Trading News

Why J.P. Morgan Believes These 3 Stocks Are Attractive in the Current Market

0

S&P Futures

3,630.50

+31.25(+0.87%)

 

Dow Futures

29,472.00

+206.00(+0.70%)

 

Nasdaq Futures

10,958.50

+113.50(+1.05%)

 

Russell 2000 Futures

1,713.60

+16.70(+0.98%)

 

Crude Oil

89.67

+0.32(+0.36%)

 

Gold

1,677.90

-8.10(-0.48%)

 

Silver

19.24

-0.25(-1.27%)

 

EUR/USD

0.9710

+0.0004(+0.04%)

 

10-Yr Bond

3.9390

0.0000(0.00%)

 

Vix

33.28

+0.83(+2.56%)

 

GBP/USD

1.1052

+0.0076(+0.70%)

 

USD/JPY

146.3680

+0.5690(+0.39%)

 

BTC-USD

19,174.90

+87.61(+0.46%)

 

CMC Crypto 200

436.49

+4.18(+0.97%)

 

FTSE 100

6,913.47

+28.24(+0.41%)

 

Nikkei 225

26,396.83

-4.42(-0.02%)

 

Tired of hearing about inflation? Well, tough luck. That is once again this week’s hot topic. On the agenda, the wholesale and consumer inflation reports – out Wednesday and Thursday, respectively. Considering the market’s latest pullback, Wall Street is evidently on edge following a good-is-bad jobs report, with little expectation the Fed will be relaxing its monetary policy anytime soon.

Q3 earnings are also about to kick off and financial statements will offer a clue on inflation and rising costs’ ongoing impact.

Things feel particularly shaky, then, and uncertainty rules the roost. So, how to play the investing game against such a precarious economic backdrop? One way is to follow the recommendations of the experts.

Banking giant J.P. Morgan has a few of them on its roster and the firm’s analysts have been pinpointing the stocks they think are worthy of investor attention in the current climate. So, let’s dig into the details on 3 of their recent picks and check in with the TipRanks database for overall sentiment amongst Wall Street’s analyst corps.

Group 1 Automotive, Inc. (GPI)

The first JPM pick we’ll look at is a car retailer. Group 1 Automotive is a US auto dealership with a footprint in 17 states (although most are based in Texas) while it also has a meaningful presence in the UK, which accounts for ~20% of overall revenues. Via its cross-channel business model, Group 1 sells new and used cars and light trucks. Other services included vehicle financing and insurance contracts while the company also offers car maintenance and repair services and sells vehicle parts.

As of July, the Texas-based firm boasted 204 owned and operated automotive dealerships, 273 franchises, and 47 collision centers with 35 brands of automobiles on tap.

There might be concerns around the prospects of the automotive retail space amidst fears of a widespread economic downturn, but that didn’t stop GPI delivering a strong Q2 report in late July. Revenue reached $4.1 billion, amounting to a 10.8% year-over-year increase and coming in $80 million ahead of the Street’s forecast. Adjusted net income hit a record $197.5 million, a 5% growth vs. the $188 million delivered in the same quarter last year. This resulted in adj. EPS of $12.00, some way above the $10.76 anticipated by the analysts.

While J.P. Morgan’s Rajat Gupta notes the dealership’s heavy skew to one state “creates room for higher volatility as regional economics could have an outsized impact on growth,” the analyst sees enough reasons to back the company.

“We see GPI’s initiative to drive higher used vehicle growth in a flattening SAAR (seasonally adjusted annual rate) environment as positive,” Gupta said. “GPI’s parts & services initiatives to increase technician headcount and better use existing manpower are compelling, in our view, with drop-through to the bottom line starting to show. EBITDA growth, balance sheet optionality, and standing ROIC are in line with group averages, though we see upside to standing consensus, which in our view is not discounted in current valuation.”

Accordingly, Gupta rates GPI an Overweight (i.e. Buy) along with a $210 price target. The implication for investors? Upside of 32% from current levels. (To watch Gupta’s track record, click here)

Overall, GPI has picked up 4 analyst reviews, and these include 3 Buys and 1 Sell, for a Moderate Buy consensus rating. Going by the $230 average target, shares have room for ~45% growth in the year ahead. (See GPI stock forecast on TipRanks)

Keysight Technologies, Inc. (KEYS)

From cars let’s take a turn into a maker of electronics testing equipment. Keysight is a leader in the field, boasting both hardware and software products which are vendor-agnostic and allow it to participate across multiple markets. Its offerings range from oscilloscopes, signal generators, and spectrum analyzers to automated X-ray inspection (5DX) and in-circuit testers to tunable lasers and optical power meters, amongst others. The company also makes electronic design automation (EDA) software and caters mostly to the telecommunications, industrial, computer, A&D and semiconductor industries.

Boosted by a strong showing from its Communications Solutions Group (CSG) segment, the company delivered a better-than-expected FQ3 report, released midway through August. CSG generated revenue of $970 million, an 11% increase over the same period last year, which helped the overall top-line reach $1.38 billion – a $30 million beat over the consensus estimate.

