Business

2 “Strong Buy” Dividend Stocks Under $5 with Upside Potential

Every person who invests wants to see his money grow, or he wouldn’t be in the market. But sometimes it can be hard to find the right investment, the one that will make money no matter what happens with the overall market.

The two easiest things an investor can do to make sure they get good returns are based on common sense. This is the first thing you should do. You should buy low and sell high. To do this, find a cheap stock with good fundamentals and good chances for growth, and buy it. You should also buy stocks that pay back. That means that you should buy dividend stocks, as well.

There are two stocks we’re going to look at today that give investors the best of both worlds. According to TipRanks’ database, these are “Strong Buys.” They have a dividend yield of up to 7% and a lot of room for growth. All this for a price below $5.

The National CineMedia (NCMI)

The first stock we’ll look at is in a very interesting field that most people don’t think about. There are a lot of ads that National CineMedia makes before movies start at the theatre. They make, produce, and distribute them. The company gets to have a group of people who are already interested in what’s on the screen.

NCMI shares fell back in February of 2020, when the corona pandemic forced the movie theatre chains to close. And not surprisingly, the stock hasn’t been able to get back to where it was before the corona.

NCMI made $31.7 million in the third quarter of this year. Pre-pandemic sales were usually more than $100 million. Even though it didn’t meet the Street’s expectations by about 25%, it was still up a whopping 428 percent year-over-year. After a year or more of pandemic-related problems, NCMI still has $64.4 million in cash assets. Also, it was the second quarter in a row that revenue went up.

They are helping the company pay its dividend, which it has been careful to do even during the corona crisis. In spite of National CineMedia having to cut back on the payment, it has been able to keep its dividend for the past two years without missing a single payment. During the most recent dividend, which was paid in December, the amount was set at 5 cents per common share, or 20 cents per year. This gives a yield of 7.3%. This is better than the average yield for stocks like this, which is about 2% right now.

A 5-star analyst at B. Riley Securities thinks that the “lights down” strategy could help NCMI’s service stand out from the newer AVOD networks, because NCMI’s platform can reach a bigger and more interested group of people. NCMI’s advertising revenue is expected to be similar to box office and attendance trends through 2022 and 2023, but in the coming quarters, NCMI will benefit from better inventory utilisation and higher CPMs that will help it stand out from the rest of the company.

When talking about NCMI’s cash flow, Wold says this: “Not only did NCMI have enough money to get through year-end, but it will also start to get money from the stronger 4Q21 seasonality and monetization of its upfront advertising commitments in 4Q21.”

A lot of people are saying that NCMI stock should be bought, and Wold thinks it should go up about 119% this year. His price target of $6 says that it has a lot of room to grow.

Wold thinks the stock is a good buy, and so does Wall Street. The stock has 4 positive reviews to back up its Strong Buy consensus rating. In 2022, the average price target for the shares is $5.38, which would mean a gain of about 96%. The shares are currently priced at $2.74.

the loanDepot, Inc. (LDI)

Next, we’ll talk about loanDepot, which is a start-to-sell lending platform that focuses on residential mortgage products. LoanDepot has a multi-channel strategy that includes both a direct branded presence and a variety of partnerships.

In February of last year, loanDepot had its first IPO. This means that the company is still very new to the public market. A lot has gone wrong for the company since it went public. First, the company is in a very competitive field: non-bank retail mortgage lending. Second, loanDepot has had to deal with a lot of lawsuits in the last few months, including accusations of business fraud and employee discrimination. That’s why the company is having a hard time.

The company, on the other hand, has a lot of strengths that help it deal with the problems. A third-quarter fiscal report from a company shows that it has been taking more market share each quarter for the last nine months. The company’s share grew 46% to 3.5%. Besides that, the company made $923.8 million on the top line. While this was down from $1.36 billion in the year before, it was up 18 percent from the second quarter of the same year. From 7 cents in the second quarter to 40 cents in the third. There was $506 million in cash at the end of Q3, a figure that has grown steadily since December 2020.

Because the company has a lot of money in the bank and makes a lot of money, it has a lot of confidence that it can keep paying out dividends. There was an 8-cent per share payout from LDI in its most recent statement. This is the third time in a row the payout has been at that level. Company: With an annualised dividend payment of 32 cents per common share, it has a dividend yield of 6.5%

Piper Sandler analyst Kevin Barker is a 5-star Piper Sandler analyst, and he thinks that LDI will be able to withstand the current rate cycle. This should allow the company to stay profitable even though there is a lot of competition. A rise in book value should protect against a fall in the stock price, but if the market turns in an unexpected direction (like when rates go down), the stock could rise significantly.

Barker is upbeat even though there are still a lot of lawsuits pending. He doesn’t run away from the headwind, but he doesn’t think it is very important right now. We can’t ignore these claims, but we don’t know if they have any truth to them. However, we don’t think this lawsuit or a possible regulatory action would have a big effect.

There is a lot of good news for investors in LDI. Barker gives it an Overweight rating, which means he thinks the stock will be worth more in the next 12 months, at $8.

Barker seems to be getting a lot of support from Wall Street. LDI shares have a strong buy rating from the majority of analysts. Since last week, there have been 8 reviews, with 6 Buys and 2 Holds on them. Meanwhile, the stock has an average price target of $10.19, which means it has a 108 percent chance of rising from its current price of $4.90.

 

 

About the author

mm

Kathy Lewis

Kathy Lewis is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for writing, she loves writing for almost all the sections of Editorials99.

Add Comment

Click here to post a comment