JP Morgan Says These 2 Stocks Could Rise At Least 30% From Current Levels
In a volatile market environment, with stocks hit by a variety of conflicting forces, investors are turning to expert commentators for guidance. Covering the macro situation of banking giant JPMorgan, quantitative strategist Marko Kolanovic believes that continued gains in stocks await us. Kolanovic doesn’t rule out recent declines in the S&P 500 and the NASDAQ; rather, he sees them as temporary. Kolanovic notes that we are nearing the end of the first quarter and will see the first earnings reports for 2021 soon. He hopes that will build momentum for stocks over the summer, driving market indices and keeping inflation steady with returns of the bonds. stabilizer. Kolanovic has set a year-end price target of 4,400 for the S&P 500, suggesting ~ 13% growth in the market benchmark. Taking Kolanovic’s perspective seriously, JP Morgan analysts are offering concrete recommendations, pointing to two names that seem attractive. With the company’s analysts forecasting at least 30% upside potential for each, we used the TipRanks database to dig a little deeper. BorgWarner, Inc. (BWA) The first JPM pick we’re looking at is BorgWarner, a major manufacturer of transmission components, especially transmissions and air management systems, which has long been a stalwart of the Detroit auto industry. In recent years, the company has been a leader in the development of powertrains and motors for electric vehicles, and is committed to accelerating that development. The company announced this week that it intends to expand its EV revenue to 45% of the company’s total by 2030. The company’s plan, called Charging Forward, would focus on developing components for commercial electric vehicles while optimizing power. combustion portfolio and scale. the electric vehicle business to meet the increased projected 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 experienced strong pace in 4Q20 on several key metrics. BWA reported revenue of $ 3.93 billion, a 53% year-over-year gain. EPS stood at $ 1.52, compared to $ 1.06 in the prior-year quarter. Looking at full-year figures, 2020 ended with BWA showing $ 10.17 billion on the top line, roughly equal to last year’s total. 2020 earnings were down to $ 2.34 from $ 3.61 in 2019. Despite lower earnings, BWA’s cash position improved in 2020. Free cash flow was $ 743 million for the year, and the company increased its cash and cash equivalents holdings at $ 818 million year over year. -year. Among the bulls is JPMorgan analyst Ryan Brinkman, who wrote: “Demand for BWA products is strong, driven by both consumer ‘pull’ and government ‘push’ elements, and we believe it will only increase with the time as the number of vehicles in emerging markets increases. pushes up fuel prices. BWA already enjoys the second highest margins in the industry, partly driven by the fact that many of the products it manufactures are highly engineered, creating high technical barriers to entry and market concentration. Still, we expect the combination of rapid gross income growth and financial discipline to allow for a top-tier operating margin expansion. “To this end, Brinkman rates BWA overweight (ie buy), and its price $ 58 target implies a potential rise of 33% for next year. (To view Brinkman’s track record, click here) Brinkman is not an outlier in his bullish stance, but there is some division on Wall Street regarding BWA. The consensus opinion of the analysts is a moderate buy, based on 14 recent reviews that are divided into 8 purchases, 5 holds and 1 sale. The shares are priced at $ 43.70 and their average target price of $ 49, 69 suggests a one-year increase of ~ 14%. (See BWA stock analysis on TipRanks) Adobe, Inc. (ADBE) Shifting gears, we’ll move from auto to software. Adobe is a name we’re all under familiar, and rightly so. The company created the PDF format, and its product line includes Photoshop, Illustrator, and InDesign, among many, many others. In recent years, Adobe has switched to a subscription-based SaaS model, offering its products as a bundle on Adobe Creative Cloud. Adobe saw gains last year as its cloud-based model coped well with the 2020 shift to remote working and telecommuting. The company’s tax revenue in 2020 reached $ 12.8 billion, almost 14% more than in 2019, and growth has continued into its first quarter of fiscal 2021. The company reported $ 3.9 billion on the top line of the first quarter, a company record and a 26% year-over-year increase. . EPS, at $ 2.61 per share, increased 33% year-on-year. That guide was updated based on the first quarter results. Management expects the company to generate $ 15.45 billion in total revenue by fiscal 2021, representing a 20% year-over-year increase over the published 2020 figure. Digital media, one of the main drivers of 2020 figures generate 22% year-on-year growth and show annualized recurring revenue of $ 1.8 billion. Five-star analyst Sterling Auty, who covers these stocks for JPM, sees a clear path forward for Adobe. “When the business cycle improves, companies tend to invest in solutions that will help drive revenue growth, and that is exactly what Adobe Experience Cloud, with its digital marketing solutions, can help customers achieve,” he said. Auty. The analyst added: “Over the years, it is more common for Adobe to reiterate the full-year guidance after reporting Q1 earnings, so seeing the rise above the Q1 hike for the Q1 figures. Full year is a sign of incremental strength. In our opinion. As a reminder, the stock hasn’t done much since early September and this could be the catalyst for it to move again. ” In line with its bullish comments, Auty rates that ADBE shares an overweight (i.e. buy). Its price target of $ 595 indicates its confidence in a 32% one-year upside. (To see Auty’s history, click here) Overall, Wall Street analysts are pretty well unified in their views on Adobe – the stock has 16 Buy reviews, against a single hold, for a consensus rating. of Strong Buy analysts. The stock is priced at $ 450.99, with an average price target of $ 559.82, suggesting a ~ 24% gain by the end of the year. (See ADBE stock analysis on TipRanks) To find good ideas for trading stocks with attractive valuations, visit TipRanks Best Stocks to Buy, a recently launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are solely those of prominent 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.