June 13, 2022- HubSpot, Inc. (NYSE:HUBS) and Shell plc (NYSE:SHEL)
New bullish analyst coverage serves as common ground for these polar opposites.
HubSpot, Inc. (NYSE:HUBS) and Shell plc (NYSE:SHEL) look like two of the best stocks to buy now. This is despite Friday’s (June 10, 2022) brutal sell-off. Although the Dow fell 880 points or 2.73%, the S&P dropped 2.91%, and the Nasdaq cratered 3.52%, both HubSpot and Shell received brand new bullish analyst coverage.
Their upsides appear substantial, too.
Analysts at Scotiabank initiated coverage on HubSpot and set an OUTPERFORM rating with a $550.00 price target. That represents a 68.92% upside from June 10, 2022’s $325.60 close.
Credit Suisse also initiated coverage on Shell and was the latest to tack on an OUTPERFORM rating on the stock. While the bank did not release a price target, they are the seventh Wall Streeter since February 2022 to either upgrade or initiate coverage.
What’s funny is how different these stocks are from each other. One stock is a tech play and the biggest CRM platform outside of Salesforce; the other is an international energy juggernaut. Their 2022 performances are also almost mirrored images of each other.
Yet, with both receiving recent favorable analyst coverage, it’s clear that both of these stocks can add diversification and upside to a portfolio. There are several reasons why HUBS and SHEL are June 13, 2022’s best stocks to buy now.
HubSpot, Inc. (NYSE:HUBS)
A recent Scotiabank price target has this CRM force staring at an almost 69% upside.
HubSpot’s shares sharply sold off on Friday (June 10, 2022) and followed the broader market.
That did not deter Scotiabank from initiating coverage with an OUTPERFORM rating and $550.00 price target.
Several reasons point to why Scotiabank did that on a gloomy market day and why HUBS is one of the best stocks to buy now.
HubSpot crushed earnings and revenue estimates last month and has immense growth potential.
HubSpot reported Q1 earnings on May 5, 2022, and turned heads doing so.
This marked the fourth consecutive quarter Hubspot surpassed both top and bottom-line estimates.
Revenue came in at $395.6M and beat estimates by $12.55M. It also represented a 40.6% year-over-year increase from $281.37 million.
EPS also came in at $0.54, beating estimates by $0.07. This figure marked a 74.19% year-over-year increase from $0.31.
Additionally, HubSpot generated $82.2 million of operating cash flow, compared to $72.5 million a year ago. It also generated $62.6 million of free cash flow compared to $61.2 a year ago.
To put the icing on the cake, HubSpot‘s customers increased year-over-year by 26% to 143,689. The average subscription revenue per customer also increased 12% year-over-year to $11,030.
On the top line, revenue could also see a 5-year CAGR of 36.9%. On the bottom line, net income could grow an astronomical 259.0% at an average 5-year rate of 119.1%. So, needless to say, this likely isn’t HubSpot’s last earnings beat in 2022.
These growth figures should be enough reason to consider HubSpot one of the best stocks to buy now. Yet it gets even more interesting from here.
HubSpot’s a supremely profitable industry leader.
HubSpot holds more cash than debt on its balance sheet and is incredibly profitable based on its 80.4% gross margin.
It’s also a long-term outperformer, seeing its share price move nearly five-fold since 2017.
This profitability and long-term performance reflect favorably on its position as an industry leader. HubSpot didn’t get to this point without having an outstanding product. Most recently, it was rated the best CRM software in G2’s Spring 2022 CRM Grid Report due to customer satisfaction and its likelihood of being recommended.
Analysts see immense upside as well.
HubSpot is currently trading roughly 62.5% below its all-time highs. Clearly, though, Scotiabank isn’t the only believer in this stock.
Tipranks rates the stock a STRONG BUY. Of the 21 analysts who gave HUBS a 12-month price target in the last 3 months, 18 rated the stock a BUY. HubSpot’s average price target currently sits at $513.25 while its high is $750.00 and its low is $375.00. The average price target represents a 57.63% upside from June 10, 2022’s $325.60 closing price.
