July saw a great bounce back for equities, and while the idea of whether a recovery is underway is still being debated, investors are looking for the next hot picks to strengthen their portfolios. One major Wall Street firm has a few ideas for the rest of the year, with one in particular looking to have more than 75% upside.
Credit Suisse has issued a few calls across multiple industries, where it sees significant upside. Considering the current inflationary climate within the market, finding upside is key to keeping pace along with the recovery from the market lows this summer.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
MercadoLibre
MercadoLibre, Inc. (NASDAQ: MELI): Credit Suisse reiterated an Outperform rating on the online marketplace but lowered the price target to $1,430 from $1,450, implying upside of 76% from the most recent closing price of $813.71. Stephen Ju was the lead analyst on the call, which is coming just ahead of quarterly results. Ongoing difficulties in the macroeconomic environment in Latin America and the strengthening of the U.S. dollar against local currencies both factor into his near/medium-term outlook. Ju has modestly raised his second-quarter gross merchandise volume estimate by 3% but otherwise kept his second half of 2022 projections, which contemplate ongoing deceleration against easing comparisons intact. And despite the near-term turbulence, Ju thinks his long-term thesis remains unchanged.
The stock traded at around $805 early on Tuesday, in a 52-week range of $600.68 to $1,970.13. Shares are down roughly 40% year to date.
Yeti Holdings
Yeti Holdings, Inc. (NYSE: YETI): Credit Suisse’s Kaumil Gajrawala reiterated an Outperform rating for the company that makes ice chests and soft coolers. It cut the price target to $80 from $95, implying upside of 58% from the most recent closing price of $50.77. In the report, Gajrawala noted that despite another tough quarterly comparison, he thinks Yeti’s momentum continues. Recent read-throughs from peers indicate spending on outdoor categories is strong despite discretionary being soft overall, according to Gajrawala. He estimates second-quarter sales increasing 18.6%, in line with the consensus. Margin pressure from input costs and freight are known headwinds, limiting second-quarter EPS growth, and putting emphasis on the second half of the year results to reach full-year EPS targets.
Yeti stock has a 52-week trading range of $38.77 to $108.82, and it traded near $51 a share on Tuesday. The stock is down 39% year to date.
WEX
WEX Inc. (NYSE: WEX): Credit Suisse reiterated a Neutral rating for the provider of payment processing and information management services. It raised the price target to $195 from $185, implying upside of 17% from the most recent closing price of $166.21. Nik Cremo was the lead analyst on the call and he noted that Wex’s second-quarter revenue exceeded consensus estimates by 5%, driven by the same factors as the first quarter — higher fuel prices and a faster-than-expected travel recovery. Cremo now forecasts the travel-and-corporate payments segment 2022 volume growth of 70%, up from 55% previously, and he continues to see upside to his forecasts.
24/7 TempoThe stock traded at around $166 on Tuesday, in a 52-week range of $123.01 to $197.70. Shares are actually up over 18% year to date.
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