The market is still feeling jittery as we enter the second half of the year. And according to Goldman Sachs this volatility isn’t going away anytime soon. “Escalating trade tensions and further monetary policy normalization could result in realized volatility remaining meaningfully above last year’s 6.7 through the end of 2018,” says Goldman Sachs’ David Kostin.
“This raises a key question for investors: which sectors and stocks are likely to produce the highest risk-adjusted returns in a market with below-average returns and elevated volatility?” Luckily for investors, the firm has now upgraded its High Sharpe Ratio basket of stocks. These are stocks that can deliver strong returns even in choppy market conditions.
Here we use TipRanks data to further refine the firm’s list. TipRanks tracks the latest ratings from over 4,800 analysts on over 5,000 US-listed stocks. The upshot is you can pinpoint the best ‘Strong Buy’ stocks with big growth potential very quickly. In fact, all the stocks covered below have received only buy ratings in the last three months. Let’s take a closer look now:
1. BorgWarner (BWA)
Auto-parts marker BorgWarner is buzzing right now. The stock has just been upgraded by Goldman Sachs from Hold to Buy. And both Robert W Baird’s David Leiker and Oppenheimer’s Noah Kaye single out BWA as a ‘Top Stock Pick.’
Kaye writes: “We view BorgWarner as a differentiated technology solutions provider for efficient vehicle propulsion. As the global auto industry evolves to meet increasingly stringent emissions regulations, we expect BorgWarner to benefit.” Meanwhile Leiker sees shares spiking 69% from current levels. He tells investors not to let the CEO transition faze them.
This ‘Strong Buy’ stock has 4 recent buy ratings and a $65 average analyst price target (44% upside potential).
2. Delta Airlines (DAL)
Warren Buffett’s favorite airline stock Delta Air Lines also boasts 11 consecutive buy ratings from the Street. Top Imperial Capital analyst Michael Derchin believes DAL is on track to up its fiscal 2018 revenue outlook. This is due to strong pricing power in key domestic hubs; improving business yields; and impressive international results.
As for higher oil prices- a key concern for airlines- this hasn’t offset Derchin’s revenue bullishness (hence the $70 price target). From current levels, his price target indicates 37% upside potential.
3. Halliburton (HAL)
This is one of the world’s largest providers of products and services to the energy industry. BMO Capital analyst Daniel Boyd calls the stock his ‘favorite large-cap’ in this space. He notes that US pressure pumping is strengthening, while the company’s international outlook may prove too conservative.
Indeed, firming oil fundamentals have just prompted Wells Fargo’s Judson Bailey to boost his price target from $58 to $65 (43% upside potential). He is becoming increasingly bullish on the prospect for a multi-year recovery in offshore spending from 2019. Our data reveals that nine analysts have published buy ratings on HAL in the last three months.
4. Equinix (EQIX)
Internet-connection specialist Equinix “has virtually become the switch for the Internet/cloud” according to Oppenheimer’s Timothy Horan. He has a $525 price target as “EQIX benefits from its unique, highly connected global platform that is attractive to enterprises deploying hybrid cloud strategies.”
The company just held an upbeat Investor Day on June 20. Following the meeting, Credit Suisse’s Sami Badri reiterated his Buy rating. “We believe the company’s interconnection strategy provides a wide competitive moat making them extremely difficult to compete against and replicate” explains Badri.
5. Albemarle (ALB)
Albemarle is one of the world’s leading specialty chemical stocks. Its prime product is lithium- a key component of automotive batteries. “We believe that ALB deserves a premium multiple given the multi-year growth opportunity we see in lithium” writes top Oppenheimer analyst Colin Rusch.
He adds: “ALB’s combination of specialty chemical expertise, security of supply, and resilient customer contracts put the company in a de-risked position to benefit from technology evolution.” Rusch’s $157 price target indicates huge upside potential of over 65%. Even the Street’s average analyst price target translates into 39% upside.
Our database covers over 5,000 stocks. Find your own “Strong Buy” stocks in the sector that interests you the most. Go to the Nasdaq Smart Portfolio stock screener now.
Author: Harriet Lefton.