3. Hersha Hospitality Trust (HT)
Company Profile: Hersha Hospitality is a real-estate investment trust that own 73 hotels primarily located in the Northeastern U.S. states and on the West Coast.Share Price: $4.46 (Dec. 2) 2011 Stock Performance: -32.4% Analyst Consensus: Hersha Hospitality shares were little changed for the first half of 2011 until a sudden drop-off in August shortly before the company announced it would sell 18 hotels to Starwood Capital for $155 million in order to reduce its debt load. Analysts remain fans of the stock despite the rough summer. Ten of the 14 analysts following Hersha Hospitality rate the stock a "buy." The average price target of $5.52 would mean potential upside of about 24% from current levels. Bullish Case: Bank of America/Merrill Lynch analyst Shaun Kelley reiterated the bank's "buy" rating on Hersha in November after the company announced it would buy the Courtyard Miami Beach Oceanfront for $95 million. "Today's deal is a prime example of HT's capital recycling, moving to higher growth urban markets even as its selling down low growth assets (portfolio sale to Starwood Capital)," Kelley wrote in a Nov. 9 research note. "HT's near term results could be choppy (1Q is seasonally weak in NYC), but we still like longer term prospects given its high margin profile, consistent cash flow and improving portfolio quality."
2. Power-One (PWER) Company Profile: Power-One is the world's second-biggest provider of solar inverters. The company is also among the largest providers of power conversion and power management solutions in the world. Share Price: $4.24 (Dec. 2) 2011 Stock Performance: -58.3% Analyst Consensus: Power-One investors are licking their wounds this year as the stock has fallen from $12 in February to about $4. Power-One has suffered from continually guiding forecasts below analysts' estimates. The company most recently saw a drop in third-quarter profit and offered a weak outlook for the fourth quarter because of the global macroeconomic uncertainty that has dented renewable energy firms around the globe. However, the company still pulls in 11 "buy" ratings from the 20 analysts following the company. The average price target of $6.29 implies upside potential of 48% over the next 12 months, although that would still fail to regain the 2011 high of $12.14. Bullish Case: Cantor Fitzgerald analyst Dale Pfau in late October reiterated a "buy" rating on the stock, noting that Power-One continues to gain market share in a challenging industry. "Based upon the challenging solar environment, investors should be heartened by solid profitability, continuing market share gains, and an outlook for improving margins," Pfau wrote in an Oct. 28 research note. "We believe that the shares are attractively valued at current levels, and we suggest that investors accumulate shares in anticipation of further market share gains."
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