Incredibly, the first quarter is now history, after a volatile 90 days to start 2023 that saw the return of bank failures, rising interest rates, the ongoing war in Ukraine, continued hot and sticky inflation, and a host of additional items that have kept the pressure on stocks. Despite all the negatives, each of the major indexes finished the quarter higher. The tech-heavy Nasdaq led the way, closing up almost 17%, while the S&P 500 scratched out a hard-fought 7% gain and the Dow Jones industrials just barely closed positive, up 0.5%.
The question on the minds of many investors and traders is what the second quarter will bring. With a host of top strategists forecasting recession later this year, and interest rates likely to climb higher, it could be a more-of-the-same quarter. With a reported $508 billion moved to cash during the first quarter, there is plenty of dry powder for stocks, but will the economy remain strong enough for another big move higher?
BofA Securities is among the first out with top ideas for the second quarter of 2023. Its research report has eight stocks to buy, long ideas that at first glance look like outstanding stock picks for growth investors. It also has two that are expected to underperform, CarMax Inc. (NYSE: KMX) and United Airlines Holdings Inc. (NYSE: UAL), which could be possible short sale candidates for investors who are more aggressive.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
CubeSmart
This self-storage real estate investment trust (REIT) may seem an odd beneficiary of rising rates, but it is one. CubeSmart (NASDAQ: CUBE) is a self-administered, self-managed REIT. Its self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers. According to the Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States.
In a rising rate environment, hard assets like real estate gain in value, and the self-storage REITs are also in a good position as capital expenditures and the need for additional capital are often very low.
Investors receive a 4.13% dividend. The BofA Securities price target for CubeSmart stock is $64, and the consensus target is $51.40. The stock closed on Wednesday at $47.54.
FedEx
Given the huge increase in internet shopping and sales, the delivery giant has a strong path for growth. FedEx Corp. (NYSE: FDX) provides transportation, e-commerce and business services in the United States and internationally.
Its FedEx Express segment offers express transportation, small-package ground delivery and freight transportation services; time-critical transportation services; and cross-border enablement, technology and e-commerce transportation solutions. The FedEx Ground segment provides day-certain delivery services to businesses and residences. And the FedEx Freight segment offers less-than-truckload freight transportation services. As of May 31, 2022, this segment had approximately 30,000 vehicles and 400 service centers.
The FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection and back-office support services. The Corporate, Other and Eliminations segment offers integrated supply chain management solutions, specialty transportation, customs brokerage and global ocean and air freight forwarding services. It offers document and business services, as well as retail access to its customers for its package transportation businesses.
Shareholders receive a 2.01% dividend. BofA Securities has set its price target at $305. FedEx stock has a consensus target of $239.81, and Wednesday’s close was at $229.93.
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