In the world of stock investing, there are rarely absolutes.
This is why stock prices go up and down whenever markets are trading. The bulls buy, while the bears sell.
If there are more bulls than bears, prices go up, resistances are breached. Conversely, if there are more bears, prices go down, and supports are broken.
Even between investment banks and fund analysts, each and everyone has their own view and opinion on whether a stock is cheap or expensive.
And stocks that are covered get assigned a rating – Buy, Hold, or Sell. Sometimes, overweight and underweight are used. So it’s normal to see stocks covered by analysts having a mix of Buys, Holds, and Sells.
However, there are currently 4 US stocks with a 100% Buy rating.
4 US Stocks with 100% Buy Ratings
Are these stocks really a no-brainer buy?
Let’s take a look:
1) Targa Resources Corp. (NYSE: TRGP)
Targa Resources Corp. (NYSE: TRGP) is a midstream energy infrastructure corporation. Its business is mainly in gathering, compressing, treating, processing, and selling natural gas.
Targa’s strength lies in its fractionation facilities and also Natural Gas Liquid (NGL) pipeline transportation. Its pipeline transports LNG to areas around the Gulf Coast, particularly Texas and Louisiana.
Owning and operating an infrastructure business, allows Targa to charge fees for utilization of its pipelines. Think of it as needing to pay an ERP every time you use the expressway, or for the cloud storage subscription.
Even though Targa operates in the energy sector, its business model is predominantly fee-based, giving it stable earnings and cash flows.
With growing revenue, operating income, and net cash generation from operations, Targa’s financials look spotless on the surface.
However, operating an infrastructure business, Targa can experience bouts of asset writedowns, and that will pull down the net profit. It is up to investors to dig deeper into whether is this a concern.
2) Axon Enterprise, Inc. (NASDAQ: AXON)
Axon Enterprise, Inc. (NASDAQ: AXON) is a company that develops personal and public safety technology. The company might not be well known, but the products are.
Axon’s initial product suite and namesake is the Taser, the line of electroshock weapons that is world-renowned. The company has since diversified into technology products for military and law enforcement, which include body cameras, and even a cloud-based digital evidence platform.
You might be wondering, what does a company that produces and owns Tasers got to do with prospects? Well, the game plan for Axon is to provide solutions for critical missions, from capture to courtroom.
Its pivot into Axon Cloud for digital evidence management, productivity, and real-time operations allows it to provide a niche SaaS subscription model, which allows Axon to bundle their whole offerings as a package.
Axon was also mentioned by Alvin here:
3) Bio-Rad Laboratories, Inc. (NYSE: BIO)
Bio-Rad Laboratories, Inc. (NYSE: BIO) is an American developer and manufacturer of specialized life sciences products.
Their list of life science products can include scientific instruments, software, consumables, and reagents in areas relating to biology, gene expression, food science and safety, and even drug discovery.
Bio-Rad products are one of the most widely used in the science and experiment fields and is already established around the world.
Although the topline historical growth rate seems modest, it is the operating income and margin that is eye-catching – margins have improved significantly from below 10% to more than 20%!
Total operating expenses have remained surprisingly flat for the last 10 years, letting the company benefit from the efficiency of its economies of scale to eke out more revenue growth.
4) Alexandria Real Estate Equities, Inc. (NYSE: ARE)
Alexandria Real Estate Equities, Inc. (NYSE: ARE) is a REIT that specializes in investment properties within the life sciences and technology industry. It is the largest life science-based REIT in the world.
It also has a venture capital arm, Alexandria Venture Investments, that invests in life sciences firms. Alexandria’s tenants include the likes of Bristol-Myers Squibb Company (NYSE: BMY), Moderna, Inc. (NASDAQ: MRNA), Sanofi S.A. (EPA: SAN), Novartis AG (SIX: NOVN) and other reputable companies.
Alexandria has a special and scientific way of going about their investment property selection. Inspired by Harvard Business Professor Micheal E. Porter’s cluster theory, successful life science clusters comprise of 4 critical components – location, innovation, talent, and capital.
Investment properties are usually located near top science universities, as the abundance of talent will automatically convince life science and pharmaceutical companies to set up their office or laboratories within the vicinity.
Gross rental revenue and net property income have been nothing short of spectacular, as the company has successfully grown for the last 9 consecutive years.
Its gearing ratio is just 33%. Given the stickiness of its type of property and superior track record, it is no surprise that its distribution per unit is also on a growth spurt.
However, the unit price has been on a selldown, mostly due to the concern about rising interest rates.
Good companies, Great businesses, Fair valuations?
I have got to admit. Prior to going through these 4 companies, I have never heard of most of them.
However, some of the products like Bio-Rad and Taser are familiar to me, and going through these 4 companies which are having a 100% BUY rating by analysts, I do understand why.
Companies like Targa have a recurring infrastructure that is fee-based, while Axon and Bio-Rad are making the best products within their specific field and expertise which is not easy for competitors to challenge head-on.
And who would have thought it is possible to have a niche REIT like Alexandria Real Estate, which manages life sciences investment properties, and has a track record of growth from top to bottom, that every REIT would be envious of?
That said when it comes down to businesses and valuation, one man’s meat can be another man’s poison.
Some investors would stay away from the cyclical oil and gas sector even though Targa’s business is predominantly fee-based, while some would shy away from REITs, especially if its a US REIT and with the high interest rates nowadays.
So, is a 100% BUY rating stock for everyone?
Not really, it still boils down to your risk tolerance.
