As incredible as it may seem, 2021 is down to the final 90 days of the year. Halloween and the other holidays will soon be upon us, and many investors and traders across Wall Street are a touch anxious over what could be a volatile quarter, especially following September, which was the worst month for stocks since 2020. While interest rates should remain close to generational lows, the beginning of the tapering of the $120 billion per month quantitative easing is expected to start in November.
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In a new research report, BofA Securities is among the first firms out with their top ideas for the fourth quarter of 2021. They have eight stocks to buy and two that are expected to underperform. At first glance, the long ideas look like outstanding stock picks for growth investors. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
APA
This company was long considered an industry leader when it was known as Apache, and the stock is perhaps offering one of the best entry points in the sector. APA Corp. (NYSE: APA) explores for and produces oil and gas properties. It has operations in the United States, Egypt and the United Kingdom, as well as has exploration activities offshore Suriname. It also operates gathering, processing and transmission assets in West Texas, as well as holds ownership in four Permian-to-Gulf Coast pipelines.
The company is one of the largest U.S. exploration and production (E&P) companies with 2.3 billion barrels of oil equivalent of proven reserves (63% liquids). It is an explorer, acquirer and exploiter a fiscally conservative company that has grown its reserves and production consistently via acquisitions and organic projects.
Shareholders receive a 1.13% dividend. The BofA Securities price target for APA stock is $40, well above the consensus target of $27.63. The last trade for Monday came in at $22.06 a share.
CNH Industrial
This is a good play on agriculture in a world with a growing need for food and construction. CNH Industrial N.V. (NYSE: CNHI) is the world’s second-largest farm equipment company, with a primary listing in the United States and secondary one in Milan. It is also a leading producer of construction equipment, trucks and commercial vehicles, and powertrains.
The company designs, produces, markets, sells and finances agricultural and construction equipment, trucks, commercial vehicles and buses worldwide. It also offers specialty vehicles for fire fighting, defense and other uses, as well as engines, transmissions and axles for its vehicles.
The dividend yield is 0.80%. BofA Securities has a $25 price target, while the consensus target for CNH Industrial stock is $18.02. The shares closed at $16.76 on Monday.
East West Bancorp
Shares of this off-the-radar bank have been on fire, and the stock is on the BofA Securities US 1 list. East West Bancorp Inc. (NASDAQ: EWBC) is a $50 billion asset bank. Its wholly owned subsidiary, East West Bank, is focused exclusively on the United States and Greater China markets and operates over 120 locations worldwide, which include California, New York, Georgia, Massachusetts, Texas and Washington. In Greater China, East West’s presence includes full-service branches in Hong Kong and Shanghai and representative offices in Beijing, Shenzhen and Taipei.
East West Bancorp stock investors receive a 1.70% dividend. The $100 BofA Securities price target compares to the $91.09 consensus figure and Monday’s close at $78.89.
Extra Space Storage
This top real estate investment trust (REIT) is a safe way for investors to own the self-storage sector. Extra Space Storage Inc. (NYSE: EXR) is a fully integrated, self-administered and self-managed REIT headquartered in Salt Lake City, Utah.
Like many self-storage companies, Extra Space offers rentable storage space offering customers conveniently located and secure storage units across the country, including boat storage, recreational vehicle storage and business storage.
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As of the fourth quarter of 2020, the company owned or operated 1,971 self-storage stores in 40 states, the District of Columbia and Puerto Rico. The portfolio consists of approximately 149.2 million square feet of rentable space and 1.4 million units, making the company the second-largest owner/operator of self-storage stores and the largest self-storage management company in the country.
Investors receive a 2.97% distribution. BofA Securities has set a $218 price target on Extra Space Storage stock. The consensus target of $193.62 is closer to Monday’s close at $168.30.
Fox
This well-known media and broadcasting company continues to churn out outstanding ratings. Fox Corp. (NASDAQ: FOX) operates as a news, sports and entertainment company in the United States.
Its Cable Network Programming segment produces and licenses news, business news and sports content for distribution primarily through cable television systems, direct broadcast satellite operators, telecommunications companies and online multichannel video programming distributors.
