Analysts Make a Move on These 2 Stocks as the Market Takes a Volatile Turn Michael Marcus Jan 25, 2022, 08:52 AM A A A series of headwinds have investors worried – from war drums on the Russia-Ukraine border to rising inflation to the prospect of at least three Fed rate hikes coming sooner rather than later. All of this is playing into the market’s recent volatility. Looking at the market gyrations from Morgan Stanley, chief investment officer Lisa Shalett believes that the worries are overblown. $Grab Holdings(GRAB)$
Putting most of it down to the Fed’s upcoming policy change, she says, “It’s been an unbelievable run. This is a standard, garden-variety correction, and it’s absolutely appropriate when there is a change in policy.” In these uncertain and volatile times, one approach to finding compelling investment opportunities is to follow Wall Street’s analysts, as they build their reputations by the quality of their stock reviews. And lately, even though markets are volatile, the analysts are still finding stocks that are poised to weather the storm.
We’ve used TipRanks’ database to pinpoint two such stocks. These are Strong Buy choices with recent positive analyst reviews and considerable upside potential. Let’s dive into the details to find out why Wall Street is herding these bulls away from the bears. Grab Holdings (GRAB) First up is Grab Holdings, an Asian ‘superapp’ company. This Singapore-based firm offers its users access to a range of ‘daily living’ services through the app – from deliveries and mobility to financial services and hotels, Grab’s customers can find what they want, when they want, in one convenient online location. The company services a user base in Southeast Asia, including Singapore, Malaysia, Indonesia, the Philippines, and Thailand, among others. In recent weeks, Grab has made headlines – in a positive way. The company went public on the US markets through a SPAC transaction with Altimeter Growth Corporation at the beginning of December.
The SPAC deal, with saw the GRAB ticker start trading on December 1, brought the company $4.5 billion in gross proceeds – making it the largest public debut, with the largest capital raise, for a Southeast Asian company on the US markets. The PIPE in the transaction, at $4 billion, made this one of the largest-ever SPAC transactions. There are firm grounds for the size of this business combination. Grab recorded $11.5 billion in gross merchandise value for the first 9 months of 2021, with three record quarters in a row. In the first half of the year, the company’s app completed 1 billion transactions – and more importantly, it is installed on 40% of all active smartphones in Southeast Asia, the world’s most populous region. Morgan Stanley analyst Mark Goodridge is bullish on Grab, and explain why in clear terms, writing: “Mobility is profitable today at the EBITDA line for Grab, and we forecast Deliveries to reach profitability in 2023. We see these two business lines funding Grab’s expansion into Fintech and Digital banking which, in our view, will be long-term growth drivers. This sustained and profitable cash flow is a very strong competitive advantage against other Super App players in the space…” Looking at the valuation metric, Goodridge adds, “On our estimates Grab is trading on 2023 EV/ MS-adjusted Net Sales multiple adjusted for growth of 11.3x… We view this as attractive particularly with the long-term opportunity around Grab’s Fintech business.” To this end, Goodridge puts an Overweight (i.e. Buy) rating on GRAB shares, along with an $8.40 price target that indicates potential for 51% upside in the next 12 months. The 6 recent reviews are all positive, for a unanimous Strong Buy consensus, while the $10.23 average price target implies a one-year upside of ~84%.
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