HUB’s year-to-date low and high are $295.53 and $679.00, respectively.
Shell plc (NYSE:SHEL)
With oil poised to hit $140 a barrel and gas at $5, this energy play is up 36% year-to-date and potentially has 18+% of more room to run.
We already know that inflation is at its highest rate in 41 years, and energy is largely to blame. While the CPI rose 8.6% in May, energy prices rose 34.6%, the most since September 2005. According to Bank of America, the worst isn’t over either. BoA sees oil potentially touching $140 a barrel within months. The average gas price also touched $5 a gallon over the weekend for the first time in history.
Some parts of the country have it even worse than others.
But don’t fret. Environments like this pose generational opportunities. Take the bull by the horns and think of the best stocks to buy now.
Stocks such as Shell.
Shell is a prominent player in the oil, gas & consumable fuels industry and has all of the ingredients you want in this current environment.
As the 4th largest oil and gas company in the world, Shell is perfectly positioned. It boasts rock-solid fundamentals, bullish technical indicators, and an on-fire stock that could have even more room to run.
Plus, if you want a touch of ESG with this fossil fuel play, Shell is arguably doing more than other oil and gas companies to invest in the clean energy transition. Since 2016, it’s invested $3.2B in various clean energy initiatives.
However, these reasons only scratch the surface as to why Shell is one of the best stocks to buy now.
Shell’s experiencing hypergrowth and somehow remains undervalued.
Shell’s stock year-to-date is up xx.xx%. Yet somehow, its multiples depict a severely undervalued enterprise by almost any metric you can think of. These include a
- 9x trailing P/E
- 3x forward P/E
- 04 PEG
- 2x price-to-book
- 7x trailing price-to-sales,
- 6x forward price-to-sales
What makes these discounted multiples even more perplexing is the blowout quarter Shell just reported. Shell posted adjusted earnings of $9.1 billion in Q1. This marked a 42.19% quarter-over-quarter increase and a mind-blowing 184.37% year-over-year increase.
This also marked Shell’s highest quarterly profit in 14 years.
This may only be the start too. Energy prices are not going down anytime soon, and European countries will do anything to get their hands on oil and gas outside of Russia. Shell is clearly in the thick of things with a U.K. headquarters.
Finbox undoubtedly is bullish on Shell’s future positioning as it projects net income to grow 75.7%.
Shell also just hiked its dividend.
One of Shell’s top-selling points is its high shareholder yield. It currently has a 3.4% dividend yield, which could soon rise even more.
Shell investors won’t reap the rewards only from raw returns. They’ll also reap the rewards from higher dividends. While the Company has already announced a 4% dividend hike, Finbox thinks Shell could have bigger aspirations and see its dividend grow by 76.6%.
Aggressive buybacks and solid margins add to Shell’s strength.
Shell’s management is aggressively buying back shares. $4 billion of its $8.5 billion share buyback program has already been completed. The remainder is expected to be completed before Q2 earnings in July.
In addition, Shell’s cash flows can sufficiently cover interest payments. It also boasts strong fundamental margins, including a 24.4% gross margin and 11.1% operating margin.
Its 8 out of 9 Piotroski Score also indicates that the Company has healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.
Analysts see continued upside for Shell.
Credit Suisse was the latest to initiate coverage on Shell with an OUTPERFORM rating.
But the upside for Shell’s stock is seen by more analysts than just one Swiss bank. In total, 5 Wall Street analysts offered 12-month price targets for Shell in the last 3 months. Of these 5, 4 rated the stock a BUY compared to just 1 HOLD and 0 SELL. Perhaps that’s why Tipranks rates the stock a STRONG BUY. Shell’s average price target currently sits at $68.34. Its street high is $75.00, while its low is $60.00. The average price target represents an 18.02% upside from June 10, 2022’s closing price of $57.98.
SHEL’s year-to-date low and high are $48.27 and $61.67, respectively.