Half of 2023 is essentially over. It's been quite a start to the year. Big Tech has rallied ahead, leaving most other stocks in the dust. The
is up about 37% year-to-date. Based on data from 1986, this is the best start to the year on record.
Investors feared that the biggest names such as B. can only squeeze out a little juice
(Ticker: AAPL) and
(NVDA) should be looking for some stocks that can close the performance gap in the second half of 2023.
Barrons tried to identify some candidates. We searched that
for stocks with rising earnings estimates and falling share prices. We found about 100 stocks where Wall Street has taken estimates over the past three months and where investors have responded to a brighter outlook by selling shares, causing prices to fall.
|company / ticker||Market Cap (Billions)||YTD change||3 Month EPS Revision||PER 2023|
|Moderna / MRNA||$46.9||-32%||2%||N / A|
|Enphase / ENPH||22.1||-39||2||29.1|
|Alteryx / AYX||3.1||-14||68||63.7|
|ChargePoint / CHPT||3.0||-12||1||N / A|
|Nextera / NEE||148.6||-12||1||23.6|
|CNH Industrial / CNHI||19.0||-12||1||8.3|
|Harley Davidson / HOG||4.9||-18||2||7.2|
Sources: Bloomberg; FactSet
This setup is a chance, but 100 is a lot. We paired this list by looking for stocks that either show large differences between estimate revisions and stock returns or large year-to-date losses. Almost every screen has a qualitative element. In this case, we want to avoid value traps – stocks that are getting cheaper for a reason.
(Any stock with rising valuations and falling price is by definition getting cheaper.)
Eight stocks appear to have a chance for a trend reversal. The octet, in no particular order, is:
(Ticker: MRNA), solar technology company
(ENPH), software manufacturer
(AYX), electric vehicle charging company
(NEE), mechanical engineer
It's an eclectic mix. Moderna and ChargePoint are not profitable. Moderna made big bucks in 2022 but less Covid vaccination means less profit. Still, the company has attractive technologies despite its recent boom-bust cycle. ChargePoint is essentially a startup capitalizing on the rise of electric vehicles. It's the most valuable EV charging company and a good place to start for investors looking to buy something different
(TSLA) Stock up more than 100% so far in 2023.
NextEra and Enphase are both giants in the renewable energy space. Utility stocks have fallen somewhat out of favor as technology has become a dominant market force. Enphase makes technology for solar power, and investors were worried about falling prices. However, Jeffrey Osborne, an analyst at TD Cowen, recently wrote that prices are now “stable”.
Harley is the least popular of the stocks listed, with only 50% of analysts giving the company a buy stock rating. The average buy rating ratio for a stock in the
is about 55%. Stocks also trade for about seven times estimated earnings, making them a sort of value-driven contrarian pick.
CNH Industrial doesn't trade at a huge multiple either, around eight times 2023 earnings estimates, but business is doing well and the company is comparable
(EN). Both benefit from the trend towards smart farming technologies that save farmers money. Deere stock is trading at about 13 times.
Nasdaq stock is down in part due to the big Adenza acquisition. Investors may not be given enough credit for the company to integrate and grow in the future.
Alteryx provides data analysis software and is growing revenue at about 15% per year. At more than 60 times earnings, but earnings estimates are up about 68% over the past three months. Analysts now expect the company to earn about 68 cents in 2023, up from previous estimates of about 40 cents.
The eight situations are fascinating. Of course, a stock screen is just a start. After attractive ideas are identified, the harder work of evaluating and scoring begins.
Write to Al Root at [email protected]