Enphase Energy stock (NASDAQ: ENPH)
Analyst Sophie Karp initiated coverage of the stock with an overweight rating on Monday evening, saying in a note to clients that the company had a solid base business and growth opportunities.
“We like ENPH’s strong core microinverters business, where the company has a significant market share and is well positioned to capitalize on the robust growth in the residential solar market in the United States.” While ENPH’s nascent storage… business does not yet enjoy a comparable competitive position, we see it as a solid addition to the growth engine if operational and financial discipline is maintained, according to the note.
Microinverters are an important product for solar energy users, as they assist homeowners in producing and managing power from panels on their rooftops and elsewhere.
According to KeyBanc, Enphase will grow in areas such as small businesses, residential storage, and off-grid storage.
“We believe that expanding into complementary and adjacent products will improve ENPH’s long-term growth profile. “The Company continues to innovate in its core business while also broadening the scope of its product offerings,” according to the note.
The stock has struggled this year, as have many other green energy stocks, falling 13%, but Enphase still has a market cap of more than $20 billion.
Vail Resorts (NYSE: MTN)
Analyst Brett Andress raised Vail from sector weight to overweight in a note to clients, saying that demand for skiing vacations was exceeding his expectations.
“While elevated leisure travel demand should not come as a surprise,” the note said, “early bookings data through August (which includes the impact of Delta) points to strong demand for the upcoming season.” “While booking windows remain compressed, weighing on the correlation of this data, the data points to record occupancy levels for Thanksgiving and (more importantly) Christmas/New Year’s Eve.”
According to KeyBanc, the continued uncertainty surrounding the Covid-19 pandemic could end up being a slight benefit to Vail as people seek out outdoor activities even in the winter.
“Looking ahead, we see Delta as more of a tailwind this season vs. other winter leisure options as skiing remains an outdoor activity, with record early bookings possibly evidence of this,” the note said.
KeyBanc set a price target of $355 per share.
The stock is trading close to where it was in August 2018, making it a significant underperformer for long-term investors.
Wall Street’s favorites after the dip
The S&P500 fell 1.7 percent on Monday, its worst day since May, as several new risks emerged during a seasonally weak period.
On Monday, analysts identified the stocks that fell more than the S&P500. We chose the stocks with the most upside to their 12-month consensus analyst price targets as collected by FactSet. In addition, the stocks had to have buy ratings from 70% of the analysts who cover them.
Several stocks on the screen are from sectors associated with the global growth story, as investors fled those names in the face of mounting risks.
On Monday, energy was the worst performing sector in the S&P500, but several oil names are expected to rally in the coming year. Analysts screen includes energy stocks such as Diamondback Energy, ConocoPhillips, and Baker Hughes. General Motors is on list, with 84 percent of analysts calling it a buy and 47.4 percent predicting upside.
Amazon and Microsoft make the list, with 81.6 percent and 86.8 percent of analysts recommending the stocks as buys, respectively. Disney, the media and entertainment conglomerate, is also on the list, with the stock expected to rise 18.8 percent in the next 12 months.
After a more than 4% drop on Monday, Activision Blizzard makes the screen; however, the stock fell after a Wall Street Journal report said federal securities regulators are investigating the video game company for sexual misconduct and workplace discrimination.
Chinese e commerce stocks
Women typically have “strong decision power” in family spending, the analysts said. They also expect consumption will increase as marriage rates fall and divorce rates rise, raising the share of single-person households in China to 25 percent in 2030, up from 19 percent in 2020.
Overall, the analysts’ model predicts $3.3 trillion to $5.3 trillion in household consumption growth by 2030 based on the rising influence of women in China’s society.
UBS found in its survey that Chinese women spend 21 percent of their discretionary income on luxury goods, higher than the 17 percent for men.
One of the analysts’ top picks in the category is Switzerland-traded luxury goods holding company Richemont. The company “offers the largest exposure to the jewellery category, with Cartier and Van Cleef & Arpels continuing to gain momentum,” the report said.
China is Richemont’s largest market on a single-country basis. The mainland alone generated 4.37 billion euros in sales in the 12 months ended March 31, or 33 percent of global sales, the company said. With 2.14 billion euros in sales, the United States was the second-largest market.
“Triple-digit sales growth in mainland China more than offset declines in locations affected by a tourism halt, particularly Hong Kong SAR and South Korea,” the company said in its annual report, which was released in May. Mainland China benefited from the repatriation of previously outbound tourist demand and increased domestic spending.”
The French cosmetics company L’Oréal is a “leading player in the prestige skincare segment and e-commerce,” according to UBS analysts.
Despite the rise of domestic Chinese brands, UBS analysts found that Chinese women are more concerned with the quality and effectiveness of cosmetic products than with the brand. According to the report, this trend will benefit international brands, particularly those capitalizing on the rise of online shopping.
In the first half of this year, L’Oréal said sales in China grew 34.2 percent from a year ago to an undisclosed amount. In the country, the cosmetics company observed “very strong growth in e-commerce and salons.”
German auto giant Volkswagen “has strong EV launches and high exposure to the Chinese market, the UBS analysts said.
“Chinese women’s rising income, education level and social status are likely to further boost their demand for cars in the next decade,” the report said.
“Driven by enhanced gender equality in education, increasing female income level, and women’s
active role in family spending decision-making, we expect female consumers to have an increasing budget per capita for spending on themselves,” the UBS analysts said. “The consumption of alcoholic drinks is likely to become more gender-neutral, in our view.”
Danish brewer Carlsberg is the only foreign pick among the three beer stocks that UBS likes. The company has made inroads into China in the last decade with acquisitions of popular local brand Wusu, as well as brewery Chongqing Beer Group Assets Management.
Overall, Carlsberg said its volumes in China grew by 23 percent in the first half of 2021 from a year ago. The company doesn’t provide country-level sales figures, but its latest report showed Asia was second only to Western Europe by revenue in the first six months of this year.
InterContinental Hotels and Resorts
InterContinental Hotels is the largest Western hotel operator in China, the UBS analysts said.
“Due to females’ higher purchasing power and higher requirement on travel experience, we expect hotel names with multi-brand strategy and leading mid-range and upscale brands to be the major beneficiaries,” the report said.
Greater China accounts for 8% of InterContinental’s global revenue, which includes brands such as Hotel Indigo, Crowne Plaza, and Holiday Inn.
The company said that while an industry measure of revenue in mainland China for the first half of the year was still 19 percent below 2019 levels, the business recovered in the second quarter as demand for domestic leisure grew in China’s mid-sized cities.
InterContinental Hotels is the only stock of the five above that UBS has a neutral rating on. The four other stocks have a buy rating from the firm.