After last week’s bear market rally, stocks have given back a lot of their gains. With markets as volatile as they are, investors are looking for some stability and then upside. One major Wall Street firm believes it has found a couple of big names that can offer solid upside potential as well as stability in these trying times.
Citigroup issued a few calls recently, and although there is no particular focus in terms of sector or industry, the investment thesis is stability and upside. Each call is fairly positive, forecasting solid upside in both the near and long term.
While market headwinds have put a damper on the markets in general over the past few months, Citigroup believes that a couple of stocks could provide solid upside in the coming months and years.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Domino’s Pizza
Jon Tower was the lead analyst on the Domino’s Pizza Inc. (NYSE: DPZ) call. He reiterated a Buy rating and raised the price target from $424 to $450, which implies upside of 15% from the most recent closing price of $389.04.
The company’s net U.S. job postings suggest an improving staffing environment, which “foots with delivery times coming off highs.” Tower adds that his recent conversations with investors suggest “many have warmed” to Domino’s given a “handful of incremental sales drivers” and industry-level staffing data that has improved quarter-over-quarter. He sees modest upside to Wall Street estimates for the second quarter and expects the company to speak encouragingly about the near term.
Domino’s stock has a 52-week trading range of $321.15 to $567.57, and it traded near $392 a share early Friday. The stock is down about 31% year to date.
FedEx
On FedEx Corp. (NYSE: FDX), analyst Christian Wetherbee reiterated a Buy rating with a $270 price target. The implied upside from the most recent closing price of $233.81 is 15%.
According to Wetherbee, the company’s targets, efficiency initiatives and long-term network goals are “quite positive and represent a meaningful shift in its thinking and vision”. However, he is “underwhelmed” by the level of detail contained in the presentation related to cost takeouts. The good news is that the outlook for free cash flow growth is “beyond anything we’ve seen from FedEx and should provide a stable floor for shares at the current multiple,” even if earnings targets fall short.
The stock traded above $222 early Friday, in a 52-week range of $192.82 to $302.65. Shares are down over 12% year to date.
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