Apple, Boston Beer and Figs. What you need to know before buying these stocks

Apple stock (AAPL)

Toni Sacconaghi from Bernstein, who has a market performance rating on the company, told customers Monday in a note that underperformance makes Apple more attractive but the pricing is still not very good.

“On the whole, we feel better about Apple’s valuation than we did at the start of the year, and we are more bullish on the stock,” the note said. “However, given potential downward revisions and the possibility of a weak iPhone 13 cycle, we continue to believe the risk-reward is largely balanced; we see a market multiple or below ($110) as a compelling entry point.”

Another source of concern for Apple shareholders, according to the note, is that last year’s strong start for the iPhone model may dampen the boost for this year’s cycle.

“We remind investors that the only year in which the iPhone seasonal trade failed between June and September was following the strong 6 cycle, which objectively bears strong similarities to the current iPhone 12 cycle,” the note said.

Bernstein has set a price target of $132 per share on Apple, which is just 1% higher than the stock’s closing price on Friday.

Boston Beer stock (SAM)

According to investment company Guggenheim, investors should purchase the drop in Boston Beer, as jumpy statistics from economic revival seems to be overshadowing a solid underlying growth narrative.

“While the growth of the hard seltzer category in retail tracked channels appears optically softer, our analysis shows that it is primarily a function of the more difficult year-ago comparison, which we believe should begin to abate in June, and a stronger than expected reopening of the on-premise channel, which is driving a channel shift,” the note stated.

Even if the overall seltzer category is slowing, Guggenheim believes Truly is still on track for rapid growth.

“Since the launch of Lemonade last year, Truly has been successfully pivoting to ‘bolder’ flavors, and we estimate that for every 10 points of category deceleration, Truly can meet our 85 percent retail growth target by gaining roughly 2 points of share — which has been the case thus far,” the note said.

Guggenheim maintained its $1,800 per share price target on the stock, which is more than 85 percent higher than the stock’s closing price on Friday.

Figs stock (FIGS)

Analyst Edward Yruma started overweight inventory coverage by telling customers on Monday that scrubs is ready to create a special reputation for itself.“It is not often that we see a brand become a noun for the product that it represents in our 15+ years of experience (e.g., lululemon, Crocs, Jordans). We have learned that once you reach this tipping point, combined with a commitment to innovation, financial results remain strong and prove to be long-lasting,” the note stated.

According to KeyBanc, the growth of athleisure brand Lululemon serves as a model for Figs, but the newer company has an advantage in that it operates in a less competitive market.

“A notable difference worth noting is that FIGS has favorable competitive dynamics, and we believe that the current pricing and margin structure can be maintained,” the note stated.

The firm set a price target of $45 per share for Figs, which is roughly 24% above where the stock closed on Friday.

On Monday, several other Wall Street firms, including Barclays, Telsey Advisory Group, and Bank of America, initiated coverage of Figs with buy-equivalent ratings.

The new stock received neutral ratings from Goldman Sachs and Morgan Stanley.

The bull market

According to Goldman Sachs, American households and professional wealth managers will fuel demand for the rest of 2021 stocks, pouring 500 billion dollars of capital flow to equities throughout the year.

Goldman increased its forecast for 2021 household net equity purchases to $400 billion from $350 billion. According to Kostin, US equity inflows are on track to be the highest in a calendar year’s first half since at least 2007.

Corporations should be the largest source of equity demand for the rest of 2021, according to Goldman, as stock buybacks accelerate and equity issuance slows from first-quarter highs.

While it has been choppy in recent weeks, the US stock market is off to a strong start in 2021, with nearly half of the year completed. Since January, the S&P 500 has gained more than 11 percent, while the Dow Jones Industrial Average and Nasdaq Composite have gained 9.7 percent and 8.6 percent, respectively.

Those gains, which are already higher than the average calendar year’s return, came as investors shifted back into stocks sensitive to the broader economy and so-called reopening trades as the worst of the Covid-19 pandemic ended in the United States. Furthermore, lower bond yields have recently contributed to a resurgence of interest in growth stocks, including technology names.

The Energy Select Sector SPDR Fund is up about 39% year to date, as a rebound in travel and oil demand has pushed crude prices back to pre-pandemic highs.

While Kostin made no sector-specific recommendations in his note, he did list a number of factors that he believes support his overall bullish hypothesis.

He began by mentioning a record $5.5 trillion in cash on the financial “sidelines,” waiting to be deployed by fund managers. He argued that with the Federal Reserve unlikely to change the federal funds rate until late 2023, there is little reason to hold cash in the short term.

Goldman also labeled current credit conditions as “unattractive,” with the bank’s rates strategists expecting the 10-year Treasury note rate to rise 45 basis points to 1.9 percent by the end of the year.

Last, Kostin stated that he anticipates a significant return of retail traders following a lull in the spring.

Individual traders fueled a surge in call option volumes in January and February, which was fueled in part by excess savings and federal stimulus checks. While some of that trading — in companies like GameStop and AMC Entertainment — raised concerns about mania, it also highlighted the power that retail investors have in the financial markets.