July was one of the strongest months in recent memory, as markets cruised higher across the board. In fact, the S&P 500 posted roughly a 9% gain for the month, after seeing its worst start to the year since 1962. Obviously, the other averages are hurting from the first half of the year, but as a recovery may be in the works, there are questions as to which stocks investors should get in for the long trip back up.
Some investors are bottom-fishing and looking for companies that have been beaten up the most because they might stand to recover the most if everything goes back to normal. However, many times these companies that have been beaten up are still susceptible to downside and could very well be a value trap if the fundamentals have not come back around.
Luckily, earnings season is underway, so we have a way of measuring companies with fairly recent numbers in order to find the best picks. Here, 24/7 Wall St. looks at a handful of blue chip stocks that have been beaten up so far this year but that could also be a value trap. At least that’s what some analysts are thinking.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cisco Systems Inc. (NASDAQ: CSCO) shares were down about 29% year to date, though they have seen a nice bump over the past month of roughly 4%. Earnings are about a week away, and analysts already have their predictions. Consensus estimates are calling for $0.82 in earnings per share (EPS) on $12.7 billion in revenue. The same period of last year had $0.84 in EPS on $13.1 billion in revenue.
J.P. Morgan recently rated Cisco at Neutral with a $51 price target. That implies downside of 5% from the consensus price target of $53.42. The stock was trading near $45 on Tuesday, in a 52-week range of $40.82 to $64.29. It has a dividend yield of 3.4%.
For most of the year, Walt Disney Co. (NYSE: DIS) was perhaps the worst performing Dow stock, but the House of Mouse has bounced back nearly 14% over the past month. However, year to date the stock is still down closer to 30%. Look out for Disney earnings later this week, when analysts are forecasting $1.00 in EPS on $20.7 billion in revenue. The same period of last year had $0.69 in EPS on $17.0 billion in revenue. Although Disney’s numbers should be improving, there was a huge shock to the stock at the onset of the pandemic that has made it tough to run comps since.
Goldman Sachs recently rated Disney as a Buy. Its $130 price target implies downside of 2% from the consensus price target of $133.15. The stock was trading near $109, in a 52-week range of $90.23 to $187.58.
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