On the bottom-line, the company delivered adj. EPS of $2.01, above the $1.79 anticipated on Wall Street. The outlook also met expectations with Q4 revenue anticipated in the range between $1.38 billion to $1.40 billion, at the mid-point the same as consensus at $1.39 billion.

Assessing this company’s prospects, JPMorgan’s Samik Chatterjee lays out the bull case.

“We rate Keysight shares Overweight [i.e. Buy] on our favorable demand outlook, including strong leverage to multiple cyclical industry drivers, primarily the 5G cycle, which should drive both strong top-line growth as well as margin expansion, delivering in line to better growth for 2023, relative to our forecasts for best-in-class execution and more diversified drivers in Amphenol. Keysight’s strong earnings growth should be led by leverage to 5G through the broad ecosystem of both devices and communication equipment as well as strong flow-through to the bottom line from strong revenue growth,” Chatterjee opined.

That Overweight rating is backed by a $225 price target which suggests shares will rise by 44% over the coming months. (To watch Chatterjee’s track record, click here)

Looking at the consensus breakdown, 10 other analysts join Chatterjee in the bull camp, but with 3 others staying on the fence, the stock makes do with a Moderate Buy consensus view. According to the $196.36 average target, the shares will be changing hands for a ~26% premium a year from now. (See KEYS stock forecast on TipRanks)

Akero Therapeutics, Inc. (AKRO)

Most stocks are showing heavy year-to-date losses but the same cannot be said of Akero Therapeutics, which has seen its shares jump 80% this year. Akero is a biotech focused on the development of medicines aimed at patients suffering from serious metabolic diseases, specifically ones with high unmet medical needs.

Akero only has one drug in its pipeline currently going through the clinical stage testing phases but that is all it takes to get heads spinning if the drug is making all right the moves. And that appears to be the case for efruxifermin (EFX).

The drug has been earmarked as a treatment for nonalcoholic steatohepatitis (NASH), a condition for which that there are currently no treatments approved by the FDA, despite an estimated 12% of U.S. adults being affected by this serious liver disease.

This is a huge market Akero is hoping to tap into, and results from the phase 2b HARMONY of EFX in NASH certainly offer promise. The data readout showed that the drug hit both the study’s primary endpoint of at least a one-stage improvement in liver fibrosis with no worsening of NASH following 24 weeks of treatment and a key secondary endpoint of patients achieving NASH resolution without worsening of fibrosis.

While the drug still needs to go through more testing before the company can file for approval, JPMorgan’s Eric Joseph is bullish on its chances of success.

“Based on the compelling, placebo-controlled activity profile in HARMONY, we see efruxifermin being materially derisked into phase 3 development, with our view of its best-in-class potential reinforced,” the analyst explained. “Combined with the multi-billion-dollar commercial opportunity in scope and a scarcity of demonstratively effective agents for NASH, we further see AKRO becoming increasingly elevated among potentially actionable strategic candidates over the mid-term.”

To this end, Joseph thinks the stock is worthy of an Overweight (i.e., Buy) rating and a $48 price target. Even after the huge gains, there’s still room for 26% upside from current levels. (To watch Joseph’s track record, click here)

In general, other analysts echo Joseph’s sentiment. 4 Buys and 1 Hold add up to a Strong Buy consensus rating. The average price target of $48 matches Joseph’s. (See AKRO stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Advertisement

TipRanks

‘There Are Many Stocks That Are Already Reflecting a Recession’: Morgan Stanley Says It’s Time to Buy These 2 Beaten-Down Names

Those hoping for the fourth quarter to herald a stock market comeback have been disappointed so far. A late-year rally has yet to properly materialize with the market still factoring further turmoil as the fight against inflation continues and the specter of a recession remains. However, while the prospect of a recession looms, Morgan Stanley’s Investment Management Managing Director Andrew Slimmon points out that many stocks already appear to be taking for granted the likelihood of a recession.

TipRanks

Analysts Say Buy These 2 High-Yield Dividend Stocks — Including One With 16% Yield

Markets finished last week on a down note, with the S&P 500 and the NASDAQ falling 2.8% and 3.8%, respectively. The Friday collapse came in the wake of the September jobs report, which further fed into investor worries that the Federal Reserve will continue pushing interest rate hikes even at risk of a recession. The headline number, 263,000 new jobs in the month, came in below the forecast of 275,000, and was well below the August print of 315K. At the same time, the headline unemployment rate

TipRanks

Down More Than 60%: Analysts Say Buy These 3 Beaten-Down Stocks Before They Rebound

After the annus horribilis of 2022, with the final quarter now in play, investors will be hoping a late-year rally will materialize. According to Carson Group’s chief market strategist Ryan Detrick, that’s not such a far-fetched idea. “While October has a reputation for crashes, it is really a bear market killer,” Detrick recently wrote. “Of the past 17 bear (or near bear markets), stocks bottomed in October six times. Could it happen again? With sentiment this pessimistic and extremely positive

