The week of May 17, 2019, started out as though the China trade tariffs and tit-for-tat retaliation was going to kill the strong economy and the 10-year bull market once and for all. That turned out to not be the case, and the drop in the major indexes ended up being far less than painful. Some companies even managed to see their shares surge. They rallied either on strong earnings or they could point to corporate news and other outside forces, and some companies have proven that they have little to no real threat from China at all in their daily decision-making on running the company.
With the worries of “sell in May and go away” coming right at the same time the stock market is close to all-time highs, many investors are looking at new ideas and at new companies and sectors as a place to hide out in for the summer and maybe even the rest of 2019. Many great ideas may come from analyst research reports and other group forecasts. 24/7 Wall St. reviews dozens of analyst calls every morning, and that makes for hundreds of analyst reports each week. Some of these stock and sector picks are stocks to buy, and some are stocks to sell or avoid.
After a review of the analyst calls for the week of May 17, 10 stocks stood out. They either have large market caps or are well known to the public, and Wall Street analysts have Buy or Outperform ratings and see big upside. Traditionally at this stage of the bull market, total return potential is 8% to 10% in Dow Jones industrials and S&P 500 stocks. Some of the following picks have far higher implied upside.
24/7 Wall St. has added color on each analyst call and included where the stocks have been and the implied upside, and we have even included trading color and how the calls generally compare to the Refinitiv analyst price targets. It is important to understand that there is no free lunch when it comes to investing. That means any analyst call that sounds enticing or looks promising should be a starting point of research and investment decision-making rather than a conclusion.
Here are 10 analyst calls with strong implied upside from the week of May 17, 2019.
Chevron Corp. (NYSE: CVX) was added to the Americas Conviction Buy list at Goldman Sachs on May 15, and the firm’s $144 price implied a total return of 24% for the oil giant at the time. While oil stocks are stuck in a range right now, the firm noted that it supports Chevron’s capital discipline to walk away from acquiring Anadarko as it will collect a $1 billion breakup fee and also will increase its own share repurchases. On May 16, Morgan Stanley maintained its Overweight rating and lowered its target price to $149 from $150.
Chevron shares closed down 0.2% at $120.52 on Friday. The consensus target price is $140.18, and the 52-week trading range is $100.22 to $130.39.
Cincinnati Financial Corp. (NASDAQ: CINF) was raised to Outperform from Neutral and the price target was raised to $110 from $90 at Credit Suisse on May 17. Credit Suisse raised its estimates above consensus because the reserve release likely will exceed expectation, and the firm noted its ability to cherry pick the best risks and that $450 million of capital will be freed up in the coming years.
Cincinnati Financial closed up 0.7% at $97.15 a share ahead of the call, and it has a consensus analyst target of $88.31. It is a member of the 50-year dividend hike club, along with 10 other companies, and the stock closed up by 0.6% at $97.73 on Friday with a consensus target price of $88.31.
Foot Locker Inc. (NYSE: FL) was raised to Buy from Neutral and the target price was raised to $73 from $62 (versus a $55.47 prior close) at B. Riley FBR on May 17. The call cited improving sales trends in its footwear business and a lower effort around discounts and promotions.
Foot Locker’s shares closed down 0.5% at $55.20 on Friday. The consensus analyst target is close to $72, and the 52-week trading range is $43.34 to $68.00. It also has better than a 2.5% dividend yield. This represents a total return opportunity of close to 35% if the firm’s call is proven true.
Johnson & Johnson (NYSE: JNJ) was reiterated as Outperform and the price target was raised to $156 from $152 at Credit Suisse on May 16. The firm’s call came after the Annual Business Review encouraged the perspective on key marketed and pipeline products and the company’s overall bullish commentary pointed to pharmaceutical segment sales alone reaching $50 billion by 2023.
Johnson & Johnson is a dividend-hiking monster that has managed to churn out returns over time. Its shares closed up 0.3% at $138.61 on Friday, in a 52-week high of $148.99 and with a consensus target price of $148.12.
Owens-Illinois Inc. (NYSE: OI) was raised to Outperform from Market Perform and the price target was raised to $24 from $20 (versus a $17.21 close) at Wells Fargo on May 15. The firm believes that Owens-Illinois has made the necessary investments to better position itself to capture more share in the glass container business. A stronger balance sheet is also allowing it to redeploy capital with a dividend and share buyback.
Its shares closed out the week at $17.36, after nearly a 1% drop on Friday. The 52-week range is $15.67 to $20.78, and the consensus price target is $20.69. Owens Illinois also was just featured as one of our own 13 dirt cheap value stocks trading under 10 times earnings as well.