Citi Presents 20 Great Stocks That The Rest Of Wall Street Hates

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Sometimes going against the prevailing market consensus can pay off in a big way. So, many investors look for contrarian calls.Citi’s Javier Guardo is out with his list of best contrarian calls based on the firms analysts’ ratings and earnings forecast.

These are stocks that Citi analysts view much more positively than the rest of Wall Street.

Netflix's results are stabilizing after the Qwikster fiasco

Ticker: NFLX

Sector: Entertainment services

Why: Q4 results showed stabilisation after the negative impact of the price hike and Qwikster fiasco. Concerns about Netflix's profitability are addressed through its guidance on expanding streaming contribution margin, and relatively low international losses.

Analyst: Mark Mahaney

Source: Citi

Choice Hotels valuation could go higher as projects in the pipeline get bigger

Ticker: CHH

Sector: Lodging

Why: The stock currently has reasonable valuation, which could increase as the projects in the pipeline grow. Meanwhile, EPS is in line with historical average at times of cyclically low earnings.

Analyst: Michael Bilerman

Source: Citi

Advanced Energy is in a profitable segment of the solar industry and is insulated from Germany's FIT cuts

Ticker: AEIS

Sector: Semi equipment

Why: Advanced Energy is one of the best franchises in a segment of the solar market that is growing fast and which is sustainably profitable. It is insulated from additional cuts to photovoltaic feed-in tariffs (FIT) in Germany.

'Furthermore, we have more confidence in solar margin leverage as the company shift manufacturing to lower cost China and the Street has historically under modelled leverage.'

Analyst: Timothy Arcuri

Source: Citi

Analysts underestimate Brown Froman's growth opportunity abroad

Ticker: BFb

Sector: Beverages

Why: The consensus among analysts underestimates the sales that will come from the launch of Jack Daniel's Tennesse Honey in the U.S., the international growth opportunity for the company, and the growing popularity of bourbon around the world.

Analyst: Vivien Azer

Source: Citi

Health Net is expected to gain from Dual Eligible Opportunity

Ticker: HNT

Sector: Managed care

Why: Health Net is expected to gain from Dual Eligible Opportunity, especially as California considers moving the majority of its dual eligible population to managed care plans in coming years. It has a strong cash position which has been strengthened with the divestiture of its Medicare drug business to CVS for $140 million in net proceeds.

Analyst: Carl McDonald

Source: Citi

Expect Imperial Oil should generate higher cash flow and boost dividends

Ticker: IMO

Sector: Oil Companies - International

Why: Wall Street analysts have overestimated the near term concerns about crude oil prices and funding for the company's Kearl project. Imperial Oil is expected to generate Canadian $2.2 billion of free cash flow -- cash from company's operations minus capital expenses -- by 2015, and could increase return to shareholders.

Analyst: Faisel Khan

Source: Citi

Amsurg Corp will gain from changes to Medicare in 2012

Ticker: AMSG

Sector: Health care facilities

Why: Amsurg Corp is expected to benefit from new acquisitions and a positive Medicare update this year. It's organic business is also believed to have stabilised.

Analyst: Gary Taylor

Source: Citi

Bemis Co Inc will gain from lower raw material costs and EPS is expected to grow

Ticker: BMS

Sector: Containers and packaging

Why: Bemis is expected to benefit from a drop in prices of raw materials. It is expected to reverse volume declines seen in the second half of 2011. EPS growth is expected to be boosted by share repurchases and deleveraging driven by rising free cash flow.

Analyst: Timothy Thein

Source: Citi

Gap can see its margin improve this year after weak product and sourcing miscues in 2011

Ticker: GPS

Sector: Retailing - softlines

Why: Gap has room to improve its profit margin this year, after sourcing miscues and weak product at the Gap division last year. Gap could see share buybacks of up to $1 billion this year which can support above-consensus EPS.

Analyst: Jeff Black

Source: Citi

Lockheed Martin is expected to continue to benefit from defence demand

Ticker: LMT

Sector: Aerospace & defence

Why: Unstable regions continue to demand fighter jets, transport and missile defence. Within the industry Lockheed already leads in terms of divided and moving forward its shareholder friendly activities are expected to persist.

