With stocks close to all-time highs again, many investors have missed out on the great stock market recovery of 2020. It turns out that trillions of dollars of stimulus money, and more potentially on the way, have trumped the perpetual election fears. Now many investors are having to look for new ideas about how to make money when they also have worries that the stock market gains may be getting ahead of reality.
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24/7 Wall St. reviews dozens of daily analyst upgrades and downgrades. While many stocks have seen analyst downgrades on valuation, or with analysts just maintaining ratings and raising price targets, some of the battered stocks that have not risen back to their highs are attracting some interesting analyst upgrades and new coverage.

Investors should never use one analyst report as a sole reason to buy or sell a stock. Doing more research is always a good idea, but this is the starting point for many investors who are looking for upside that the market may have overlooked. It’s also worth noting that stocks do not keep rising just because an analyst believes they should be valued higher than the current share price.

These seven stocks remain valued at great discounts to their highs and have started to see key upgrades and positive coverage with calls for much higher upside. Note also that these calls are coming right before the launch of earnings season. Does that mean they are spring-loaded for upside surprises? That remains to be seen.

Ford

Ford Motor Co. (NYSE: F) now has a new CEO and some investors have taken note. Benchmark raised the shares from Hold to Buy with a $10 price target on October 12. That represented 38% in implied upside from its $7.25 prior close, but Ford shares rose 5.8% to $7.67 on that upgrade. Benchmark noted that earnings may propel the shares higher, based on better than expected production in North America. The firm also sees a better shift in the mix of its sales and better activity in auto credit markets.

While Ford had to abandon its dividend due to the recession, its 52-week high is still up at $9.57 a share, and this was a $15 stock about five years ago. The prior Refinitiv consensus analyst target price was $7.69, and Benchmark is not the highest sell-side target out there.

Most analysts remain less aggressive on Ford, but its pact with Volkswagen for the electrification of autos may be a hidden source of value to investors. If the economy does not take a double-dip in the coming months, then it is even conceivable that Ford could resume paying a more modest dividend.

General Electric

General Electric Co. (NYSE: GE) is still unloved on Wall Street these days, but it’s still one of the most important employers in America. Goldman Sachs resumed coverage with a Buy rating on October 9, and the $10 price target represented 47% upside from its $6.80 share price. It no longer matters that GE was a $30 stock before its woes came in the post-Immelt years. The stock was obliterated due to its aircraft-related sales seeing a sudden flop as the airlines all became troubled customers.

Goldman Sachs did warn on October 9 that the call could be a bit premature. That said, it noted that GE’s fundamentals are bottoming and a coronavirus vaccine coming available will rekindle the airline demand. GE did receive a concerning a Wells Notice from the U.S. Securities and Exchange Commission in the days ahead of this call.

GE’s consensus target price was $7.90, and the shares were at $13 before the pandemic crushed the economy and GE’s end-user customers. GE remains unpopular with analysts, and now it is up to the company to prove it can rekindle cash flows with its current portfolio of operations.

Gilead Sciences

Gilead Sciences Inc. (NASDAQ: GILD) is perhaps the most boring story in biotech, even though the company is making grand acquisitions to expand its offerings into the future of cancer treatments. Now it has to make those expensive buyouts pay off. One helping hand is that Gilead’s remdesivir has received great publicity after President Trump was able to leave the hospital so soon after being given a multiday treatment of the drug. The company has since released more positive data showing that the drug shortens the recovery time in very ill patients.

On September 30, Jefferies resumed coverage of the stock with a Buy rating and a $78 price target. On September 15, Maxim upgraded it to Buy from Hold with an $88 price target. Some analysts now believe that remdesivir will become a go-to standard of care in more threatening COVID-19 cases, alongside other drug cocktails similar to what the president was given.

Shares of Gilead trade near $64.55, and the consensus price target is up at $78.92. Not all analysts have remained positive here, and there are risks that Gilead could face under future drug price challenges in the political minefield.
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HP

HP Inc. (NYSE: HPQ) doesn’t report for a while, but most people still consider selling persona computers and printers to be a such a 2000 computing model. After all, smartphones and tablets took away from laptops, notebooks and desktops. Then the pandemic hit and laptops and desktops are hot again, with shortages being seen at a time when demand remains elevated. That means price power and hopefully better margins.

UBS decided to resume coverage of HP with a Buy rating at the end of September, and the firm’s old $18 price target was reset at $25. That implies 26% upside from the current $19.83 share price, and the consensus target price is still right at $20 for the company. UBS even sees more upside in HP than in Apple‘s stock.

Unlike many other tech stocks, HP still is nowhere close to its $23 pre-pandemic highs. HP also has a 3.6% dividend yield that would create closer to a 30% total return opportunity if UBS is proven to be right here. HP still buys back stock as well, and most value investors should take note that HP is valued at only nine times earnings expectations, with plenty of cash flow to keep its flexibility and options open.

International Paper

International Paper Co. (NYSE: IP) may not be universally disliked, but most investors do not get too excited about paper these days. The stock also is still down from the very start of 2020, and its earnings recovery story looks interesting, with a valuation that is now just 10 times its earnings from before the pandemic set in.

Where this stock looks more interesting is that it recently received two analyst upgrades. BMO Capital Markets lifted its rating to Outperform from Market Perform on October 12, and the firm raised its target price to $53 from $40 as well. On October 9, Wells Fargo raised its rating to Overweight from Equal Weight and it lifted its $38 target to $52.

Most analysts remain muted or on the sidelines here, as the consensus analyst target was not even quite at $40 coming into the last upgrade. International Paper also was better than a $60 stock back at the start of 2018, long before investors knew anything about real-life pandemics.

3M

3M Co. (NYSE: MMM) remains a long-term turnaround, and it was having problems long before the pandemic hit in 2020. It also started having trouble with orders in Asia. Lately, it seems as though there is revitalization being seen with the orders that it has been telegraphing, and Jim Cramer have been giving the conglomerate positive remarks since the summer. At $168.50 a share, 3M remains very unloved by Wall Street with very few analyst calls. The stock was also above $180 in January.

The firm Gordon Haskett raised its rating to Hold from Underperform on October 7, and while this only removes the equivalent of a Sell rating, the $170 price target is still above consensus estimates. The big upgrade came in the second half of September, when Credit Suisse reiterated its Outperform rating, making it one of the few firms willing to tell customers to buy the stock. Credit Suisse’s price target was raised to $197 from $179 in that call, and the firm sees 3M’s turnaround holding.

While other analysts have been raising their targets, they still tend to have Hold and Neutral ratings. If 3M can rekindle its earnings in 2021 to anywhere close to pre-pandemic levels, then it would be valued at just 17 times earnings expectations. Wall Street now completely ignores that 3M used to be a $250 stock at the start of 2018, and it is still managing to raise its dividend year after year.

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