Wall Street sees double-digit upside ahead for these 6 stocks. Here’s why.
We’re already half way through 2019. Records have been broken so far this year, and the market is near all-time highs.
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But while many stocks have soared, not all boats have been lifted. Now is the time to watch out for those stocks that have struggled this year that may be due for a comeback.
Analysts have been telling clients that there are opportunities among stocks that ended the first half of the year in the red.
Names that have been recommended going into the second half include Chemours Company (NYSE: CC), Cigna (NYSE: CI), Marathon Petroleum (NYSE: MPC), Pure Storage (NYSE: PSTG), Six Flags (NYSE: SIX), and TripAdvisor (NASDAQ: TRIP).
Of the group, Chemours Company is down the most so far this year at -32%, followed by TripAdvisor at -15%, Cigna at -7%, Marathon Petroleum at -6%, Six Flags at -4%, and Pure Storage at -3%.
SunTrust recently rated Chemours a Buy, arguing that the sell-off in the stock is overdone. “In a recent court filing, CC quantified potential high-end liabilities of approximately $2.5B. We estimate that CC’s current valuation of 4.1x 2020E EBITDA assumes exposure of ~$5.5B, or more than 2x the upper end of what CC has been able to estimate. With risks being more than discounted in the current share price and Ti02 fundamentals stabilizing, we maintain our Buy rating.”
Analysts’ average price target for CC is $38.10, indicating possible upside of a whopping 99% over the next twelve months.
Health insurer Cigna has jumped nearly 11% over the last month after the Trump Administration dropped their plan to eliminate drug rebates from government prescription drug plans.
“We expect news to be favorable most specifically to entities with larger pharmacy benefit management exposure as it eliminates the uncertainty and overhang that the rebate rule had on those companies,” analysts at Citi bank wrote.
The firm rates the stock a Buy and lists it as a “top pick.” Overall, Cigna has a consensus Buy rating and an average price target of $220.96 – 25% higher than Thursday’s closing price.
Raymond James recently gave Marathon Petroleum a Strong Buy rating, writing “While Marathon Petroleum’s 1Q19 was a shakier start to the year than we had hoped, we think 2Q19 will prove to be a solid bounce-back quarter (which should help improve the narrative as well). We still believe MPC is uniquely positioned to optimize its now industry leading refining position, while driving growth and value in the retail and midstream segments.”
Despite the bearish view on Marathon, Raymond James believes the company’s current strategy, “along with increasing returns to owners, continues even if the market is currently skeptical towards the MPC story.”
MPC currently has eleven Buy ratings and two Strong Buy ratings, with an average price target that’s 53% higher than the current price.
Wells Fargo was the third in a month to upgrade Six Flags to a Buy.
The company is expected to report earnings on July 24, and the bank wrote that Six Flags has multiple “positive catalysts” despite its “volatility.”
“We believe concerns surrounding Q219 weather, China trade implications and dividend sustainability, are fairly discounted,” the Wells Fargo analysts said.
The theme park operator is currently rated a Buy on the Street and analysts’ average price target is $61.33, suggesting possible upside of 15% over the next twelve months.
Thirteen analysts rate Pure Storage a Buy. Their average price target is 61% higher than the stock’s price as of Thursday’s close.
“Pure Storage remains in the top quintile of revenue growth for IT hardware, given it remains unencumbered by legacy hard-disk drive technology, and the company continues to build an economic moat around its storage array offerings,” Cowen analysts wrote.
And finally, travel and restaurant website TripAdvisor was just upgraded to a Buy at Needham and added to its “conviction list.”
“We think the setup remains super attractive on a compelling second derivative directional play into 2H19,” Needham analysts said. “In particular, we think 2Q likely marks the low watermark for Hotel, Media & Platform y/y declines, and while it may take until 4Q for a return to growth, at the current valuation, we view expectations as sufficiently low, given the Experiences segment underperformance in 1Q and likely acceleration into 2H.”
Analysts average price target for TRIP is $55.80, indicating possible upside of 22% over the next twelve months.