You don't have to look far for beaten up stocks missing market expectations, but some of these wrecks could prove to be a great buying opportunity.
Some of the reporting season tragics on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) include the A2 Milk Company Ltd (ASX: A2M) share price, the Brambles Limited (ASX: BXB) share price and the AMCOR PLC/IDR UNRESTR (ASX: AMC) share price – just to name a few.
If you are wondering if there's anything to salvage among the wrecks, Amcor might be worth looking at, according to some top brokers.
Sticking to their "buy" call
The analysts at Macquarie Group Ltd (ASX: MQG) described Amcor's full year results as "relatively solid" with the packaging group reporting a better than expected 5% increase in net profit to US$729.5 million versus the broker's expectation of US$715 million.
There were a few points of weakness though in the relatively messy result that incorporates the massive Bemis acquisition and the US GAAP accounting standards. The exchange rate wasn't working in Amcor's favour, its exposure to the basket case Argentinian economy is hurting the group and management's FY20 earnings per share (EPS) guidance of 61 to 64 cents per share is below Macquarie's expectations.
But the negatives don't outweigh the positives and Macquarie has reiterated its "outperform" recommendation on Amcor with a 12-month price target of $17.19 per share.
Another broker that is sticking to its "buy" recommendation is Citigroup, which also called the result "solid" even though Amcor's share price performance feels anything but.
"Proceeds from regulatory required divestments enabled AMC to announce a $500m share buyback and to invest a further $50m in strategic sustainability projects," said Citi.
"Given an uncertain global backdrop, we remain attracted to AMC's solid earnings growth outlook and strong cash generation."
Foolish takeaway
That's the thing that makes Amcor worth considering over some of the other reporting season sinners. It's likely to generate high single-digit growth even in a slowing economy due to its relatively defensive income streams.
Further, investors don't have to cough up a lot for a stock with a strong balance sheet, global reach and a growth profile that is less affected by the economic volatility.
Based on Macquarie's estimates, the stock is trading on a FY20 price-earnings multiple of less than 16 times.
But Amcor isn't the only one that's worth putting on your radar. The experts at the Motley Fool have uncovered other value buys on the market.
Follow the free link below to find out what these stocks are.