The company operates FOX News, a national cable news channel; FOX Business, a business news national cable channel; FS1 and FS2 multi-sport national networks; FOX Sports Racing, a video programming service that comprises motorsports programming; and FOX Soccer Plus, a video programming network for live soccer and rugby competitions; FOX Deportes, a Spanish-language sports programming service; and Big Ten Network, a national video programming service.
The Television segment acquires, produces, markets and distributes broadcast network programming. It operates the FOX Network, a national television broadcast network that broadcasts sports programming and entertainment.
Shareholders receive a 1.25% dividend. The BofA Securities price target is $54. The consensus target is $51.50, and Monday’s closing share price was $38.25.
General Electric
This venerable American company was booted out of the Dow Jones industrial average a few years ago but has proceeded to take drastic steps to turn things around. General Electric Co. (NYSE: GE) operates as a high-tech industrial company worldwide.
The company’s Power segment offers heavy-duty and aero-derivative gas turbines for utilities, independent power producers and industrial applications; maintenance, service and upgrade solutions to plant assets and their operational lifecycle; steam power technology for fossil and nuclear applications, including boilers, generators, steam turbines and air quality control systems; and advanced reactor technologies solutions comprising reactors, fuels and support services for boiling water reactors. This segment also applies the science and systems of power conversion to provide motors, generators, automation and control equipment, as well as drives for energy intensive industries, such as marine, oil and gas, mining, rail, metals, test systems and water.
Its Renewable Energy segment provides various solutions for its customers through combining onshore and offshore wind, blades, hydro, storage, solar and grid solutions, as well as hybrid renewables and digital services offerings. The company’s Aviation segment designs and produces commercial and military aircraft engines, integrated engine components, electric power and mechanical aircraft systems. It also provides aftermarket services.
Investors in General Electric stock receive just a 0.31% dividend. The BofA Securities analysts have a $128 price. The posted consensus target is $124.09. The stock closed on Monday at $104.90.
Medtronic
This medical technology giant is a solid pick for investors looking for a safe position in the health care sector, and it was a fairly recent addition to the US 1 list. Medtronic PLC (NYSE: MDT) develops, manufactures, distributes and sells device-based medical therapies to hospitals, physicians, clinicians and patients worldwide. It operates in four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group.
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The company announced last year that Blackstone’s life sciences division will invest $337 million into the research and development of its diabetes device technologies. Under the terms of the agreement, Medtronic will receive funding for four diabetes R&D programs over the next several years. Medtronic’s engineering, clinical and regulatory teams will conduct the development work for the programs.
The company pays a 2.02% dividend. The $150 BofA Securities price target is higher than the $145.56 consensus target. Medtronic stock closed at $125.05 on Monday.
24/7 Wall St.Uber
This high-profile company may be the most exciting idea of all. Uber Technologies Inc. (NYSE: UBER) is a mobility platform that services 63 countries, more than 750 ridesharing markets and over 500 Eats markets, and nearly half of its core platform revenue is generated outside of the United States.
The company’s monthly average paying customers represent 1% to 2% of the world’s population on a monthly basis. For rides, Uber acts as an intermediary, connecting riders with drivers. For Eats, the market is three-sided, connecting customers, restaurants and drivers. Uber also has an emerging freight business.
At a Wall Street Journal Tech Live event earlier this year, Lyft CEO Logan Green announced that the company is targeting EBITDA profitability in the fourth quarter of 2021. Lyft’s commentary supports the view that Uber will continue to benefit from decreasing competitive intensity in U.S. ridesharing. Top analysts like the opportunity for Uber stock to benefit from increasing disclosure, and they see potential stock support from sum-of-the-parts valuations.
The BofA Securities price target of $64 is less than the $67.33 consensus target. Uber Technologies stock was last seen trading at $45.72 a share.
The two stocks that the analysts rate as Underperform are AutoZone Inc. (NYSE: AZO) and Williams-Sonoma Inc. (NYSE: WSM). More aggressive investors may want to consider these ideas as possible short sale candidates for the fourth quarter.
These are eight great stock ideas for the final quarter of 2021, along with two potential short sale ideas. The long picks all make good sense for growth portfolios looking to take some profits and move to new positions.
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