The end of July ended on a mixed note with the S&P 500 still more than 1% off of highs but still right in line with the end of May. The bull market is nearing six and a half years old as well. Many investors are starting to turn to value stocks now that so many growth stocks have risen so much, and then there is that coming pesky interest rate hike cycle sooner or later. 24/7 Wall St. reviews dozens of analyst reports and research reports each day to try to find some of those overlooked value calls for investors. When it comes to stocks to buy, some analyst reports get very aggressive.
The typical Dow Jones Industrial Average or S&P 500 Index analyst upgrade with an Outperform or Buy rating will come with 8% to 15% implied upside. Then there is the dividend to consider, but sometimes you see analysts on Wall Street get much more aggressive than their peers with upside calls of 30%, 50%, or even close to 100%. The higher the implied upside there is, investors better just assume that there are caveats and probably more risks.
24/7 Wall St. tracked some of these analyst calls with massive upside seen in just the last week of July alone. There were six standout calls with upside that was put north of 30% and some over 50% in companies with easily recognized established. These even all have a market cap of no less than $5 billion.
General Motors Co. (NYSE: GM) was revisited by Argus back on Tuesday, July 28. The firm reiterated its Buy rating and reiterated $45 price target. That implied more than 40% upside, but Friday’s close of $31.51 leaves was appreciation of almost 43% and then there is that 4.5% dividend yield to consider.
Argus believes that GM is in a very strong position, with growth here and in China, and they even see slightly stronger sales growth in Europe. All this and more detail on the call is giving GM huge upside.
GM’s official highest price target is up at $50, but a more conservative report this week was seen from Credit Suisse, which raised its rating to Neutral from Underperform with a mere $33 price target. GM’s 52-week range is $28.82 to $38.99 and its consensus price target is $40.27.
GoPro, Inc. (NASDAQ: GPRO) found a very bullish call at the end of the week and month. The last trading day of July brought Citigroup out of the shadows for head-cams, raising its rating to Buy from Neutral and with a $90 price target. The call was based upon mega-trends in flying cameras, virtual reality, and also in drones. It sees potential sales of $5 billion to $10 billion in 2020, versus 2014 sales of $1.4 billion and expected 2015 sales of $1.95 billion.
Shares were at $61.69 before the call and gapped up to just over $64.00 based upon that excitement. Still, shares closed up only 0.7% at $62.10 after some pundits picked the call apart. GoPro’s consensus price target is a more conservative $76.50 or so, and the median target is even lower at $72.00 even if the highest such analyst target is still $105 here. GoPro’s 52-week range is $37.13 to $98.47.
Micron Technology Inc. (NASDAQ: MU) is one of the top tech stocks that many analysts have lowered their price targets in for weeks or months. Still, the rating montage remains mostly positive and Credit Suisse had a research note mid-week that called for Micron, with an Outperform rating, to have about 80% upside to the firm’s $34.00 price target. The lynchpin here was the new storage class memory called Xpoint that was featured with Intel to combine the best characteristics of NAND and DRAM for smaller geometries and more layers.
Micron’s recent buyout speculation from China was not really the basis of the upgrade. Investors need to consider that Micron has seen estimates and price targets come rifling lower in 2015. Credit Suisse even mistakenly had a $50 price target earlier this year which investors might want to consider.
Micron is now treated more like a value stock than the prior mega-turnaround growth engine it was previously. Credit Suisse’s $34.00 price target is also over $4.00 higher than the consensus price target.
Southwest Airlines Co. (NYSE: LUV) received a key upgrade from J.P. Morgan on Thursday. The firm raised its rating to Overweight from Neutral and issued a $50.00 price target. Shares were at $35.50 or so before the call, and Southwest Airlines closed out the week at $36.20. This still leaves an implied upside of just under 40% if you include Southwest’s dividend in the mix.