Dividend stocks have been the go-to option for income investors amid the Fed’s continuing low-interest-rate policy. Despite the solid economic comeback, analysts are still holding out the possibility of a market correction soon based on overvaluation.
According to a Reuters poll of analysts, the rally in global stocks is likely to be over soon, and a correction can be expected by year’s end. Also, Miller Tabak chief market strategist Matt Maley views a market correction as almost “obvious.”
Amid the threat of a rolling market correction and rising COVID-19 cases, Wall Street analysts predict high-yielding dividend stocks Siemens AG (SIEGY) and National CineMedia, Inc. (NCMI) will double in price the near term.
Siemens AG (SIEGY)
SIEGY is a Germany-based technology company that is focused on automation and digitalization. It operates through seven segments: Digital Industries; Smart Infrastructure; Gas and Power; Mobility; Siemens Healthineers; Siemens Gamesa Renewable Energy and Financial Services (SFS).
On September 1, word broke that Siemens Mobility would install a comprehensive rail system that will feature the first-ever high-speed, electrified main and freight rail line in Egypt. The Egyptian government plans to invest heavily in a reliable and sustainable 1800 km state-of-the-art rail network. The project demonstrates the company’s dominance in the industry and should allow it to garner significant revenues.
On August 24, SIEGY shared its plan to bolster its existing EV infrastructure manufacturing footprint with the VersiCharge Level 2 AC series product line of commercial and residential EV chargers. The company expects to manufacture more than 1 million electric vehicle chargers for the United States over the next four years. Amid the accelerating EV charging demand, the company’s strategic plan to expand its manufacturing capabilities should be highly beneficial for SIEGY.
SIEGY’s $2.11 annual dividend yields 2.42% at its current share price. SIEGY’s dividend payouts have increased at a 2% CAGR over the past five years.
For its fiscal third quarter, ended June 30, SIEGY’s revenue increased 23.9% year-over-year to €16.09 billion ($19.08 billion). Its income from continuing operations grew 46.7% from its year-ago value to €1.38 billion ($1.64 billion). SIEGY’s net income came in at €1.48 billion ($1.76 billion), indicating a 176.6% rise year-over-year. The company’s EPS increased 147.8% year-over-year to €1.66 ($1.96).
The Street expects SIEGY’s revenues to rise 5.9% year-over-year to $73.08 billion in the current year. The $6.72 consensus EPS estimate for the current year indicates a 125.5% improvement year-over-year. Shares of SIEGY have gained 25.7% in price over the past year and 21.1% year-to-date.
The $194.62 median price target indicates a potential 123.9% upside from its last closing price of $86.94. The 12-month price targets range from a low of $188.72 to a high of $200.52.
National CineMedia, Inc. (NCMI)
NCMI, through its subsidiary, National CineMedia, LLC, operates a cinema advertising network. In addition, the Centennial, Colo.-based company operates a digital in-theater network in North America, allowing NCM LLC to sell advertising and certain third-party theater circuits under long-term network affiliate agreements.
On August 11, NCMI signed multiple extended cinema advertising affiliate agreements with nine exhibitors. These long-term agreements will bring NCMI’s Noovie® pre-show entertainment program to more than 315 screens across 39 theaters. This demonstrates the company’s growing network and should aid its recovery from pandemic-driven lows.
On July 13, NCMI and Harena Data, a leading esports community aggregator, agreed to an exclusive esports advertising and content monetization arrangement to capitalize on the esports industry and cultural phenomenon. This agreement is believed to be a “unique opportunity to develop the esports concept and create compelling consumer experiences both across our NCM theater network and beyond the big screen in other complementary venues and mediums,” said Scott Felenstein, President, Sales, Marketing & Partnerships with NCMI.
NCMI’s $0.20 annual dividend yields 7.97% at the current share price. On August 9, the company approved a $0.05 quarterly dividend, to be paid on September 6.
NCMI’s revenue increased 250% year-over-year to $14 million in its fiscal second quarter, ended July 1. However, its operating loss grew 24.4% from its year-ago value to $29.6 million. In addition, the company was adversely impacted by the COVID-19 because theaters remained shut for almost a year. Although the restrictions were lessened during the second quarter of 2021, earnings remained significantly below historical levels. Management believes many advertisers continued to delay making commitments until they confirmed that industry attendance had achieved the necessary critical mass. A $43.64 million consensus revenue estimate for the fiscal third quarter (ending September 2021) indicates a 337.3% increase year-over-year. The Street expects the company’s EPS to improve 25% year-over-year in the current quarter. NCMI has gained 2% in price intraday to close yesterday’s trading session at $2.51.
Of the three Wall Street analysts that rated NCMI, two rated it Buy, while one rated it Hold. The $5.50 median price target indicates a potential 119.1% upside from its last closing price. The 12-month price targets range from a low of $4.50 to a high of $7.00.
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SIEGY shares were trading at $83.47 per share on Wednesday afternoon, down $3.47 (-3.99%). Year-to-date, SIEGY has gained 18.52%, versus a 21.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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