Top 3 Financials Stocks on Analysts’ Recommendations List

The global economy has gone through turbulent times over the past two years. The COVID-19 pandemic has wreaked havoc and posed a medical risk to the entire world. Consequently, the financial downturn that emerged from the panic hit the markets. To deal with the same, central banks around the world started adopting a dovish tone and unleashing a liquidity storm with some of the lowest interest rates ever seen.

However, the resulting boost to equity markets due to low interest rates hit a snag due to cost inflation issues, continued distress in supply chains, and the geopolitical crisis due to Russia’s invasion of Ukraine.

As a result of this low interest rate regime, US consumer inflation soared to a 40-year high of 7.9%. To deal with this, the Federal Reserve raised its key rates by 0.25%, the first since 2018, with six more hikes planned for the year.

In such an uncertain environment, investing in financial sector stocks can be a risky proposition as the cost of credit is high and the path to sustainable profitability for financial institutions remains uncertain.

Still, some of the top analyst stocks in this sector may be a prudent investment choice for investors. Let’s take a look at the Top 3 among them.

Hertz Global Holdings (NASDAQ: HTZ)

Based in Estero, Florida, Hertz Global Holdings is a car rental company operating in 160 countries, with 12,000 corporate and franchise locations with popular brands such as Thrifty Car Rental and Dollar Rent A Car in its portfolio.

The company announced upbeat results for the fourth quarter ended Dec. 31, 2021. Its revenue rose 57.8% year-over-year to $1.95 billion, in line with the consensus estimate. Earnings per share (EPS) for the quarter were $0.91 per share, which compares favorably to a loss of $1.20 recorded in the same quarter last year. Moreover, the figure significantly exceeded the consensus estimate of $0.76 per share.

Recently, Tigress Financial analyst Ivan Feinseth hedged the stock with a buy rating and price target of $32, implying 41.3% upside potential from the current levels.

The analyst believes the company is well positioned to benefit from macro trends that involve increased adoption of ridesharing features, which is expected to increase by more than 50% over the next five years. Additionally, the resumption of global travel and demand for personal mobility remain tailwinds for the company. Additionally, key partnerships with companies like Tesla and Uber bode well for the company.

Overall, the street is cautiously bullish on the stock and has a Moderate Buy consensus rating based on four buys and two holds. HTZ’s average price target of $29.17 implies the stock has 28.8% upside potential from current levels. Stocks are down 16.1% over the past year.

Assurant, a New York-based provider of risk management products and services, helps consumers buy by offering specialty insurance products through its Global Housing and Global Lifestyle segments.

In its recent quarterly results, the company reported mixed results as earnings and revenue missed estimates. Revenue for the quarter was $2.57 billion, up 6.5% from a year earlier, with net earned premiums up 3.5% to $2.18 billion . Still, the figure did not exceed the consensus estimate of $2.59 billion. Similarly, its EPS rose 15% year-over-year to $2.20, but fell short of the consensus estimate of $2.30 per share.

Recently, Truist Financial analyst Mark Hughes reiterated a buy rating on the stock. The analyst raised the price target from $210 to $220, implying a potential upside of 19.3% from current levels.

According to the analyst, the stock remains undervalued compared to its peers in the same space.

Overall, the consensus among analysts is a strong buy based on five unanimous buys. Assurant’s average price target of $197.20 implies upside potential of 6.9% from current levels. Shares of the company are up 18.1% year-to-date and 28.3% over the past year.

Based in Scottsdale, Arizona, smart home automation company SmartRent develops smart technology-based solutions for home owners, managers and builders. The company was established in 2017 with the aim of providing fully integrated, brand-neutral hardware and software solutions to the real estate industry.

In its recent quarterly results, the company posted mixed results for the fourth quarter ended Dec. 31, 2021. While total revenue for the quarter jumped 155% year-over-year to $34.7 million. dollars and exceeded the consensus estimate of $31.4 million, its loss per share of $0.13 for the quarter, while lower than the loss of $1.03 a year earlier, is higher than the consensus estimate of a loss of $0.09 per share.

Recently, Colliers Securities analyst Barry Oxford reiterated a buy rating on the stock with a price target of $9, implying upside potential of 63.3% from current levels.

Strong revenue and earnings growth in recent quarterly results gives the analyst confidence that the stock is well positioned to appreciate going forward.

Overall, the consensus among analysts is a strong buy based on four buys and one hold. SmartRent’s average price target of $10.56 implies 91.7% upside potential from current levels. Shares are down 44.7% over the past year.

Conclusion

The financial sector, like all other sectors, is not immune to the volatile situation currently prevailing in the world. However, some of these select stocks offer a likely investment option for investors looking to deploy their investable corpus.

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