In this article, we will look at the best stocks that recently issued new debt and currently offer attractive upside potential for investors. On March 27, CNBC shared insights into potential opportunities for Wall Street Banks to regain market share as private credit comes under pressure. The firm highlighted that the private credit space currently faces certain challenges related to liquidity and default, having undergone a fallout because of highly aggressive lending trends.
The firm highlighted that this situation creates a “long-awaited” opportunity for Wall Street banks to elevate their share in this market, which had been dominated by private credit players for over a decade. The firm also acknowledged a more favorable regulatory landscape for banks at present, which would serve the purpose well.
Mark Zandi, Chief Economist at Moody’s, also reflected on these structural challenges faced by private credit. He anticipates more issues to emerge for the sector in the coming months amid ongoing geopolitical conflicts, elevated financing costs, and certain industry-specific hurdles across consumer, software, and healthcare segments.
Speaking of opportunities for banks in this scenario, CNBC referred to comments made by Shannon Saccocia, CIO at Neuberger Berman, who stated:
“Our anticipation of deregulation from the Trump administration includes a likely weakening of the Basel III Endgame implementation, with the U.S. Treasury explicitly aims to redirect business lending back into the banking sector.”
With such developments, there will be lucrative opportunities for listed companies to raise debt capital without altering their optimal capital structures or incurring high borrowing costs. With that background, let’s explore our 10 Best Stocks That Recently Issued New Debt.
Our Methodology
To identify relevant stocks for this article, we conducted a sector-agnostic screening of U.S.-listed companies with market capitalizations above $2 billion that have recently issued debt. We narrowed our search further by selecting only companies with a debt-to-equity ratio below 100%.
Also, we shortlisted only stocks with at least 30% upside potential according to consensus as of the March 26 closing. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Omnicom Group Inc. (NYSE:OMC)
Omnicom Group Inc. (NYSE:OMC) is one of the 10 best stocks that recently issued new debt.
As of the March 26 closing, consensus sentiment for Omnicom Group Inc. (NYSE:OMC) remained moderately bullish. The stock received coverage from 7 analysts, 4 of whom assigned Buy ratings and 2 gave Hold calls. With 1 Sell rating, it has a projected median 1-year price target of $98.57, resulting in an upside potential of almost 34% at the prevailing level.
On March 20, Omnicom Group Inc. (NYSE:OMC) was subject to an upward revision in its target price, from $108 to $114 by UBS. The firm also reiterated its Buy rating on the stock, which currently yields an adjusted upside potential of more than 52%.
Back on February 23, Barclays also increased its target price for Omnicom Group Inc. (NYSE:OMC) from $82 to $90. The firm maintained an Equal Weight rating on the stock, which offers a revised potential upside of more than 20% at the current level. The revision in the price target came on the back of the company’s fourth-quarter results, which appeared to be in line with consensus estimates.
Omnicom Group Inc. (NYSE:OMC) is a media, communications, sales, and marketing company that operates through its various subsidiaries. They deliver services such as advertising, branding, precision marketing, content marketing, CSR consulting, public relations support, and more. They integrate their technical expertise with data management and analytics to deliver superior value to customers.
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