Investors will never stop looking for the best time to enter or exit the market, but making the right move is very difficult. As famed investor Peter Lynch put it, “Investors preparing for or trying to anticipate corrections have lost far more money than was lost from the corrections themselves.”
With that in mind, Ari Wald, head of technical analysis at Oppenheimer, says a better way to gauge the state of the market is to follow the trend. More specifically, from a technical perspective, to see how much the S&P 500 is trading above or below its 200-day moving average (200DMA). And sometimes, looking at the charts, an overbought condition could still represent a bullish signal.
“Not surprisingly, the best returns have come when the index is significantly oversold (>10%) below its 200-day moving average,” notes Wald. “However, the index has also outperformed when it is >10% above its 200DMA; as is currently the case.”
In fact, Wald argues that the S&P 500 is still on track to hit 4,600, up another 6% from here.
Meanwhile, analysts at Oppenheimer have pointed to two stocks that could benefit from this trend, and they're not the only ones expressing confidence in these names. Searching these tickers through the TipRanks database, we find that both are Strong Buys according to analyst consensus. Let's see why these two stocks could be a continuation of the uptrend.
Uber Technologies (UBER)
We start with a well-known name and a pioneer in the transport industry. Uber introduced a new and innovative business model that challenged traditional taxi services. Through the use of technology and the power of mobile apps, Uber has transformed the way people greet and experience transportation. His platform provided drivers with a more convenient, accessible, and often cheaper option, while also providing drivers with additional income opportunities.
Over the years, Uber has expanded its services beyond its original remit. The company launched UberEats, a grocery delivery platform, and also ventured into other areas, such as freight transportation, with Uber Freight.
UBER stock has performed brilliantly this year, up 75% so far, a trend that continued after the company released its Q1 results in early May. Gross bookings rose 19% year over year to $31.4 billion, while revenue rose 27.5% year over year to $8.8 billion, ahead of Street's guidance by $90 million surpassed. Earnings per share of -$0.08 improved from the prior-year figure of $0.27 and beat Street's expectations by $0.01. The company delivered a record $549 million in free cash flow and signaled profitability will continue to improve in the second quarter.
Oppenheimer 5-star analyst Jason Helfstein points to the strong year-to-date performance, but still touts Uber as a “top choice for large-caps” and believes strong catalysts are ahead.
“We believe UBER will continue to benefit from the normalization of spending from goods to services, exposure to the strongest consumer categories and tailwinds in return to work,” said Helfstein. “Equities should already benefit from the forthcoming inclusion in the S&P 500 in December. We expect Uber to be eligible for inclusion in the index in December this year after the company reported expected GAAP profitability in Q3 '23, resulting in positive TTM GAAP net income. In general, inclusion in an index increases demand for a stock and compels purchases of mutual and index funds.”
Those comments form the basis of Helfstein's Outperform (ie, Buy) rating, while his $65 price target suggests shares will rise about 50% in the year ahead. (To view Helfstein's track record, click here)
Overall, this is a rare stock with a lot of coverage that everyone agrees on. Based on 30 unanimous purchases, UBER receives a consensus rating of Strong Buy. At $52.18, the average target has scope for a 20% 12-month gain. (See Uber Stock Forecast)
Simulations Plus (SLP)
For our next Oppenheimer-backed name, we're staying in the technology space, but looking at a company that operates in a completely different segment. Simulations Plus provides simulation and modeling software primarily aimed at the pharmaceutical and biotechnology industries.
The company offers a wide range of software solutions that help researchers and scientists predict and optimize drug behavior, assess their safety and efficacy, and streamline the drug development process. The company's flagship product, GastroPlus, is a software package for simulating and modeling the gastrointestinal absorption, pharmacokinetics and pharmacodynamics of drugs. Simulations Plus also offers additional software tools such as ADMET Predictor, DDDPlus and MedChem Studio to help with various aspects of drug discovery and development.
Those products helped sales soar 6% to $15.8 million in the second quarter of fiscal 2023 (the February quarter), though that figure was slightly below consensus estimates. On balance, luck was greater as earnings per share came in at $0.20, ahead of the $0.18 analysts were expecting. Looking ahead, the company kept its full-year revenue guidance of $59.3 million to $62.0 million (an increase of 10% to 15%) and EPS guidance of 0.63 to 0.67 US dollar fixed.
More recently, SLP has broadened its scope by acquiring competitor Immunetrics for $15.5 million, entering oncology and immunology. That's a good move, says Oppenheimer analyst Francois Brisebois, who expects further M&A measures.
“Given SLP's history of successful and disciplined mergers and acquisitions, we view the acquisition as really positive as it should strengthen its quantitative systems pharmacology (QSP) offering. With FY3Q23 just around the corner (FY3Q22: 06/07/22), we expect more information on the impact of the forecast shortly,” stated Brisebois. “Given the historical importance of mergers and acquisitions to SLP's growth, we believe the Company's continued strong cash position ($115.3 million at the end of fiscal 2023 second quarter: February) and the value-added nature of acquisitions will support it.” well positioned for further mergers and acquisitions in the future.”
To that end, Brisebois rates SLP stock as “Outperform” (i.e., Buy), unsurprising given his comments, and puts a price target of $67, suggesting a 47% upside potential for the stock within a year. (To view Brisebois' track record, click here)
Three other analysts recently covered SLP reviews and also commended the company's good credentials, making the consensus view here a strong buy. The forecast calls for a one-year gain of about 41% assuming the average target is $64. (See SLP stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.