Best stocks to buy now
Teradyne, a manufacturer of semiconductor test equipment, is among the top picks. Analysts led by Jill Carey Hall believe it will benefit from a shift to 5G – chips are critical components of smartphones – as well as long-term demand from its customer Apple. Qorvo, a “leading radio frequency component supplier across smartphones and infrastructure/industrial applications,” and Nova Measuring Instruments are also favorites of the bank.
“Nova Instruments… is exposed to our favorite market in semis, semicap equipment, which we expect to grow at a 16 percent CAGR through 2023,” according to the bank’s analysts, referring to the compound annual growth rate for semiconductor capital equipment.
Hardware and software
The shift to e-commerce, a shift toward software applications in areas such as finance and procurement, and increased use of video-calling technology are all expected to have a “lasting impact” on cloud computing.
Avalara, a tax software firm, is a top pick for BofA, which described it as a long-term “winner” with the potential to earn “solid” margins due to a high customer retention rate. Concentrix, a company that runs call centers and develops customer service technology, was also singled out by the bank for its presence in developed and emerging markets, as well as its strong client relationships.
It also likes data analytics company Teradata and cloud computing company Nutanix.
The internet and the media
“Internet companies were some of the obvious beneficiaries of stay-at-[home-]orders, causing substantial revenue accelerations in 2020,” according to BofA, and some companies are likely to benefit “permanently.”
Match Group is one of them, and its apps such as Tinder, OKCupid, and Hinge are likely to see further growth as vaccine distribution continues, according to the bank. Match Group’s “efficient go-to-market strategy, product expertise, ability to effectively acquire new users, and combination of both subscription and freemium sites” are appealing to BofA.
Analysts also like used car websites Vroom and Carvana, which they believe will benefit from Americans spending their stimulus funds on automobiles. According to the bank, Vroom could grow by triple digits this year, while Carvana is expected to do well as it expands its capacity by opening a new reconditioning center.
According to analysts at BofA, the market is in “mid-cycle,” a period when the economy is growing and companies are making healthy profits. “We are firmly in Mid-Cycle – a phase that lasts 9-10 months (we are in month 5). Historically, this has been the best phase for small cap Tech, which has outperformed both the index and its large cap peers 63 percent of the time in this phase,” the analysts wrote.
Renewable energy stocks
Goldman Sachs analysts predict a fresh surge of growth for renewable energy firms, and now is the time to invest.
Goldman recommends NextEra Energy Partners, which invests in wind and solar farms, as well as Brookfield Renewable, whose portfolio is made up of 62% hydroelectric power facilities. Canadian Solar and Array Technologies, a supplier of mounting systems for solar facilities, were also chosen by the bank. Avangrid, which owns both gas and renewable energy facilities, and Emera, which operates coal and oil-fired power plants as well as wind and biomass plants, are also included.
China Longyuan Power Group, one of Asia’s largest wind power producers, as well as battery storage firm Eve Energy and solar cell manufacturer Tongwei Solar, are among Goldman’s picks in China. Sungrow, a Chinese solar firm, and Longi Green Energy Technology, a photovoltaics manufacturer, were also chosen by Goldman.
Renova, a Japanese operator of solar, biomass, and wind power plants, and Adani Green Energy, owned by the Indian conglomerate Adani Group, are also in the bank’s basket.
In Europe, EDP Renewables of Spain and Scatec Solar of Norway are among the top contenders, along with Vestas Wind Systems and Siemens Gamesa Renewable Energy.
It also chose SSE and RWE, both of which generate electricity using fossil fuels as well as renewables such as wind and solar power.
Renewable energy accounts for a “significant” portion of all of Goldman’s picks’ sales or earnings. “By 2030, the addressable market for renewable energy could more than double in size,” wrote the bank’s analysts.
Their upbeat tone comes despite this year’s poor performance in Goldman’s Renewable Energy Baskets, which the analysts attribute to investors profiting after 2020’s “stellar” gains.
“However, we believe that appealing regulatory frameworks, creative technological and financial innovations, and consistent flows into ESG funds could help boost the performance of former market favorites,” they add.
Goldman also noted that major oil companies are increasing their investments in “green” energy.
′′‘Big Oil’ companies looking to diversify away from polluting operations are increasingly investing in the Green Theme,” the bank’s analysts wrote. However, companies such as Shell are under pressure to address the climate emergency more quickly, as none of the major oil companies have yet agreed to the Paris climate agreement’s emission reduction targets or investment levels.
“As the world seeks to combat climate change, the global economy is shifting power sources, shifting away from fossil fuels and toward renewable energy. It will take trillions of dollars and decades to complete this transition. With ESG becoming a “business imperative” for asset managers, the analysts believe the financial system will increasingly reward long-term responsible investments that benefit the environment and society as a whole.
Ferrari stock is SELL
Goldman Sachs has said that the appointment of a new CEO and the shift to electric cars would keep Ferrari’s stock frozen in place for the near future.
“While we see this as a positive development for Ferrari’s long-term future, we believe it may necessitate additional [capital expenditures]…. Uncertainty about future capex requirements creates uncertainty about future earnings and cash flow,” Galliers wrote in an investor note.
Ferrari may also underperform the rest of the auto industry as global production resumes. Goldman does not anticipate the company attempting to make up for lost production during the pandemic period.
“Over the next 12-18 months, we expect the broader auto industry to benefit from a sequential improvement in global production as a result of easing semi-conductor shortages, improving end markets, and the need to re-stock.” “In terms of the sector, we do not see Ferrari as a significant beneficiary of this development,” the note stated.
Galliers reduced his price target for Ferrari’s publicly traded shares in the United States to $207 from $227. The new target is 2% lower than the stock’s closing price on Friday.