Investors in fear mode: Wall Street pundits are now recommending these five stocks to buy

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• Apple, NetApp and Oracle: Penalized tech stocks now attractively valued?
• IHS Holding: Strongly positioned company in the African growth market
• Bank of America: banking giant as big beneficiary of the Fed monetary policy?

Bear markets – painful as they can be for investors at times – have historically proven to be good buy-ins. Some experts on the US stock exchanges are now recommending a bold buy, with “CNBC” highlighting five of the analysts’ favourites.

Many stress factors made for a messed up first half of the year on the stock exchange

At the beginning of January, it still looked as if the stock market year 2022 could build on the successes of 2021. This hope turned out to be misleading: inflation was not a temporary phenomenon, the corona pandemic continues to weigh on the global economy via lockdowns in China, global supply bottlenecks are far from resolved and key interest rates are being increased much more than some of the most pessimistic experts predicted months had feared. The big question now is: After the messed up first half of the year, can the stock market pick up speed again in the next six months? Or are we still a long way from seeing the final lows? While it is very difficult to make a serious forecast of future developments, the Wall Street analysts definitely see an attractive risk-reward profile for the following five stocks.

Apple: Tech giant with crisis resilience

With a market cap of more than $2 billion, Apple is a corporate giant that has considerable pricing power thanks to the popularity of its products. So it’s no surprise that Apple shares make up by far the largest position in the portfolio of Warren Buffett’s investment vehicle, Berkshire Hathaway. Above all, the star investor praises the “moat” of the share, which was created thanks to the strong brand compared to the competition.

Nevertheless, Apple is not immune to the negative effects of the various economic headwinds. The iPhone maker itself expects sales to fall by up to $8 billion in the second quarter of 2022 due to ongoing component supply shortages, which were exacerbated by the COVID-19-induced delivery stops in China. In addition, Apple also expects negative effects from the cessation of deliveries to Russia.

Regardless of the short- to medium-term negative factors, the vast majority of analysts remain extremely bullish on Apple shares in the longer term. Deutsche Bank analyst Sidney Ho recently renewed his “buy” recommendation with a target price of $175. That represents a potential gain of more than 27 percent from the current price level of $137.44 (close on June 28, 2022) – despite his expectations that he will “hear more rumors about Apple’s order cuts in the coming weeks.” ” will. In Ho’s view, Apple’s price-earnings ratio is now very reasonable, so the risk of further price losses is limited.

NetApp: data company with good growth prospects

With regard to American tech companies, Ho sees a good buying opportunity in Apple as well as in the Californian company NetApp. NetApp, which is active in the field of data storage and data management, was hit particularly hard in the general stock market sell-off, as was almost the entire tech sector. Higher component and logistics costs due to supply chain constraints have impacted the company’s profit margins. These problems are likely to continue to be an obstacle in the foreseeable future.

Still, from Ho’s perspective, the positives outweigh the negatives: Despite the headwinds, NetApp is demonstrating tremendous execution ability, and the company has managed to keep its balance sheet strong and achieve a net cash position. The strong balance sheet has helped NetApp consistently pay out its dividend. The data specialist has also continuously increased the volume of its share buyback program in recent years. Based on all of these aspects, the currently discounted price level is an excellent buying opportunity: Ho sets his price target for NetApp at $84, which would be equivalent to an increase of around 28 percent compared to the current share price of $65.64 (as of January 2017). : closing price on June 28, 2022).

Oracle: software giant with stable earnings

Compared to other software stocks, Oracle’s securities came through the tech bear market relatively unscathed. Oracle’s strong market position, stable earnings and relatively low price-to-earnings ratio protected it from a brutal sell-off, such as in the more speculative software companies Snowflake or Palantir. Also in the past few months, Oracle seems to be getting through the strong economic headwind; the latest quarterly results exceeded analysts’ expectations. In addition, in December 2021, Oracle announced a promising plan to acquire Cerner, a provider of IT solutions for the healthcare sector.

Brian White, an analyst at Monness Crespi Hardt & Co., is very optimistic about Oracle’s prospects. The strong cloud momentum should also continue in 2023, from which the Texan company should be a particular beneficiary. White believes that “successfully laying a solid foundation to support strong cloud growth over the coming years has the potential to instill increasing market confidence in the company’s long-term business model.” While White lowered his price target from $126 to $113 in light of the macroeconomic woes, even the latter price target implies substantial upside potential of almost 65 percent at the current price level of $68.58 (as of the closing price on March 28). June 2022).

IHS Holding: Telecommunications company with a strong position in growth markets

Unlike the three shares mentioned above, the IHS Holding share should not be known to many stockbrokers. IHS is a telecommunications company originally incorporated in Nigeria, listed on the New York Stock Exchange as of October 2021 and owns, operates and develops proprietary telecommunications infrastructure in many emerging markets from Africa to Latin America and the Middle East. Despite the weak performance of the share in recent months, the last quarterly figures were convincing.

The strong results drew the attention of RBC Capital Markets analyst Jonathan Atkin to IHS, who sees several merits at the company, most notably a “low churn profile, long lease terms and attractive, annuity-like cash flows.” IHS is strongly positioned in the African telecoms market, which is expected to experience significant growth in the coming years. 2G and 3G are still standard in most countries on the African continent, but these systems are likely to experience a lucrative update in the near future. As a result, Atkin sees the stock’s fair value at $21 12 months from now, a whopping 99 percent higher than the current value of $10.53 (as of the closing price on June 28, 2022).

Bank of America: Solid as a rock should benefit from rising interest rates

According to conventional wisdom, it is primarily the banking sector that can benefit from interest rate hikes. Due to the rising interest rates, the margin between lending and storage interest increases at the banks, which means that the banks can earn significantly more interest through lending than they have to pay the account holders. Bank of America CEO Brian Moynihan also sees this development coming to his bank: He expects that higher interest rates and credit growth should improve net interest income significantly in the near future. Sooner or later, this could also be reflected in a higher price level for the bank giant’s recently weakening shares.

Gerard Cassidy, an analyst at RBC Capital, seems to share this positive opinion. “As a result of expected increases in short-term interest rates, we have raised our estimates for net interest income, which was fully offset in 2022 by lower-than-expected investment banking revenues, but this will be only partially the case in 2023,” Cassidy predicts. As such, the analyst expects the US bank’s profitability to remain strong throughout the monetary tightening cycle. His price target is $45, down from his previous expectation of $51, but still more than 39 percent above the current price ($32.26) as of the June 28 closing price 2022).

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