Investor sentiment has suffered dramatically due to the recent market downturn brought on by rising inflation, the Fed's aggressive policy and concerns about the impending economic recession.
The S&P 500, which returned nearly 27% to investors last year, has lost more than 19% year-to-date. The World Bank cut its global growth outlook, with President David Malpass warning that “for many countries, [a] recession will be hard to avoid.”
Despite this, market strategists believe there are still opportunities for investors to generate returns, though they may need to be highly selective.
Here is a list of recent upgrades that an investor may want to keep an eye on.
Heritage Financial Corp HFWA
Firm: DA Davidson
Price target: $29
Small and medium-sized businesses and individuals in the United States can obtain a range of financial services from Heritage Financial Corporation, which serves as the bank holding company for Heritage Bank. The business accepts a range of deposit products, including certificates of deposit, money market accounts, savings accounts, personal checking accounts, and demand deposits with and without interest.
Cadence Design Systems Inc CDNS
Firm: BofA Securities
Price target: $175
Worldwide software, hardware, services, and reusable integrated circuit (IC) design blocks are offered by Cadence Design Systems, Inc. The business provides functional verification services, including as hardware prototyping and emulators. JasperGold, a formal verification platform, Xcelium, a parallel logic simulation platform, Palladium, an enterprise emulation platform, and Protium, a prototype platform for chip verification, make up its functional verification portfolio.
Goldman Sachs Group Inc GS
Firm: BofA Securities
Price target: $380
“We see the stock as well-positioned to outperform in what is likely to be a worsening economic backdrop that could weigh more materially on the EPS outlooks for its balance sheet lending heavy peers. As a result, we see the relative risk/reward as attractive with shares trading at 1.1x P/TBV and 8.1x 2023e P/E,” analyst Ebrahim Poonawala told clients in a note.
O'Reilly Automotive Inc ORLY
Firm: DA Davidson
Price target: $740
Together with its subsidiaries, O'Reilly Automotive, Inc. conducts business in the United States as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories. The company sells new and remanufactured automotive hard parts and maintenance supplies, including wiper blades, floor mats, seat covers, and truck accessories, as well as chassis, driveline, engine parts, fuel pumps, hoses, starters, temperature control, and engine additives. It also sells new and remanufactured automotive hard parts and maintenance supplies.
McDonald's Corp MCD
Firm: Atlantic Equities
Price target: $278
"McDonald's is such a name with a dominant position in the global QSR category, which has remained resilient during periods of consumer softness, and decades of experience at managing through such periods across what is now a stable of >40k units," wrote analyst Edward Lewis. "Adding to the company's appeal are the positive changes it has been undertaking as it becomes largely a franchise business, accelerated by the Russia exit, and as digital, with all its positive tailwinds around ticket, loyalty, and marketing, plays an ever more important part."
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