There is a very good chance that the S&P 500 (NYSEARCA:SPY) could fall another 25% or more, but the news isn’t bad for all stocks. The hurricane predicted by Jamie Dimon is coming, others say the economy is broken, and yet there are sectors, industries and individual stocks that are still seeing positive activity from the analysts.
Those are stocks investors should watch out for, as names like FedEx (NYSE:FDX), which just reported a big miss while forecasting a global recession, are seeing a massive round of downgrades and falls.
Morgan Stanley Loves Miners
Morgan Stanley (NYSE: MS) just made a major change to its mining outlook by upgrading a number of names in the group. The company improved Alcoa (NYSE: AA), Teck Resources (NYSE: TECK), and Nexa Resources (NYSE: NEXA) to Overweight and Southern Copper Corporation (NYSE: SCCO) to Equal Weight while increasing price targets for most.
The analyst says the group offers value and also has the prospect of profit. “We have become selectively more positive about mining stocks as most of the stocks in our hedging trade have increasingly attractive stock valuations,” Carlos de Alba wrote in his report.
And this activity is not limited to Morgan Stanley either. Targets for all stocks in the group have declined year on year, but sentiment and price targets are firming.
The stock with the lowest consensus target, as indicated by the data from Marketbeat.com, is Southern Copper Corporation at 13%, but Morgan Stanley sees 17% of upside potential and all of its new targets point to double-digit upside potential. Alcoa and Nexa Resources are both tapped for 85% gains according to the consensus figures, while Tech should see at least 40%.
The sentiments for Darden Restaurants
Darden Restaurants, Inc (NYSE: DRI) will report earnings next week and get an upgrade for the news. Baird’s latest channel checks have seen restaurant sales up 6% in the first week of September and trending in the +18% to 20% range in the 3-year stack, boding well for this operator.
The company’s chains are not only well-known, but also loved and dominate important parts of a market where competition has evaporated in the past two years. The company has received at least four comments this month alone, including 3 increased targets and 1 started reporting at Outperform with a price target above Marketbeat.com’s broad consensus estimate, which predicts about 10% of the upside potential for the stock.
Darden Restaurants also offers an interesting dividend. The stock pays about 3.70% with shares trading near $128 and there is also a positive outlook for distribution growth. The payout ratio is a bit high near 60%, but the sustainability outlook is positive and should support additional increases if not at the recent 15% CAGR the company has been running.
Cowen calls up Shoals Technology Group
Shoals technology (NASDAQ: SHLS) just got an upgrade from Cowen to Outperform with a price target about 50% above the current consensus estimate. The consensus predicts around 12% of upside potential, but has solidified in recent months along with sentiment pointing to a solid Hold that is currently bordering on buying.
The latest news from the green energy sector is that the tax and climate bill is supporting the industry and the rise in energy prices is certainly helping.