Analyst: Jason Gursky

Source: Citi

Sunoco benefits from exposure to pipeline and midstream companies and is expected to increase shareholder value

Ticker: SUN

Sector: Refiners

Why: Khan and other Citi analysts are bullish on Sunoco because of their positive attitude to pipeline and midstream companies -- these are companies that process, store, market and transport commodities like crude oil, natural gas. -- through Sunoco Logistics Partners. Sunoco is also expected to increase shareholder value through share repurchases. Asset sales, inventory liquidation, and Toledo payments are expected to improve its cash flow.

Analyst: Faisel Khan

Source: Citi

Northrop Grumman Corp is expected to see EPS growth and dividends increase

Ticker: NOC

Sector: Aerospace & defence

Why: The company's refocused portfolio and exposure to premier fighter jet franchises are expected to support earnings. Strong share repurchase could strengthen EPS growth, and dividend increases could boost share prices.

Analyst: Jason Gursky

Source: Citi

Southern Company's high earnings growth outlook beats its historical earnings growth rate

Ticker: SO

Sector: Electric utilities

Why: Corporate bond yields support price multiples for utility stocks. And Southern Company's high earnings growth outlook, driven by environmental policy, exceeds its historical earnings growth rate and justifies a healthy premium to valuations on other utility stocks.

Analyst: Brian Chin

Source: Citi

Dr. Pepper Snapple Group's stock is cheap when compared with competitors

Ticker: DPS

Sector: Beverages

Why: Dr Pepper's stock is cheap (especially when compared with the Coca-Cola Company or Pepsico). It has strong free cash flow -- cash from company's operations minus capital expenses -- which is being used to boost dividend and repurchase shares.

Analyst: Wendy Nicholson

Source: Citi

Reynolds American's three-brand approach to the cigarette segment is expected to succeed in the long run

Ticker: RAI

Sector: Tobacco

Why: Reynolds American has a three-brand approach to the cigarette segment, and its approach to the high-margin smokeless tobacco segment is expected to succeed in the long run. The company's total tobacco strategy is expected to complement its cost savings initiatives. And Reynolds' EPS is growing driven by its $2.5 billion buyback program.

Analyst: Vivien Azer

Source: Citi

FMC Technologies is expected to be awarded 20 major projects that could drive earnings growth

Ticker: FTI

Sector: Oilfield equipment & services

Why: The company has solid long term earnings drivers for instance its 70-rig global deepwater fleet expansion over the next three years. FMC could be awarded 20 major projects which would impact earnings in 2013.

Analyst: Robin Shoemaker

Source: Citi

OpenTable has significant growth opportunity and sizable can gain market share

Ticker: OPEN

Sector: Internet

Why: OpenTable currently offers an attractive entry point because it has significant growth opportunity, has the opportunity to gain market share, dominates the U.S. market, and 'proven model scalability', with North American earnings before interest, taxes, depreciation, and amortization (EBITDA) margin at 50 per cent or more.

Analyst: Mark Mahaney

Source: Citi

JC Penney has potential to boost long term earnings and CEO Ron Johnson is expected to boost profits

Ticker: JCP

Sector: Retailing - broadlines

Why: Other analysts underestimate JC Penney's potential for long-term earnings. CEO Ron Johnson is expected to improve profits by building on the brand's marketing message to attract new customers, cutting expenses and implementing a value-oriented -- perceived value -- pricing strategy.

Analyst: Deborah L. Weinswig

Source: Citi

Diamond Rock Hospitality has an attractive dividend

Ticker: DRH

Sector: Lodging

Why: DiamondRock Hospitality has a strong balance sheet, an attractive dividend of 4 per cent, and potential for strong growth in 2012.

Analyst: Michael Bilerman

Source: Citi

Scripps Networks Interactive will see pace of share buybacks pick up and there's a 35 per cent chance that it could be acquired

Ticker: SNI

Sector: Entertainment

Why: Scripps Networks is expected to pick up the pace of its capital return. The company's management has said it expects the pace of Q1 2012 buybacks to pick up. The ratings of the Food Network have been strong and there's a 35 per cent chance that Scripps many be acquired.

Analyst: Jason Bazinet

Source: Citi

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