The top 10 U.S. ideas for Q3: 9 buys, 1 underperform - BofA
Jul. 01, 2024 10:48 AM ET
By: Monica L. Correa, SA News Editor
 MF3d
BofA Securities analysts created a new list of 10 short-term stock recommendations for the third quarter within nine industries in the U.S. equities.
These nine buys and one underperform are believed to have “significant market and business-related catalysts in the quarter ahead,” wrote Strategist Anthony Cassamassino.
These are the nine buy-rated stock recommendations:
- AutoNation Inc. ( AN) - The stock “should benefit from an improving new vehicle sales cycle driven by pent up demand and continue to produce strong cash flow that is re-deployed towards accretive share buybacks,” said Analyst John Murphy.
- Elanco Animal Health Inc. ( ELAN) - The company’s innovation pipeline is expected to be a “hard catalysts that should move the stock,” said Analyst Michael Ryskin.
- General Electric Co. ( GE) - The company is “strongly positioned to benefit from secular commercial aerospace growth,” said Analyst Ronald J. Epstein.
- Global Payments Inc. ( GPN) - Analyst Jason Kupferberg said he expects to see “sequential improvement in Merchant margins in 2Q-4Q from the ramp of EVO cost synergies as well as improved FCF conversion, which was lower in 1Q largely due to seasonality and working capital timing.”
- The Goldman Sachs Group Inc. ( GS) - Analyst Ebrahim H. Poonawala said the company has “a compelling risk/reward to gain exposure to a cyclical rebound in investment banking activity.”
- Palantir Technologies Inc. ( PLTR) - Analyst Mariana Perez Mora said the company is “at the early stages of its network effect, as each additional user brings tremendous value to the connected network” and that she sees an acceleration of partnerships with top companies continuing to mature.
- Spotify Technology S.A. ( SPOT) - Analyst Jessica Reif Ehrlich said the company is “clearly at an inflection point, which is driving share price performance over the past year and a half.”
- Union Pacific Corp. ( UNP) - The company will be “accelerating its core pricing to offset the recent impacts of high inflation, which should allow its operating ratio to improve further,” said Analyst Ken Hoexter.
- Vertiv Holdings Co. ( VRT) - Analyst Andrew Obin said that the “adoption of artificial intelligence (AI) chips, which run 3-4x hotter than traditional chips, is driving strong demand for existing and new types of thermal products,” which will benefit this company.
And this is the one underperform-rated stock:
- CarMax Inc. ( KMX) - Analyst John Murphy said that “the sourcing environment for used cars is still challenging, especially for late model used vehicles,” and he expects this dynamic to continue through 2025 and onwards, “which should hinder CarMax’s ( KMX) same-store unit growth.”
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