Benzinga

3 REITs With 10%+ Dividends Priced Under $20 Per Share

Income investors sometimes look for higher-dividend yields on low-priced stocks. But buying stocks below $10 can be a high-risk venture as these stocks are usually cheap for good reasons. Therefore, it is usually better to purchase stocks above $10. Funds from operation (FFO) is the best measure of operating performance because it is the cash flow used for dividend payouts. Dividends well covered by the FFO will usually be safer from cuts. Here are three real estate investment trust (REIT) stock

Investor’s Business Daily

9 Tempting Stocks Burn Overeager Dip Buyers Every Time

It’s understandable S&P 500 investors try to jump in early. But that dip-buying is only burning investors this year as the bottom falls out.

SmartAsset

Why Now May Be a Good Time to Invest in Dividend-Paying Stocks

The market is down and inflation is up – so what’s out there for an investor looking for growth, appreciation and stability? You can try dividend-paying stocks. Many companies that pay dividends are still profitable during a market downturn so … Continue reading → The post Why Now May Be a Good Time to Invest in Dividend-Paying Stocks appeared first on SmartAsset Blog.

Insider Monkey

10 Best Stocks to Buy According to Angela Aldrich’s Bayberry Capital Partners

In this article, we present the list of the top 10 stock picks Angela Aldrich’s Bayberry Capital Partners at the end of the second quarter. If you want to skip the fund’s history, recent performance and details about its overall portfolio, please go directly to 5 Best Stocks to Buy According to Angela Aldrich’s Bayberry […]

Reuters

WRAPUP 1-IMF warns of slowing growth, rising market risks as finance officials meet

The International Monetary Fund warned on Tuesday that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession and threatening financial market stability. In gloomy reports issued at the start of the first in-person International Monetary Fund and World Bank annual meetings in three years, the IMF urged central banks to keep up their fight against inflation despite the pain caused by monetary tightening and the rise in the U.S. dollar to a two-decade high, the two main drivers of a recent bout of financial market volatility. Cutting its 2023 global growth forecasts further, the IMF said in its World Economic Outlook that countries representing a third of world output could be in recession next year.

Motley Fool

If I Could Buy Only 1 Stock, This Would Be It

Stock indexes have slipped into a bear market, and companies are suffering from higher inflation. But the good news is that this is a temporary situation. There are still amazing stocks out there that could boost your portfolio over the long term.

Investor’s Business Daily

These Are The 5 Best Stocks To Buy And Watch Now

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist?

Motley Fool

2 Tech Monopoly Stocks That Could Help Make You a Fortune

If you find a company that has a dominant market share, especially in a large and growing market, it’s a good idea to put your money behind it. Airbnb (NASDAQ: ABNB) started as a fringe idea — using your home as a hotel to host strangers — but it’s resonated around the world, and the home-sharing platform now has more rooms available on its platform than even the largest hotel chains. While competition has sprung up in the home-sharing industry, namely from Expedia’s VRBO, Airbnb still dominates the industry with a 74.6% market share among home-sharing platforms, according to data analytics firm M Science.

Bloomberg

UK Gilts Fall as BOE Confirms End to Bond Buying: Markets Wrap

(Bloomberg) — Gilts fell and the pound trimmed gains after the Bank of England confirmed it will end its emergency bond-buying program on Friday.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketIntel Plans Thousands of Job Cuts in Face of PC SlowdownHome Flippers Get Burned by US Housing Market’s Sudden SlumpJamie Dimon’s S&P 500 Bear Market: Brutal, Far From Unimaginable It’s Official: The Fed’s in the RedThe emailed statement followed some confusion on Wednesda

The Wall Street Journal

Monday’s Bond ETF Trading Hinted at Tuesday Morning’s Moves in Yields

While bond markets were closed on Monday for the Columbus Day holiday, exchange-traded funds holding those securities continued to trade on stock exchanges. + The iShares 20+ Year Treasury Bond ETF, which tracks long-term U.S. government bonds, fell 1.6%. + The iShares 1-3 Year Treasury Bond ETF, which tracks short-term U.S. government bonds, was nearly unchanged, down less than one-tenth of a percent.

Reuters

Analysis-Global bonds move in lockstep, ramping up investors’ risk

Government bond prices around the world are moving in tandem, reducing investors’ ability to diversify their portfolios and raising concerns of being blindsided by market gyrations. Correlations between currency-adjusted returns on the government debt of countries such as the U.S., Japan, the U.K. and Germany are at their highest level in at least seven years, data from MSCI showed, as central banks around the world ramp up their fight against inflation. Increasingly, that means investors holding the debt of one country can see their portfolios slammed by market activity at the other end of the globe.

Leak detected on another Russian pipeline connecting to Europe, but Poland says it looks accidental

Previous article

Demand for riskier home loans is high as interest rates soar

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Trading News