Best stocks to buy in the 5G sector according to BofA
On the basis of what Bank of America believes, many semiconductor companies will gain from a huge global trend. Five-G.
Every smartphone has semiconductors (chips) as well as infrastructure that is crucial for the development of 5G technology (next-generation mobile internet).
According to BofA, Qualcomm is being paid for its “high-margin royalty business.” According to management, Qualcomm made up for a decrease in orders from one large customer by gaining revenue from another division “with a strong margin profile.”
According to BofA, Analog Devices had a 9 percent exposure to 5G in 2020, which is expected to increase to 11 percent in 2022. Analysts praised the company’s “diverse product lines.”
Qorvo was chosen by the bank because of its “diverse 5G handset exposure with solid infra (infrastructure) portfolio.” Management stated that “demand is very firm” for the second and third quarters of this year, according to the analysts.
According to BofA, Marvell had a 12 percent exposure to 5G in 2020, which is expected to rise to around 26 percent in 2022. The stock is also appealing to the bank for its other products, such as cloud services.
According to the analysts, Broadcom has “exposure across premium Apple devices as well as [infrastructure] development.”
“5G infrastructure growth should rapidly expand exposure across infrastructure vendors,” the analysts said, “though we note that the diverse product lines across these firms… [make] them less dependent on telecom performance.”
The FedEx earning release
JPMorgan predicts that FedEx’s earnings release will pave the way for the stock to advance another step.
On Wednesday, the company lifted its price objective for the company from $340 to $366, and this translated to a price increase of almost 17%.
On June 24, the delivery company will report its fiscal fourth-quarter earnings. In a note to clients on Wednesday, JPMorgan analyst Brian Ossenbeck predicted that FedEx would outperform expectations, thanks in part to improvements in TNT Express, the company’s European road delivery arm.
“We are bullish on the stock going into the print based on the quarter’s upside to consensus estimates and the FY22 guidance, which will finally include a positive contribution from TNT. The note stated that “ground margin volatility should subside as the peak season cost/surcharge mismatch fades, while Express can generate significant operating leverage with better weather.”
According to the note, the company should benefit from workers returning to the office as a result of a shift to a higher margin part of its business.
“We believe it will be easy to underestimate the operating leverage of B2B returning to a network with constrained capacity as B2C volume remains strong and the global economy gradually reopens,” JPMorgan said.
In addition, the firm reiterated its overweight rating for the stock.
Imax and Cinemarkdowngraded by Goldman
Goldman Sachs says that the market is too enthusiastic about the resurgence of the movie theater industry, and investors should sell their Cinemark and Imax holdings.
Investors may choose to use entertainment exposure elsewhere in the industry, therefore analyst Michael Ng lowered Imax and Cinemark to sell.
“We see limited upside to their share prices relative to the rest of our coverage universe and expect the domestic box office recovery to be more limited than what is currently priced in,” according to the note. “In comparison to the rest of our coverage universe (Internet, Video Games, Toys), where we have an average of 11% upside to our 12-month price targets, we have a 15% downside for our theatre coverage.”
The firm predicted that the box office would be only 72% of its pre-pandemic level in 2022 and that the trend toward shorter theatrical windows could hurt theaters.
“While we acknowledge that 90 percent of a film’s cumulative domestic box office has historically been realized within the first 5 weeks…., we highlight that this occurred during a period when a 3-month theatrical window was the standard and believe that a shortened home video window could negatively impact theatrical attendance,” the note said.
Year to date, the two stocks have outperformed the broader market, though neither has seen the Reddit-fueled surge that rival AMC has. AMC is not covered by Goldman
This year, Cinemark shares are up 40%, while IMAX shares are up 24%.
Goldman downgraded Cinemark to $19 per share from $21 and Imax to $18.60 per share from $19.60. These targets are 22.1 percent and 16.5 percent below where the stocks closed on Tuesday, respectively.
“We could see additional summer volatility,” they said, “but we expect a recovery as 5G builds ramp up in the US/Europe and seasonal holiday demand picks up” in the fourth and late third quarters.
‘HODL’ energy stocks could be the next bet of investors
Tom Lee, one of the co-founders of Fundstrat Global Advisors, believes he will see significant returns in the energy industry over the long term, told CNBC on Tuesday that he sees significant long-term gains.
“HODL” stands for “hold on for dear life.” The phrase is crypto slang that emerged on the internet among investor circles, essentially serving as a buy-and-hold call.
Lee acknowledged that energy has been a “source of misery” for the last 13 years and that investor sentiment in the sector is low. He also stated that energy stocks are currently trading at a discount to the oil market.
Lee, on the other hand, believes that energy can produce some of the best returns in the last two decades, comparing the number of skeptics in the space to the crypto doubters of 2017.
Lee did not comment on specific stocks, but he was bullish on the VanEck Vectors Oil Services ETF. The ETF, or exchange-traded fund, is traded under the symbol OIH.
OIH, which gained nearly 5% to close at $223.19 on Tuesday, has been rising in tandem with crude prices since April. On Tuesday, the West Texas Intermediate crude oil benchmark in the United States settled at $67.72 per barrel. Since early April, WTI has risen by about 15%.
Lee added that if crude prices continue to rise, the ETF could see even more gains. “OIH, which is currently trading in the $220 range, could reach $740 this year if oil reaches $80.”
“I believe that energy has the potential to transform someone’s portfolio return,” Lee said.