10 True Stock Winners Rising in a Down Market, Seeing Multiple Upgrades and Price Hikes After Earnings

February 3, 2018 by Jon C. Ogg

The stock market has proven that a sell-off actually can occur again. These market panics are never a welcome event when they are taking place because they feel bad, but they are actually quite necessary to see in rational markets. After a 665.75 point drop to 25,520.96, the Dow Jones Industrial Average is now down over 1,000 points from its all-time high. That took almost as little time as it did to get up there in there in the first place.

What investors have to consider now is that this bull market is now almost nine years old. And investors cannot ignore that the trend that has worked for over five years is to buy the top stocks and major indexes after each pullback. Investors are wondering how they should be positioning their portfolios for 2018 and beyond.

It’s important to think about the big picture after a sell-off. Corporate tax reform is only just starting to be felt, accelerating global growth is expected in 2018, better expensing and repatriation are taking place, and even pay raises and bonuses are being handed out to millions of U.S. workers. All this has to be considered for 2018. The markets got spooked by a rapid rise in longer dated Treasury yields, as well as some selective mixed earnings news from Apple and Alphabet and bad earnings news from Exxon and Chevron. And there is some additional fear that inflation may tempt the Federal Reserve to hike interest rates faster.

So what are investors to do looking forward in 2018? One strategy for investors to feel good about stocks into or after a sell-off is by focusing on the companies that are being treated the best by the market and the business cycle. That sounds simple enough, but this is far more pointed. A good rule is to pick companies that are beating earnings expectations, that also have strong expectations for the months and quarters ahead, and ultimately that are also the companies receiving multiple analyst upgrades or target price hikes. This is what we are referring to specifically.

The reality in a bull market is that investors should not be owning companies that are mired in problems and have no long-term remedy in hand. Sure, there are some exceptions. But why fight a great bull market? The rule in a major bull market is this: Don’t pay up to eat crow when there is an endless supply of free meat and potatoes.

24/7 Wall St. reviews dozens of analyst research reports each day of the week. While there are many analyst upgrades and price hikes in there, not so many stocks get analyst upgrades and price hikes from three or more analysts and see their stocks rise in a down market. In general, particularly in the earnings season in January and February of each year, it should be inferred that analysts on Wall Street are telling you these are the stocks they see as either the safest from downside or that they think will have solid upside.

Additional color and commentary have been added on most of the daily analyst calls, and some have been linked to more detailed and expansive pieces from last week. We also have shown a weekly and year-to-date performance on each stock. While we mentioned six companies as runner-ups, we screened out the stocks that fell during the week so that investors can see which strongly recommended stocks actually managed to rise in a down market during the week’s selling pressure.

As a reminder, the Dow fell 4.1% this past week, but it is still up 3% so far in 2018. The S&P 500 was down 3.9% last week, but it is still up 3.2% so far in 2018. And the Nasdaq 100 was down by 3.7% this last week, but it’s still up 5.7% year to date.

The following 10 stocks received multiple analyst rating upgrades or price target hikes and also managed to have a gain for the week, even during the sell-off from the week of February 2, 2018.

Amazon: Up 2% for the week, up 22% YTD — long live the Death Star!

Amazon.com Inc. (NASDAQ: AMZN) is everyone’s favorite stock at the moment. It beat earnings handily and is taking over America. Its shares were even up 2.87% at $1,429.95 on Friday despite the major equity sell-off. Its stock also hit an all-time high on Friday. Amazon was reiterated as Outperform and the price target was raised to $1,650 from $1,450 at Oppenheimer.

Other price target hikes came from Merrill Lynch ($1,650 from $1,460), Citigroup ($1,700 from $1,600), Cowen ($1,700 from $1,500), Deutsche Bank ($1,650 from $1,525) and Jefferies ($1,750 from $1,450). In more expanded coverage it seems there were more than a dozen calls, and some were outlined in detail about why their upside is so strong, and Wall Street is looking for Amazon to become an $800 billion powerhouse.

AT&T: Up 0.66% this week, still down 2.1% YTD — and dividends galore!

AT&T Inc. (NYSE: T) has been out of favor for so long that it almost feels weird when it receives multiple target hikes. The 10-year Treasury yield may be 2.85% now, but AT&T’s dividend yields over 5%. Numerous target hikes were seen this week, and AT&T’s strong week was even after its shares closed down 2.8% at $38.07 on Friday.

SunTrust Robinson Humphrey has a Hold rating, but it raised its price target to $40 from $36. Cowen also raised its target to $41 from $39. More positive calls were made as well, with Instinet (Buy) raising its target to $43 from $42 and Raymond James (Outperform) hiked its target to $44 from $40. AT&T’s 52-week trading range is $32.55 to $42.70.

Autoliv: Up 5% for the week, up 13.8% YTD

Autoliv Inc. (NYSE: ALV) may be overlooked by many momentum and growth investors due to its being in the field of automotive safety systems. It beat earnings expectation sand experienced multiple days of solid views into and after its report. Still, it gave back some big gains during Friday’s sell-off to close out the week at $144.61, after having been a $137 stock earlier in the week.

Mizuho has a Buy rating and raised its Autoliv target to $160 from $140, and Robert W. Baird raised its rating to Outperform and its target price to $192 from $137. JPMorgan has a Neutral rating, but it lifted its target to $147 from $138, and RBC Capital Markets has a Sector Perform rating and its target was raised to $142 from $126. Autoliv’s 52-week range is $96.08 to $152.57.

Boeing: Up 1.66% this week, up 18% YTD — dominating the friendly skies!

Boeing Co. (NYSE: BA) was the best Dow stock of 2017 and its strength has continued into 2018. Its stock was unable to escape the undertow of the Dow and S&P selloff on Friday, with a 2.2% drop to $348.81. Still, it was up for the week, and analysts are stepping all over themselves as Boeing is expected to increase jet production this year.

