S&P 500 stocks
The S&P 500 set a new high on Thursday, its 43rd of the year. As stock prices continue to rise, certain names are trading at a discount but are expected to run in the next year, according to analysts.
Analysts looked for S&P 500 stocks with a forward price-to-earnings ratio that was lower than the three-year average. The ratio compares the price of a stock to the company’s earnings estimates for the next 12 months. It’s a metric used on Wall Street to determine the worth of a stock.
We culled this list to find the stocks that at least 70% of analysts recommend buying and have a minimum 20% implied upside based on price targets.
Take a look at our selection.
Energy stocks have also been under pressure as crude oil prices have fallen. ConocoPhillips has the highest forward price-to-earnings ratio discount in analysts screen, at 81%.
Baker Hughes, Devon Energy, Diamondback Energy, and Valero Energy are also featured on CNBC Pro. Wall Street expects these energy stocks to rise by 29.9 percent to 43.3 percent
Amazon, the tech behemoth, also appears on analysts screen. It fell last week after the retailer missed quarterly earnings estimates for the first time in three years.
Cigna, Leidos Holdings, News Corp, and Teleflex are among the other companies on our list.
Semiconductor and electric vehicles
Between July 20 and August 2, Goldman spoke with 16 Chinese semiconductor companies, including foundries (fabrication plants), power semiconductors (used in trains and automobiles), and the smartphone supply chain.
Four of the companies “see automotive as a key end market for future growth,” according to Goldman analysts in a research note published Tuesday. This is due to increased demand for in-car technology such as parking assistance (also known as ADAS) and electrification, which necessitates more semiconductor “content” per vehicle.
Will Semiconductor is one of its buy-rated picks, with “8x-10x growth potential in its automotive business” due to new customers in China, Japan, and South Korea, as well as product expansion.
According to Goldman, semiconductor companies that manufacture an EV component known as an insulated-gate bipolar transistor (IGBT) will also expand in China: Between 2021 and 2025, demand is expected to grow at a compound annual growth rate of 22% to $1.5 billion, according to the bank.
According to the bank, StarPower, which is on Goldman’s conviction list of stocks that analysts believe will outperform, and Silan are both expanding their IGBT business and gaining new customers as a result. Goldman has a buy rating on both stocks, with StarPower in particular having “ample upside to grow.” “Management maintained a positive tone on 2H demand outlook, primarily driven by IGBT for EV,” Goldman analysts wrote after speaking with the company.
According to Goldman’s discussions with Wingtech, the semiconductor firm sees “strong” demand from automotive customers. “Wingtech stated that the dollar content of power semis in EV vs. ICE [internal combustion engine] cars is 3-5X higher in EV vs. ICE [internal combustion engine] cars,” the analysts said, rating the stock a buy. “We maintain our positive view on Wingtech, owing to its business expansion… as well as market share gains and product line expansion in power semis,” Goldman analysts wrote.
“Overall, Semis companies’ comments on new product progress, new customer penetration, and potential market share gain continue to reaffirm our positive view on the space,” the analysts added.
“Will Semi, Wingtech, StarPower, and Silan see automotive as a key end-market for future growth, supported by rising ADAS adoption and electrification due to higher semis content per car,” wrote Goldman analysts.
Due to increased demand from automakers and smartphone manufacturers, as well as factory closures during the coronavirus pandemic, semiconductors have been in short supply.