Bullish Sentiment Reigns Supreme: 2 Stocks to Watch
As markets continue their upward trend, investors are optimistic about the future. Wall Street institutions, including UBS, are echoing this sentiment, predicting further gains in the long-term bull market. Chief US equity strategist Jonathan Golub has outlined his bullish view, citing rate cuts, lower interest expense, and default risk as key factors supporting market growth.
Supporting the Bullish View
Golub believes that financial conditions point to less stress and more liquidity, which will positively impact valuations. He has adjusted his year-end 2024-25 S&P 500 targets to 5850 and 6400, respectively, based on EPS estimates of $240, $257, and $275 for 2024-26. This implies growth rates of 9.1%, 7.1%, and 7.0% for the next three years.
Allegro MicroSystems: A Semiconductor Company with Strong Growth Prospects
UBS analysts have identified Allegro MicroSystems as a stock with significant growth potential. As a leading semiconductor company, Allegro’s products are used in a wide range of technological and industrial applications, including sensor hardware and application-specific analog power systems. The company’s focus on autonomous driving safety systems, factory automation, and power-saving technologies for data centers positions it for long-term success.
Despite recent slowdowns in the electric vehicle industry, Allegro’s outlook remains bright. UBS analyst Timothy Arcuri believes that the Street is underestimating the company’s cyclical recovery, citing opportunities in autos electrification and the industrial market. Arcuri’s Buy rating and $30 price target suggest a one-year upside potential of 45%.
Chord Energy: An Independent Oil and Gas Company with Extensive Assets
The second UBS-backed stock, Chord Energy, operates in the Williston Basin of North Dakota and Montana, an area rich in natural resources. The company has extensive assets, including over 1.26 million net acres and 6 operated drilling rigs, with 57% of proven reserves being crude oil.
Chord’s recent acquisition of Enerplus has boosted its overall position and net acreage, and the company is working to integrate the assets into its operations. UBS analyst Josh Silverstein is optimistic about Chord’s prospects, citing improving operational efficiency, a strong balance sheet, and attractive valuation. Silverstein’s Buy rating and $168 price target indicate a one-year upside potential of 32.5%.
Both Allegro MicroSystems and Chord Energy boast a Strong Buy consensus rating from the Street, with average target prices suggesting significant upside potential in the year ahead. As markets continue to rise, these stocks may be worth considering for investors looking to capitalize on growth opportunities.
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