‘Our long-term outlook for the stock market remains bullish’: Here are 2 stocks that Oppenheimer likes

• TipRanks
• 21 Jul, 2022

By now, we all know the litany of market woes and headwinds: inflation, which has been grabbing all the headlines; the Fed’s turn to rate hikes and monetary tightening in response to inflation; the continued list of interconnected issues, including supply chain tangles, the Russia-Ukraine war, high oil prices.

Recent news and market stats have only reinforced the short-term gloom. Q1 showed a GDP decline of 1.6%, and preliminary data shows a similar decline for Q2, which would put the US into a recession. But do the current clouded conditions mean that investors have to fully back away from the bulls?

Weighing in from Oppenheimer, chief investment strategist John Stoltzfus doesn’t back away from trying to square that circle. Acknowledging and analyzing today’s market environment, Stoltzfus confronts it head-on, writing,
 

“Even in the face of uncertainty and palpable risks of recession, our longer-term outlook for the U.S. economy and the stock market remains decidedly bullish. We believe U.S. economic fundamentals remain on solid footing. U.S. growth should remain well supported by consumer, investment, and government spending.”

Taking Stoltzfus’ outlook and turning it into concrete recommendations, the pros at Oppenheimer are giving two stocks a thumbs up. In fact, the firm’s analysts see over 50% upside potential in store for each. We used TipRanks’ database to find out what the rest of the Street has to say.

First up is Vertex, a transitional energy company with a focus on the production and distribution of both conventional and alternative fuels. The company owns approximately 3.2 million barrels worth of storage capacity, as well as an oil refinery in Mobile, Alabama capable of producing 91,000 barrels per day of refined fuel. Vertex is a key supplier of base oils for the North American lubricant industry and is one of the largest processors of used motor oil in the US market.
 

The Mobile refining facility is one of the keys to understanding Vertex Energy’s current position. The company purchased the refinery from Shell Oil, in a transaction that was completed in April of this year.

Vertex paid $75 million in cash plus $25 million in other capital expenditures. Along with the refinery, Vertex received a hydrocarbon inventory worth $165 million, financed in a separate agreement.
 

This acquisition is a major advance in Vertex’s refining capabilities and puts the company in a position to commence renewable diesel fuel production in 1Q23. The Mobile refinery maintained normal operations through the late winter and early spring, while the transfer of ownership was progressing.

Also in the first quarter of this year, Vertex saw its top line revenue grow year-over-year, from $25.05 million to $40.22 million, a gain of 60%. Earnings, however, slipped, from a 1-cent gain per diluted share in the year-ago quarter to an 8-cent loss in the 1Q22 report. Despite the loss, Vertex was able to increase its cash holdings year-over-year by approximately a factor of 10, from $12.52 million to $124.54 million.
 

In one other highly positive announcement made in recent weeks, Vertex in June entered the Russell 3000 stock index.

Noah Kaye, a 5-star analyst with Oppenheimer, sees everything going right for Vertex at this moment, and writes of the company: “Vertex is currently experiencing a ‘blue-sky scenario’ on the Mobile acquisition.
 

The company is undertaking a comparatively low-cost renewable diesel capital project at Mobile while intending to continue producing primarily conventional fuels.

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While attentive to execution risk and spread compression, and seeing questions around the platform's strategic future, we anticipate a step-change in profitability to enable flexibility for Vertex's future growth.” Source: YF...