JP Morgan says these 2 stocks can rise at least 30% from current levels
In a volatile market environment, where stocks are plagued by various conflicting forces, investors turn to expert commentators for advice. Quantitative strategist Marko Kolanovic, who covers the macro situation of banking giant JPMorgan, believes we can expect further share price gains. Kolanovic does not dismiss the recent declines in the S&P 500 and NASDAQ; rather he sees them as temporary. Kolanovic points out that we are nearing the end of the first quarter and will see the first earnings reports of 2021 shortly. He expects this to build momentum for stocks entering the summer, boosting market indices and keeping inflation stable with bond yields. stabilizing. Kolanovic has set a price target for the S&P 500 at the end of the year 4400, suggesting ~ 13% growth in the market’s benchmark index. JP Morgan’s analysts take Kolanovic’s view to heart and make concrete recommendations, pointing to two names that look attractive. Since the company’s analysts predict upward potential of at least 30% for each, we used TipRanks’s database to dig a little deeper. BorgWarner, Inc. (BWA) The first JPM choice we look at is BorgWarner, a major manufacturer of powertrain components, particularly transmissions and air management systems, which has long been a fixture in the Detroit auto industry. The company has been a leader in the development of powertrains and motors for electric vehicles in recent years and is committed to accelerating that development. The company announced this week that it plans to expand its EV revenue to 45% of the company’s total by 2030. The company’s plan, dubbed Charging Forward, would focus on developing components for electric commercial vehicles while optimizing and scaling its combustion portfolio. the EV business to meet the expected increased demand. Management expects to maintain BorgWarner’s high margin performance while generating strong free cash flow. Current performance gives BorgWarner a solid foundation for its ambitious EV plans. The company took a strong hit in 4Q20 on several key metrics. BWA reported sales of $ 3.93 billion, up 53% year-over-year. Earnings per share came in at $ 1.52, up from $ 1.06 in the same quarter a year ago. In terms of full-year figures, 2020 ended with a $ 10.17 billion BWA on the top, roughly equal to last year’s total. Earnings in 2020 decreased to $ 2.34 from $ 3.61 in 2019. Despite lower revenues, BWA’s cash position improved in 2020. Full year free cash flow was $ 743 million, and the company increased its cash and cash equivalents with $ 818 million year over year. One of the bulls is JPMorgan analyst Ryan Brinkman who wrote, “ Demand for BWA products is strong, driven by both the consumer ‘pull’ elements and the government ‘push’ elements, and we think that this will only increase over time as the number of vehicles in emerging markets increases. pushes fuel prices up. BWA already enjoys the second highest margins in the industry, driven in part by the fact that many of the products it manufactures are of a highly sophisticated nature, leading to high technical barriers to entry and market concentration. Nevertheless, we expect that the combination of rapid sales growth and financial discipline will enable an expansion of the operating margin at the highest level. To that end, Brinkman rates BWA as overweight (ie buy), and its $ 58 price target implies a potential 33% rise for the coming year. (To view Brinkman’s track record, click here) Brinkman is no outlier in his bullish stance but there is some disagreement on Wall Street regarding BWA. Analysts’ consensus is a moderate buy, based on 14 recent reviews across 8 buys, 5 holds and 1 sell. The stock is priced at $ 43.70 and their average price target of $ 49.69 suggests a rise of about 14% for a year. (See BWA Stock Analysis on TipRanks) Adobe, Inc. (ADBE) As we switch, we are moving from automotive to software. Adobe is a name that we all know, and rightly so. The company has created the PDF format and its product line includes Photoshop, Illustrator and InDesign. In recent years, Adobe has moved to a SaaS subscription model, extending its pr offers products as a bundle on Adobe Creative Cloud. Adobe saw gains last year as its cloud-based model suited the 2020 shift to remote and telecommuting. The company’s revenue for fiscal 2020 was $ 12.8 billion, almost 14% more than in 2019, and growth continued into the first quarter of fiscal year 2021. The company reported $ 3.9 billion in revenue of the first quarter, a business record and an increase of 26% year-on-year. . Earnings per share were up $ 2.61 per share, up 33% year-on-year. That guidance has been updated based on the first quarter results. Management sees the company bringing in $ 15.45 billion in total revenues for fiscal year 2021, an increase of 20% year-on-year from the published figure for 2020. Digital media, a key driver of the 2020 figures , are expected to deliver 22% year-over-year growth and deliver annual recurring sales of $ 1.8 billion. Five-star analyst Sterling Auty is covering this stock for JPM, which sees a clear path for Adobe. “When the economic cycle changes for the better companies, companies tend to invest in solutions that help drive revenue growth and that’s exactly what the Adobe Experience Cloud, with its digital marketing solutions, can help reach customers,” noted Auty. The analyst added, “Over the years, it has become more common for Adobe to repeat its full-year outlook after reporting its first quarter earnings, so seeing the increase above just the first quarter for the numbers for The full year is a sign of increasing strength. In our opinion. As a reminder, the stock hasn’t done much since early September and this could be the catalyst to get it back on track. “In line with his optimistic comments, Judges Auty ADBE as an Overweight (ie Buy). His price target of $ 595 indicates that he is confident of a 32% rise over a year. (To view Auty’s track record, click here) In general, Wall Street analysts are quite unanimous in their views on Adobe – the stock holds 16 Buy reviews, against a single Hold, for a Strong Buy analyst consensus. The stock is priced at $ 450.99, with an average price target of $ 559.82, indicating a ~ 24% rise by the end of the year. (See ADBE Stock Analysis on TipRanks) To find great ideas for stocks trading at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ insights on stocks. Disclaimer: The opinions expressed in this article are solely those of the recommended analysts. The content is provided for informational purposes only. 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