This year, for the first time in many years, active managers are outperforming index funds, and that should be a loud wake-up call to passive investors. After a more than 10-year bull market, the bull is tired. Although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial “stock pickers” market.
So, many portfolio managers and investors are looking for stocks that can outperform into year’s end and generate a little finish-line alpha. The analysts at SunTrust Robinson Humphrey put together a list of 33 stocks ideas that they feel will outperform into year-end 2019.
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The SunTrust team noted this when discussing the high-conviction equity ideas:
Many of our institutional clients are looking for help as they screen for stocks that are poised to outperform into year end, with characteristics or catalysts that will likely become apparent to the market in the fourth quarter. Furthermore, with the recent increased volatility, partly driven by the “great rotation” – out of momentum/growth into value/ laggard names – we are receiving more requests from money managers for value ideas which have lagged, hence the timeliness of this effort.
We decided to look at the technology companies in the report first, and found four of the nine in the report that make good sense for accounts with a degree of risk tolerance. We stuck with the large-capitalization companies, as it appears the market may be in correction mode. All are rated Buy at SunTrust.
Everbridge
Investors may not be fully aware of this stock with big upside potential. Everbridge Inc. (NASDAQ: EVBG) is a cloud provider of critical communications and enterprise safety applications, including emergency notification, incident management, IT alerting and secure messaging.
The core emergency mass notification system enables organizations to communicate with employees, law enforcement, suppliers and other third parties over secure, reliable infrastructure across multiple communication channels (phone, text, email) in the event of local or organization-specific disasters.
Everbridge enterprise customers use its IT Alerting solution to streamline incident response and accelerate resolution in order to reduce unplanned IT work and downtime and to increase IT efficiency. IT Alerting is leveraged as an enterprisewide solution, helping organizations break down the silos between responder teams to ensure the quickest resolution to business disruptions.
The analysts’ report noted this:
We view Everbridge as a unique story associated with keeping employees/citizens safe and businesses/assets running smoothly. We believe global threat proliferation related to natural disasters, man-made tragedies such as active shooter and terrorist events and cyber attacks drive demand and catalyze revenue growth for many years
SunTrust has put a $100 price target on the shares, while the Wall Street consensus target was last seen at $74. The stock ended trading on Wednesday at $65.84, up over 3% into a bad tape.
GoDaddy
This company is probably the most well known for constructing websites. GoDaddy Inc. (NYSE: GDDY) is a technology provider to small businesses, web design professionals and individuals. It delivers cloud-based products and personalized customer care. The company operates a domain marketplace, where its customers can find the digital real estate that matches their idea. It provides website building, hosting and security tools to help customers construct and protect their online presence.
GoDaddy provides applications that enable connecting to customers and managing businesses. It also provides search, discovery and recommendation tools, as well as a selection of domain name for ventures. It provides productivity tools, such as domain-specific email, online storage, invoicing, bookkeeping and payment solutions to run ventures, as well as marketing products.
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