Back at the start of May, the folks over at Wells Fargo took a stab at picking stocks they thought were set to outperform their peers and the broader market throughout the rest of 2021. When considering what stocks to include, they looked at things like risk/reward profile
, existing analyst ratings, and six-month average daily trading volume. The list covered more than 10 sectors and had no pre-ordained leaning towards either growth or value stocks. In short, they were leaning on their research team’s expertise and looking for an average return of 15%
from any stock that made the list.
They made a point of explaining that the list would be “be riskier and more aggressively positioned than our former QQP model portfolio, which concentrated on defense first and offense second. However, Signature Picks on occasion will take a more risk-averse stance based on internal metrics and fundamental stock outlooks."
It’s a been a few weeks since the list was published, so let’s take a look at some of the more well known names on the list and see how they’re performing.
One of the main reasons behind Microsoft making the list in the first place was surely their fiscal Q3 earnings which came out at the end of April. Not only did they smash analyst expectations but showed revenue growing more than 19% on the year. Wall Street loves to see momentum and that’s one thing Microsoft has in buckets.
Though shares dipped into May, they’ve rallied almost 10% since and are sitting only a couple of dollars below their all time high. Their MACD is in a healthy bullish trend while RSI is just above 60, suggesting shares have a ways to go yet before they come close to being considered overbought.
Rosenblatt is the most recent sell-side heavyweight to join the bull camp, and recently gave Microsoft shares a $301 price target, which suggests an upside of more than 15% from Friday’s closing price. Over the next five years they can see shares coming close to $400, showing that they’re a solid addition.
It’s been seven weeks since Wells Fargo released the list, and Nvidia shares have tacked on 30% to their value in the meantime. This is a welcome purple patch for the chipmaker whose shares had spent much of the previous eight months trading sideways. With fresh highs being set every week right now, there’s not a lot to dislike about them.
Only last week, Jefferies came out with a street-high price target of $854, which sees the stock moving 15% from current levels. This came off the back of a conference with Nvidia CFO Colette Kress, who said the company’s vision is “to build not just hardware, but an ecosystem covering what is essentially needed in the data center today - a full system and computing company rather than a chip company”. Based on how shares are performing right now, investors are buying into this vision hand over fist.
Apple is the laggard of this list, with shares essentially flat since early May. The company’s WWDC 2021 keynote conference from the start of June appears to have dampened analyst expectations for the year, with Bank of America warning that the tech giant is up against harder competition. Still, the folks over at Oppenheimer went so far as to reiterate their Outperform rating after the conference as well as their $160 price target, which suggests there’s upside of more than 20% to be had from current levels.
Analyst Martin Yang was happy to point out that "no competing device, software, or services are remotely close to Apple regarding its audio interface’s overall usability, consumer touch points, and accessibility." It’s a well known fact in the industry that Apple’s most exciting hardware and software updates tend to be released in September and October, so there are plenty of catalysts ahead to justify a move higher. There’s a tightening pennant forming in their shares which suggests a breakout is on the horizon
, and you’d be hard pressed to say it will be a breakout to the south.
Before you consider Microsoft, you'll want to hear this.
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