With stocks close to all-time highs again, many investors have missed out on the great stock market recovery of 2020. It turns out that trillions of dollars of stimulus money, and more potentially on the way, have trumped the perpetual election fears. Now many investors are having to look for new ideas about how to make money when they also have worries that the stock market gains may be getting ahead of reality.
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24/7 Wall St. reviews dozens of daily analyst upgrades and downgrades. While many stocks have seen analyst downgrades on valuation, or with analysts just maintaining ratings and raising price targets, some of the battered stocks that have not risen back to their highs are attracting some interesting analyst upgrades and new coverage.
Investors should never use one analyst report as a sole reason to buy or sell a stock. Doing more research is always a good idea, but this is the starting point for many investors who are looking for upside that the market may have overlooked. It’s also worth noting that stocks do not keep rising just because an analyst believes they should be valued higher than the current share price.
These seven stocks remain valued at great discounts to their highs and have started to see key upgrades and positive coverage with calls for much higher upside. Note also that these calls are coming right before the launch of earnings season. Does that mean they are spring-loaded for upside surprises? That remains to be seen.
Ford
Ford Motor Co. (NYSE: F) now has a new CEO and some investors have taken note. Benchmark raised the shares from Hold to Buy with a $10 price target on October 12. That represented 38% in implied upside from its $7.25 prior close, but Ford shares rose 5.8% to $7.67 on that upgrade. Benchmark noted that earnings may propel the shares higher, based on better than expected production in North America. The firm also sees a better shift in the mix of its sales and better activity in auto credit markets.
While Ford had to abandon its dividend due to the recession, its 52-week high is still up at $9.57 a share, and this was a $15 stock about five years ago. The prior Refinitiv consensus analyst target price was $7.69, and Benchmark is not the highest sell-side target out there.
Most analysts remain less aggressive on Ford, but its pact with Volkswagen for the electrification of autos may be a hidden source of value to investors. If the economy does not take a double-dip in the coming months, then it is even conceivable that Ford could resume paying a more modest dividend.
General Electric
General Electric Co. (NYSE: GE) is still unloved on Wall Street these days, but it’s still one of the most important employers in America. Goldman Sachs resumed coverage with a Buy rating on October 9, and the $10 price target represented 47% upside from its $6.80 share price. It no longer matters that GE was a $30 stock before its woes came in the post-Immelt years. The stock was obliterated due to its aircraft-related sales seeing a sudden flop as the airlines all became troubled customers.
Goldman Sachs did warn on October 9 that the call could be a bit premature. That said, it noted that GE’s fundamentals are bottoming and a coronavirus vaccine coming available will rekindle the airline demand. GE did receive a concerning a Wells Notice from the U.S. Securities and Exchange Commission in the days ahead of this call.
GE’s consensus target price was $7.90, and the shares were at $13 before the pandemic crushed the economy and GE’s end-user customers. GE remains unpopular with analysts, and now it is up to the company to prove it can rekindle cash flows with its current portfolio of operations.
Gilead Sciences
Gilead Sciences Inc. (NASDAQ: GILD) is perhaps the most boring story in biotech, even though the company is making grand acquisitions to expand its offerings into the future of cancer treatments. Now it has to make those expensive buyouts pay off. One helping hand is that Gilead’s remdesivir has received great publicity after President Trump was able to leave the hospital so soon after being given a multiday treatment of the drug. The company has since released more positive data showing that the drug shortens the recovery time in very ill patients.
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