Talk about breaking out to new highs. This past week’s ramp up to blow us out of the old trading range was significant, and with early earnings coming in positive, and we prices improving as inflation was nudged higher, we could be poised for a solid move up. One thing is for sure, it makes sense to stick with high-quality companies that look set to report good second-quarter results, because in a pricey market, an earnings or guidance miss will probably not be treated well.
In a recent research report, UBS suggests that quality is the only way to go. Citing firming growth, low interest rates and the big political uncertainty, the firm is looking for companies with strong profitability, good financial health and efficiency. The report focused on 20 companies with the ability to deliver positive results despite macro uncertainty. The companies also share what UBS terms as more “U.S.-centric business models,” which they see as helped along by a more confident consumer.
We selected the four stocks with the highest upside potential to the UBS price targets. All are rated Buy.
This top internet company has long been rumored to be in play as a takeover target. eBay Inc. (NASDAQ: EBAY) operates e-commerce platforms that connect various buyers and sellers worldwide. Its platforms enable sellers to organize and offer inventory for sale, and buyers to find and buy it virtually anytime and anywhere.
The company’s Marketplace platforms include its online marketplace at ebay.com and the eBay mobile apps, as well as StubHub platforms that comprise its online ticket platform at stubhub.com and the StubHub mobile apps, which enable fans to purchase tickets to the games, concerts and theater shows. Its Classifieds platforms include a collection of brands, such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay Classifieds and others that offer online classifieds and help people find whatever they are looking for in their local communities.
The UBS price objective is posted at $32. The Thomson/First Call consensus price target is $28. Shares ended the week at $26.34.
Delta Air Lines
This company consistently has ranked high with Wall Street, and it posted solid second-quarter earnings last week. Delta Air Lines Inc. (NYSE: DAL) and the regional Delta Connection carriers offer service to 334 destinations in 64 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft.
Wall Street analysts have long lauded Delta for the most extensive hedging policy among the airlines, and it owns and operates a refinery in addition to a sizable hedging book. Trading at a low 8.8 times 2016 estimated earnings, the stock is right in the metrics that look so solid.
Delta investors receive a 1.33% dividend. The UBS has a $49 price target, but the consensus price objective is higher at $56. The stock closed most recently at $39.98.