IMPORTANT POINTS:
- Redburn identifies 4 stocks with the potential to double in the long run: Amazon, Vestas, Bayer and Sabre.
- Amazon stands out for its leadership in artificial intelligence and its position in the cloud business.
- Vestas shows favorable prospects in the wind industry with its focus on value and conducive macroeconomic conditions.
According to financial research firm Redburn, even though some sectors of the market have been overbought this year, there are still long-term opportunities for investors. Redburn has selected 12 companies from various sectors in the United States and Europe, in which changes in the competitive environment, financial or management actions could generate significant value for shareholders. Here are four of these companies that Redburn included in a May 23 report as reported by CNBC.
Amazon: Redburn highlights Amazon’s vantage point in the cloud computing business, Amazon Web Services (AWS), to take advantage of favorable trends in artificial intelligence. He believes that Amazon is well positioned to become a provider of “Super Apps” in the new era of artificial intelligence, which could reshape the economics of its business by capturing a greater share of value. In addition, he highlights Amazon’s leadership in artificial intelligence, evidenced by its AI chip strategy and the launch of its AWS Inferentia chip.
Vestas: Redburn believes that Danish wind turbine maker Vestas has the potential to recoup double-digit margins. He points out that Vestas is one of the top four players in onshore wind turbine sales outside of China. The company stands out for its focus on value rather than volume, and benefits from favorable macroeconomic conditions, such as high electricity prices in many parts of the world, and long-term support through legislation in USA. Redburn expects Vestas’ EBIT (earnings before interest and tax) margin to reach 10% by 2024.
Bayer: Redburn includes the German pharmaceutical and biotech company, Bayer, on its list. He believes that Bayer’s shares are undervalued and do not reflect the growth prospects in the company’s various divisions. He stresses that the appointment of the new CEO, Bill Anderson, could lead Bayer to take a fundamental step forward. According to Redburn, the current valuation doesn’t make much sense. Redburn wrote,“The easiest way to chart the path to doubling Bayer’s shares is to explore our ‘sum of the parts’ modeling work… The company’s current market capitalization is no more than €50 billion. Removing the 20% conglomerate discount we apply across the group means Pharma is worth €40bn, possibly much more if the pipeline works.”
Sabre: Redburn sees clear growth potential in shares of Sabre, a travel technology company that operates distribution systems for flight reservations in the United States. He believes there are clear and lasting pathways for Saber to reach its 2025 EBITDA target. Redburn highlights the clear path to significant growth at this company.
In summary, Redburn has identified these four stocks as long-term opportunities for investors. Amazon stands out for its leadership in technology and its position in artificial intelligence. Vestas benefits from favorable conditions in the wind energy industry and its focus on value. Bayer is considered undervalued and is expected to experience growth under its new leadership. Saber has clear growth potential in the travel technology industry. These stocks could be considered as part of a long-term and diversified investment strategy.
