the analysts describe as their ‘top picks’ for 2021.
Talos Energy (TALO)
The Gulf of Mexico has long been known as one of the world’s great hydrocarbon production regions, and Talos Energy, which produces some 48,000 barrel of oil equivalent per day from offshore operations in the Gulf, is an important player in the area.
Talos finished the third quarter of 2020 running a net loss, but revenues, at $135 million, were up 53% sequentially. The company reported over $353 million in accessible liquidity to end the quarter, including $32 million in cash on hand and $321 million in available credit.
In December of last year, and continuing into this January, Talos has firmed up its liquidity situation through issues of senior secured notes. The December issue, of $500 million at 12%, will be used mainly to pay down a previous note issue which comes due next year. The January issue, an additional $100 million, will be used to cover outstanding debt on the reserves-based lending facility. Both note issues are due in 2026.
Highlighting TALO as his top E&P pick for 2021, Northland analyst Subash Chandra wrote, “TALO is one of the few companies that we are aware of trading at trailing PDP values without a good reason, in our view. The company has addressed the maturity wall and credit facility stresses with a December equity offering and refi. They enter 2021 with breathing room to cross the finish line with Zama and look for scaling opportunities in GoM.”
To this end, Chandra rates TALO an Outperform (i.e. Buy), and puts a $19 price target, indicating the potential for 91% growth in the coming months. (To watch Chandra’s track record, click here)
Overall, with five analyst reviews on file, including 4 Buys and a single Hold, Talos gets a Strong Buy rating from the analyst consensus. Shares are priced at $9.96, and their $14.33 average target gives ~44% upside on the one-year horizon. (See TALO stock analysis on TipRanks)
Next up is Twilio, a Silicon Valley cloud communications company. Twilio’s software services allow customers to run their telecom service through their office computer servers, making available not just phone calls but chats, texts, and video conversations. The service includes security features such as user verification.
Go to the news source: These 3 “Strong Buy” Stocks Are Top Picks for 2021, Say Analysts