The old adage of “throwing the baby out with the bathwater” has happened year in and year out to good stocks when tax-loss selling season arrives. This year’s selling may have been exacerbated by worries over big capital gains taxes on the way. Many top stocks that have been hit hard may be some of the best bargains for investors looking to reset portfolios for 2022.
In a new Raymond James research report, equity strategist Travis McCourt screened the firm’s coverage universe looking for stocks rated Strong Buy or Outperform that have underperformed the S&P 500 by 10% or more in the past two months and are down 30% or more from their highs. The report notes that it is difficult to be sure if the selling is pandemic related, with worries over economic reopening after the Omicron variant arrived on the scene, or just true tax-loss selling.
Here we focus on the large-cap names that the Raymond James team spotlighted, and these five stocks look extremely attractive at current levels. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Activision Blizzard
This remains a top gaming pick on Wall Street, and with the holiday shopping season in full swing, this could be a very solid idea now. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide.
The company develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers. Its legacy franchise Call of Duty continues to be hugely popular.
Investors receive just a 0.81% dividend. The Raymond James price target on Activision Blizzard stock is $90, though the consensus target is higher at $93.62. The stock closed on Monday at $58.09 a share.
Delta Air Lines
This stock consistently has ranked high with Wall Street and, after a stiff reversal, looks like a great bargain now. Delta Air Lines Inc. (NYSE: DAL) provides scheduled air transportation for passengers and cargo in the United States and internationally.
Its domestic network is centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK and Seattle. Its international network is centered on hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle and Seoul-Incheon.
The carrier sells its tickets through various distribution channels, including its website and the Fly Delta app, online travel agencies, traditional brick-and-mortar agencies and other agencies. It also provides aircraft maintenance, repair and overhaul services, as well as vacation packages to third-party consumers, aircraft charters and management programs.
Raymond James has a Strong Buy rating and a $58 price target. The $53.68 consensus target on Delta Air Lines stock is also well above Monday’s closing share price of $38.14, after a 6% gain on the day.
Global Payments
As the economy continues to ramp up, this top company should benefit in a big way. Global Payments Inc. (NYSE: GPN) provides payment technology and software solutions for card, electronic, check and digital-based payments in North America, Europe, the Asia-Pacific and Latin America.
The company operates through three segments. The Merchant Solutions segment offers authorization services, settlement and funding services, customer support and help-desk functions, chargeback resolution, terminal rental, sales and deployment, payment security services, consolidated billing and statements, and online reporting services.
The Issuer Solutions segment offers solutions that enable financial institutions and retailers to manage their card portfolios through a platform, as well as commercial payments and ePayables solutions for businesses and governments.
The Business and Consumer Solutions segment provides general-purpose reloadable prepaid debit and payroll cards, demand deposit accounts and other financial service solutions to the underbanked and other consumers and businesses under the Netspend brand.
Investors in Global Payments stock receive a 0.50% dividend. The $195 Raymond James price target is less than the $200.07 consensus target. Yet, both are well above the $127.03 close after a pop of almost 6% on Monday.
PayPal
This stock has long been a Wall Street favorite and may be the strongest ideas of all of these damaged companies. PayPal Holdings Inc. (NASDAQ: PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide.
The company enables businesses of various sizes to accept payments from merchant websites, mobile devices and applications, as well as at offline retail locations through a range of payment solutions across its payments platform, including PayPal, PayPal Credit, Venmo and Braintree products.
PayPal’s platform allows customers to pay and be paid, withdraw funds to their bank accounts and hold balances in their PayPal accounts in various currencies.
Raymond James has set a $264 price target, and the posted consensus target is $281.04. PayPal stock closed at $184.86 on Monday.
24/7 Wall St.Qualtrics
This is another stock that has incredible potential that has been absolutely hammered. Qualtrics International Inc. (NASDAQ: XM) operates an experience management platform to manage customer, employee, product and brand experiences worldwide.
The company offers the Qualtrics Experience Management Platform, a system of action that helps businesses attract customers, engage employees, develop products and build a brand.
Qualtrics International also provides professional services that primarily consist of research services, through its DesignXM, which allows customers to gain market intelligence, as well as implementations, configurations and integration and engineering services to help customers deploy its XM Platform.
Raymond James’s $55 price target is a bit higher than the consensus target of $54.36. Monday’s final trade was reported at $33.87, after close to a 4% gain for the day.
These companies have very strong positions in their respective sectors and silos. Even though reopening fears, corporate fundamentals and tax-loss selling are the among issues behind the declines, they all make sense for long-term growth investors looking for top stocks at bargain-basement prices.
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