Analysts’ Top Financial Picks: Saratoga Investment Corp (SAR), Consolidated-Tomoka Land Co (CTO)

By Austin Angelo

There’s a lot to be optimistic about in the Financial sector as 2 analysts just weighed in on Saratoga Investment Corp (SARResearch Report) and Consolidated-Tomoka Land Co (CTOResearch Report) with bullish sentiments.

Saratoga Investment Corp (SAR)

In a report released today, Timothy P. Hayes from B.Riley FBR reiterated a Buy rating on Saratoga Investment Corp, with a price target of $26. The company’s shares opened today at $21.82.

Hayes wrote:

“We reiterate our Buy rating and $26 price target on shares of Saratoga Investment Corp. (SAR), following strong F3Q19 results that handily beat B. Riley FBR and Street estimates. Saratoga reported F3Q19 adjusted NII per share of $0.65, which beat B. Riley FBR and Street estimates of $0.58 and easily covered the $0.53/share dividend. During the quarter, Saratoga closed $73.7 million of new originations, which contributed a 13% Q/Q increase in the investment portfolio and interest income. While credit spread widening impacted the valuation of the CLO in the quarter and continues to plague the broader leveraged loan market, the company’s lower middle market portfolio appreciated in value as fair value marks are less correlated with credit spreads and are more company specific.”

According to TipRanks.com, Hayes is a 4-star analyst with an average return of 5.8% and a 67.4% success rate. Hayes covers the Financial sector, focusing on stocks such as Ready Capital Corporation, Cherry Hill Mortgage, and Hercules Capital.

The word on The Street in general, suggests a Strong Buy analyst consensus rating for Saratoga Investment Corp with a $25 average price target, a 14.6% upside from current levels. In a report released yesterday, Maxim Group also reiterated a Buy rating on the stock with a $26 price target.

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Consolidated-Tomoka Land Co (CTO)

In a report released today, Craig Kucera from B.Riley FBR reiterated a Buy rating on Consolidated-Tomoka Land Co, with a price target of $82. The company’s shares opened today at $58.79.

Kucera said:

“We are raising our 2018 earnings estimate for Buy-rated Consolidated-Tomoka Land Co. (CTO,) post a flurry of land sales executed at the end of 4Q18 with a cumulative $16M of expected gains in the quarter (vs. our prior expectation of ~$8M). As such, our 4Q18 estimate is increasing, from $0.81 to $2.02, and our 2018 estimate is rising, from $5.39 to $6.61. Our 2019 estimate is unchanged, at $10.34. CTO continues to trade at a significant discount to our NAV estimate; and the catalyst to trading to a better multiple, in our opinion, will be CTO’s potential conversion to a REIT and an expected increase in its dividend. We estimate a capital base that, post the sale of all of CTO’s land, could support a >$4/share dividend, at an ~40% leverage/~70% AFFO payout ratio.”

According to TipRanks.com, Kucera is a 4-star analyst with an average return of 3.9% and a 63.6% success rate. Kucera covers the Financial sector, focusing on stocks such as Preferred Apartment Communities, NexPoint Residential Trust Inc, and Bluerock Residential Growth.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Consolidated-Tomoka Land Co with a $82 average price target.

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