Analysts Love These 3 Bargain Stocks Right Now

Globe and Mail

18-03-2025

The ongoing volatility surrounding the equity markets allows you to buy quality companies at a discount and benefit from outsized gains when investor sentiment improves. In this article, I have identified three undervalued stocks that analysts are bullish on right now.
Bargain Buy #1: United Airlines
United Airlines (UAL) reported strong fourth-quarter earnings, with earnings per share of $3.26, above expectations, and a pretax margin of 9.7%, up 3.5 points year-over-year. The airline delivered full-year EPS of $10.61, within its original guidance range of $9-$11.
CEO Scott Kirby highlighted 'structural and durable' industry changes favoring United, including cost convergence and effective revenue diversity. International flying, particularly Pacific routes, showed strong performance, with Pacific PRASM up 4.1% in Q4 after being down 15.7% in Q3.
For 2025, United expects EPS between $11.50 and $13.50, representing 18% growth at the midpoint. The airline forecasts Q1 EPS between $0.75 and $1.25, suggesting an improvement of $400 million compared to the year-ago period.
United Airlines plans to take delivery of 71 narrow-body and 10 wide-body aircraft in 2025, with capital expenditures below $7 billion due to OEM production delays. In 2024, United generated $3.4 billion in free cash flow and reduced its net leverage to 2.4 times.
Looking ahead, United is accelerating the installation of Starlink internet service and investing in its MileagePlus program, which grew 12% in 2024 and plans to grow even higher this year.
Out of the 21 analysts covering UAL stock, 20 recommend 'Strong Buy' and one recommends 'Moderate Buy.' The average target price for UAL is $131.75, indicating an upside potential of 77% from current levels.
Bargain Buy #2: Carnival
Carnival (CCL) delivered strong Q4 results, exceeding expectations. Net income improved by over $250 million year-over-year and came in $125 million better than anticipated. CEO Josh Weinstein cited robust demand as the primary driver, pushing yields, per diems, EBITDA, and operating income to new record highs.
Full-year 2024 revenue reached an all-time high of $25 billion, generating record cash from operations of nearly $6 billion. Yield growth for 2024 came in at 11%, significantly above the initial guidance of 8.5%, with the majority attributed to higher prices. Onboard spending accelerated sequentially each quarter throughout the year.
For 2025, Carnival forecasts yield growth exceeding 4%, outpacing unit cost growth of approximately 3.7%. Already two-thirds booked for 2025, the company reports higher price and occupancy for all four quarters compared to the same time last year.
Carnival reduced debt by over $8 billion from its January 2023 peak, ending 2024 with $27.5 billion in debt and achieving a 4.3 times net debt to EBITDA ratio. It expects to reach investment-grade leverage metrics of 3.5 times by 2026.
Out of the 23 analysts covering CCL stock, 17 recommend 'Strong Buy,' one recommends 'Moderate Buy,' four recommend 'Hold,' and one recommends 'Strong Sell.' The average target price for CCL is $29.17, indicating an upside potential of 50% from current levels.
Bargain Buy #3: Synchrony Financial
Synchrony Financial (SYF) reported Q4 net earnings of $774 million, or $1.91 per diluted share, delivering a return on assets of 2.6% and a return on tangible common equity of 23%. For 2024, the company generated net earnings of $3.5 billion or $8.55 per diluted share, with a return on assets of 2.9% and a return on tangible common equity of 27.5%.
Synchrony Financial added five million new accounts in Q4, generating $48 billion in purchase volume despite tighter credit actions implemented between mid-2023 and early 2024. Ending loan receivables grew 2% to $105 billion as payment rates moderated, decreasing approximately 10 basis points compared to last year.
Net revenue grew 4% to $3.8 billion, driven by higher interest and fees and other income, partially offset by increased retailer share arrangement and interest expense. The 30-plus-day delinquency rate improved to 4.70%, down four basis points year-over-year, showing the effectiveness of the company's credit actions.
For 2025, Synchrony expects low-single-digit loan receivables growth and forecasts net revenue between $15.2 billion and $15.7 billion. It projects its net charge-off rate to improve to between 5.8% and 6.1%, down from the current 6.45%.
Out of the 22 analysts covering SYF stock, 14 recommend 'Strong Buy,' one recommends 'Moderate Buy,' six recommend 'Hold,' and one recommends 'Strong Sell.' The average target price for SYF is $77.62, indicating upside potential of over 55% from current levels.