Markets bounced back on Monday after a fairly slow start to August. While there appears to be a recovery underway, after what we saw in July and then from the most recent employment report, investors are still looking for investments that can outpace the market. One major Wall Street firm thinks it has found a few big ideas that could benefit greatly going forward.
J.P. Morgan has issued a few calls across multiple industries where it sees significant potential upside. Considering the current inflationary climate, finding upside is key to keeping pace with the recovery from the market lows this summer.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Corteva
On Corteva Inc. (NYSE: CTVA), J.P. Morgan’s upgrade was to Overweight from Neutral, and it raised the price target to $63 from $58. The implied upside from the most recent closing price of $57.90 is 9%.
Jeffrey Zekauskas was the leading analyst on the call, and he noted that there are a number of tailwinds converging for Corteva in 2023, and fewer headwinds. The strength in the prices of corn and soy should allow the company to price its seed products higher for 2023, and seed volumes should be positive, according to Zekauskas. Also, farmers are more likely to plant more corn in 2023, given a shortened planting season in 2022 and good grain prices.
The stock traded at around $60 on Monday, in a 52-week range of $40.72 to $64.03. Shares are up 22% year to date.
First Solar
First Solar Inc. (NASDAQ: FSLR) was upgraded to Overweight from Neutral and the $83 price target was raised to $126. That implies upside of 24% from the most recent closing price of $101.90.
Mark Strouse was the lead analyst on the call, and he views the Inflation Reduction Act as the largest policy change in U.S. history to accelerate growth in an “already inevitable energy transition to renewables.” While changes are still possible as the bill proceeds to the House of Representatives, investor expectations for the industry will “appreciate materially with the passage of the more evenly divided Senate,” according to Strouse.
Although alternative energy stocks have risen since the initial news of the bill, there is further upside for most companies in the space. Ultimately, Strouse views companies with existing domestic manufacturing as the most immediate beneficiaries.
The stock has a 52-week trading range of $59.60 to $123.13, and it traded near $113 a share on Monday. The stock is up nearly 17% year to date.
TPI Composites
J.P. Morgan upgraded TPI Composites Inc. (NASDAQ: TPIC) to Overweight from Neutral. It also raised the $17 price target to $27, implying upside of 44% from the most recent closing price of $18.79.
Strouse was the lead on this call as well, and much of the thesis from First Solar carries over to TPI. Again, the Inflation Reduction Act stands to benefit this domestic company, which already has existing manufacturing infrastructure.
The stock traded at around $20 early on Monday, in a 52-week range of $9.23 to $44.61. Shares are up roughly 25% year to date.
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