Some of the price target changes seen were Bernstein raising its target to $422 from $402, Credit Suisse raising its target to $443 from $375, and Merrill Lynch raising its target to $470 from $395. There were about 10 calls, and most have been featured in detail. Boeing’s 52-week range is $162.38 to $361.45.

Crane: Up 3.2% this week, up 8.9% YTD

Crane Co. (NYSE: CR) rose to over $102 after beating earnings and revising 2018 guidance, but a 2.3% slide on Friday had its shares close at $97.16. Even after selling down more than $5 from its peak, the stock was still up from the $94.09 prior week’s close.

Canaccord Genuity (Buy) raised its target price to $110 from $95. Oppenheimer (Outperform) raised its price target to $105 from $92, noting that earnings visibility into 2020 should trump any decelerating trends. Stifel was more aggressive as it raised its rating to Buy from Hold and the price target was raised all the way up to $113 from $99. Crane’s 52-week trading range is $70.56 to $102.65.

eBay: Up 8.3% this week, up over 17% YTD

eBay Inc. (NASDAQ: EBAY) had a much better week than its former partner PayPal. After beating earnings and outlining its 2018 outlook, eBay is not going to keep its future tied up to PayPal now that they are independent. Even a 4% drop to $44.30 on Friday did not kill eBay’s weekly gains.

RBC Capital Markets raised its rating to Outperform from Sector Perform and assigned a $51 price target. eBay was maintained as Neutral with a $46 price target at Wedbush Securities, and it was maintained as Hold at Stifel, though the firm raised its target to $41 from $37. 24/7 Wall St. outlined in detail how more than a half-dozen analysts now greatly favor eBay over PayPal. eBay shares have a 52-week range of $31.80 to $46.99.

Edwards Lifesciences: Up 2.8% this week, up 17% YTD

Edwards Lifesciences Corp. (NYSE: EW) was up 0.3% at $126.98 ahead of earnings and was indicated up about 1.5% at $129.00 after beating expectations, and Friday’s stock gain ended up 3.8% at $131.83 despite a massive stock market selling session. Edwards Lifesciences saw multiple positive ratings along with higher price targets: Jefferies (Buy, to $150 from $135), Stifel (Buy, to $155 from $130), Wells Fargo (Outperform, to $150 from $141) and Canaccord Genuity (Buy, to $174 from $140). Edwards Lifesciences now has a 52-week trading range of $86.55 to $128.61.

Electronic Arts: Up 8.1% this week, up 18.5% YTD

Electronic Arts Inc. (NASDAQ: EA) shares screamed higher on Wednesday after its third-quarter earnings report, and the stock hit a new high of $131.01 afterward. Its weekly gain was quite strong, even after falling 2.8% to close at $124.53 on Friday. It seems EA has been able to overcome some of the Star Wars fears.

Electronic Arts was reiterated as Outperform and the price target was raised to $143 from $131 at Credit Suisse, and Jefferies reiterated its Buy rating and its target price was raised to $150 from $138. Needham also reiterated its Buy rating and raised its target price to $135 from $130. Benchmark reiterated its Buy rating and raised its target price to $141 from $136. This was covered in more detail, with multiple other firms raising their targets. EA’s 52-week range is now $80.40 to $131.01.

Mastercard: Up 0.1% this week, up 12.7% YTD

Mastercard Inc. (NYSE: MA) may not seem like a great inclusion, as it was up just 0.1% this week, but it is better than the broad market and still up a lot this year. Mastercard saw multiple targets raised: Barclays ($195 from $178), BMO Capital Markets ($205 from $174), Deutsche Bank ($208 from $185), Keefe Bruyette & Woods ($205 from $178) and RBC Capital Markets ($209 from $180).

Mastercard did not escape Friday’s panic, but its drop was just 1.4% to $170.55. Mastercard also has a 52-week range of $105.69 to $177.11, and it’s worth pointing out that the $177.11 high was actually put in on Friday morning before the carnage took down so many gainers.

Qorvo: Up over 18% this week, up over 21% YTD

Qorvo Inc. (NASDAQ: QRVO) did not escape Friday’s sell-off, with a drop of 3.1% to $80.77, but its new 52-week range is $62.68 to $85.24. The company provides radio frequency solutions and technologies for mobile devices, infrastructure and defense and aerospace. Northland Securities raised its rating to Outperform from Market Perform and Instinet raised its rating to Buy from Hold.

Merrill Lynch raised its rating to Neutral from Underperform, and Mizuho maintained its Neutral rating but raised its target to $74 from $70. Needham has a Buy rating and raised its target to $88 from $84. Downen reiterated its Market Perform rating but raised its target to $85 from $78.

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One example of a great earnings move and seeing multiple analyst upgrades was Microsoft Corp. (NASDAQ: MSFT). Still, it was not included this weekend because shares ended down 2.4% this week, despite being up by 7.3% so far in 2018. It still scored a dozen or more analyst target hikes along with very positive ratings.

There were five other runners-up in the week scoring multiple analyst upgrades or target price hikes. The market sell-off and some health care fears hit some of them. If the market euphoria resumes, these stocks may all end up being considered stocks that were oversold after good news due to outside events. These were listed as follows:

  • Caterpillar, down 5.7% this week and down 0.06% YTD.
  • Pfizer, down 6.1% this week but up 1.1% YTD.
  • Stryker, down 3.9% this week but up 4.8% YTD.
  • Vertex Pharmaceuticals, down 176% this week but up 10.9% YTD.
  • Visa, down 4.2% this week but up 6% YTD.

A reminder from Warren Buffett will perhaps calm major market fears: Be fearful when others are greedy, and be greedy when others are fearful.