On top of a resurging pandemic and a recession, most investors have been surprised and somewhat baffled that the stock market has been able to rally so much. The market cannot price in the outcome of the coming presidential and congressional elections yet, but it already is discounting that some form of a vaccine or a treatment for the coronavirus is on the way.
As earnings season kicks off, many investors feel like they have missed the boat and that many of the key stocks in the market have simply gotten away from them due to how much they have rallied from the panic-selling lows seen in March. Some key stocks are now even above their consensus targets. It turns out that those fears of key stocks being overvalued are perhaps misguided, according to some key analysts on Wall Street. Many recent analyst upgrades are even directly recommending buying shares of key blue chips ahead of the imminent earnings announcements in July and the start of August.
While traditional blue chips were considered to be Dow Jones industrial stocks, currently more than 60 U.S.-based stocks have a $100 billion market cap or higher. Another 20 or so either used to have a $100 billion market cap or are now contenders to become mega-cap stocks.
In recent days, eight key analyst calls that have stood out with major Buy and Outperform ratings that come with more than the 8% traditional total return implied upside from major research firms. These analyst calls are largely ahead of major earnings releases. Consensus target prices and other valuation data is from Refinitiv.
While no analyst call should be used as a sole reason to buy or sell a stock, investors are looking for fresh ideas about how to be positioned going into what will be a challenging earnings season, ahead of the election and as 2021 comes closer.
Though Amgen Inc. (NASDAQ: AMGN) may not be a Dow stock as a traditional blue chip, its $150 billion market cap makes it the largest of all legacy biotech stocks. Amgen’s drugs are steady, and its shares are now close to an all-time high. It also still comes with a 2.5% dividend yield, and the company is ready to return even more capital to shareholders over the coming years. Credit Suisse reiterated Amgen as Outperform and raised its price target to $290 from $252 on Monday.
Amgen was last seen trading at $260.93, and it has a consensus target price of $256.08. Its 52-week trading range is $173.12 to $264.97.
Needham reiterated Apple Inc. (NASDAQ: AAPL) as Buy and raised its target price to $450 from $350 last week, but this follows many major upgrades and even a recent $450 price target with a much higher $525 “bull case” from Wedbush Securities. Apple had some supply chain issues earlier in the year, and it recently has begun closing stores where the coronavirus has been spreading rapidly again.
It turns out that not even a pandemic will slow iPhone demand, and the upcoming iPhone 12 for 5G is being priced-in as that upgrade super-cycle for which analysts and investors have been looking. Amazingly, this is now close to a $400 stock. Even the most cautious analyst out there is still positive on the coming 5G wave.
Apple stock recently traded at $389.17, in a 52-week range of $192.58 to $399.82. The consensus price target is $367.37, but this was under $350 just over a week ago.
Boeing Co. (NYSE: BA) may seem risky as hell in a recession and at a time where airlines around the globe are looking to fire pilots and workers rather than buying airplanes. Despite airplane order cancellations out the you-know-what, it seems that investors do not even care that the 737 Max issues remain in place while it is running out of room to keep them anywhere.
Goldman Sachs recently touted Boeing as a top aerospace and defense stock, and its implied upside is nearly 40% at that firm. The call even telegraphs a belief that Boeing will be able to communicate greater visibility and confidence in all its key issues along with earnings, despite this earnings report expecting to be an outright disaster compared to prior years.
Boeing stock was last seen at $173.51, with a 52-week range of $89.00 to $391.00. Analysts have a consensus price target of $177.86.