July was one of the strongest months in recent memory, as markets cruised higher across the board. In fact, the S&P 500 posted roughly a 9% gain for the month, after seeing its worst start to the year since 1962. Obviously, the other averages are hurting from the first half of the year, but as a recovery may be in the works, there are questions as to which stocks investors should get in for the long trip back up.
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Some investors are bottom-fishing and looking for companies that have been beaten up the most because they might stand to recover the most if everything goes back to normal. However, many times these companies that have been beaten up are still susceptible to downside and could very well be a value trap if the fundamentals have not come back around.
Luckily, earnings season is underway, so we have a way of measuring companies with fairly recent numbers in order to find the best picks. Here, 24/7 Wall St. looks at a handful of blue chip stocks that have been beaten up so far this year but that could also be a value trap. At least that’s what some analysts are thinking.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Cisco Systems
Cisco Systems Inc. (NASDAQ: CSCO) shares were down about 29% year to date, though they have seen a nice bump over the past month of roughly 4%. Earnings are about a week away, and analysts already have their predictions. Consensus estimates are calling for $0.82 in earnings per share (EPS) on $12.7 billion in revenue. The same period of last year had $0.84 in EPS on $13.1 billion in revenue.
J.P. Morgan recently rated Cisco at Neutral with a $51 price target. That implies downside of 5% from the consensus price target of $53.42. The stock was trading near $45 on Tuesday, in a 52-week range of $40.82 to $64.29. It has a dividend yield of 3.4%.
24/7 Wall St.Disney
For most of the year, Walt Disney Co. (NYSE: DIS) was perhaps the worst performing Dow stock, but the House of Mouse has bounced back nearly 14% over the past month. However, year to date the stock is still down closer to 30%. Look out for Disney earnings later this week, when analysts are forecasting $1.00 in EPS on $20.7 billion in revenue. The same period of last year had $0.69 in EPS on $17.0 billion in revenue. Although Disney’s numbers should be improving, there was a huge shock to the stock at the onset of the pandemic that has made it tough to run comps since.
Goldman Sachs recently rated Disney as a Buy. Its $130 price target implies downside of 2% from the consensus price target of $133.15. The stock was trading near $109, in a 52-week range of $90.23 to $187.58.
Intel
Intel Corp. (NASDAQ: INTC) has been beaten up recently and the stock is down 31% year to date. The company reported its most recent quarterly results late in July. So far, it has been a rough year for the semiconductor firm, with EPS of $0.29 on $15.3 billion in revenue for the fiscal second quarter. Both earnings and revenues have been dwindling over the past year, with revenues as high as $19.1 billion in the September quarter of last year and earnings at $1.71 a share.
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UBS recently rated Intel at Neutral, and its $41 price target implies downside of 3% from the consensus price target of $42.38. The stock was trading near the bottom of its 52-week range of $35.18 to $56.28. The dividend yield is 4.1%.
JPMorgan
Shares of JPMorgan Chase & Co. (NYSE: JPM) have bounced back after a weaker-than-expected earnings report last month. The stock is still down 28% year to date, but it has been holding steady for the past month. For the second quarter, JPMorgan reported $2.76 in EPS on $30.7 billion in revenue. The same period of last year had $30.5 billion in revenue and $3.78 in EPS.
Berenberg recently rated JPMorgan as a Hold with a $120 price target. The implied downside from the consensus price target of $139.49 is 14%. The stock was trading near $114, in a 52-week range of $106.06 to $172.96. It has a dividend yield of 3.5%.
Nike
Year to date, Nike Inc. (NYSE: NKE) shares are down 32%, leading the Dow in losses. Nike’s earnings were reported back in late June, when the apparel giant said that it had $12.2 billion in revenue and $0.90 in EPS. It had $0.93 in EPS and $12.3 billion in revenue in the same period of last year. There has been a steady decrease in the bottom-line over the past year.
Piper Sandler has a Neutral rating on Nike with a $115 price target. That implies downside of 17% from the consensus price target of $138.39. The stock was trading near $114 within a 52-week range of $99.53 to $179.10. It has a dividend yield of 1.1%.
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