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Allegedly Underrated: Buying Opportunity in Brenmarkt: JPMorgan Analysts See Chances Double in These Two Stocks | news

Analyst Kolanovic expects the stock market to recover in the second half of the year

Shares of Mexican airline Volaris are likely to rise thanks to the travel boom

Marvell Technologie’s stock chip looks cheap

At first glance, the current highly volatile market environment amid the US Federal Reserve’s monthly interest rate hikes does not necessarily invite bold follow-up buying. Since January, any brief bounce has proved to be a treacherous Brenmarkt rally. However, some analysts are again seeing attractive risk / opportunity profiles for some stocks. Traditional US bank JPMorgan has identified two stocks that could offer large returns to long-term investors going forward.

JPMorgan analyst Kolanovic sees a large stock market rally in the second half of the year

In recent days, investors and analysts have outperformed each other with their negative forecasts. Jamie Dimon, JPMorgan’s longtime CEO, spoke of a “hurricane” approaching the US economy. British investment legend Jeremy Grantham had expected another 20% drop in the US S&P 500 index. But there are more positive voices as well. One of the most influential bulls of the moment is Marko Kolanovic. The JPMorgan analyst enjoys a good reputation within the analyst guild as it has had a good success rate on its price targets over the past few years.

Kolanovic expects a sustained rise in the stock market in the second half of the year, bringing the S&P 500 back to 4,800 points, roughly on par with the good start of 2022. His argument: the US economy will be able to avoid a recession. The related positive economic reports will illuminate investor sentiment which is currently extremely pessimistic in the coming weeks of trading. After the first price gains, the company’s share buyback programs “will be in full swing.” This process will go on for several months: “We believe this will be a model for the whole year, in the sense that the market has experienced a slowdown in the first half of the year and a gradual recovery will follow in the second,” Kolanovic predicts.

This Mexican airline is expected to benefit from the post-coronavirus travel boom

Meanwhile, Kolanovic’s colleagues at JPMorgan have scanned numerous stocks to find particularly attractive buying opportunities. According to the “TipRanks” analyst database, the two stocks presented each have enormous upside potential.

The first is the Mexican airline Volaris. Volaris offers low cost flights to Mexico, the United States and other Central and South American countries. Prior to the outbreak of the COVID-19 pandemic, Volaris held a 28% market share in Mexican air traffic, making it one of the big players. After the collapse in sales due to the pandemic, the Mexican airline showed a strong return in the third quarter of 2021. This strong performance continued, with gross profit rising to $ 582 million in the first quarter of 2022, an increase 80% compared to the same quarter last year. Earnings per seat available, a key indicator for the aviation sector, increased by 18 percent to 7 cents. This resulted in a cash increase of US $ nine million; total cash reserves now stand at $ 750 million.

Although high energy prices have recently caused significantly higher costs, JPMorgan analyst Fernando Abdalla remains bullish: “Within the Latin American aviation industry, Volaris is our top pick based on: 1) its attractive low-cost model; 2) a good positioning in the Mexican market and an adequate fleet to support future growth 3) sound financial discipline and 4) strong potential for expansion of aviation in Mexico We see attractive upside potential for the stock as we believe it will compete at an undeserved discount over its Latin American competitors market, ”says Abdalla. Its price target of $ 23 implies a potential upside of 147% for Volaris shares from the current price of $ 9.29 (closing price on June 16, 2022). According to TipRanks, the analyst’s average price target is as high as $ 26.50. Incidentally, the airline’s price-to-earnings ratio is around 15.

Which chip stock offers particularly good long-term opportunities

Chip stocks were among the most sought after equity investments in the world in 2020 and 2021. The high demand combined with the lack of chips for cars, games, electronic devices, etc. caused a huge boom for groups like ASML, Taiwan Semiconductors, Infineon, NVIDIA, and AMD. However, chip stocks have failed to escape the overall tech sell-off this year.

But now it’s time to take a closer look at long-term opportunities and use favorable prices to make further purchases, says JPMorgan analyst Harlan Sur. One company he finds particularly interesting is Marvell Technology, which is listed on NASDAQ. Marvell is extremely diverse – the company’s products are used in automotive systems, data processors, Ethernet network switches, security processors, storage accelerators, and SSD controllers. In fiscal 2022, sales were $ 4.46 billion. In the last quarter, Marvell was able to increase profits by a whopping 79 percent over the same quarter last year. In addition, Marvell is a reliable dividend payer: since 2012, the company has been paying constant 6 cents per share quarterly. Marvell also operates an extensive share buyback program.

Sur comes to a positive conclusion: “We believe the market continues to underestimate the strong growth prospects of Marvell networks, compute and storage silicon franchises, and the eSSD / CXL controller opportunity is in cloud / enterprise storage. a prime example of the company’s strong market leadership and opportunities, “says the analyst. Its target price is $ 100, a whopping 122 percent higher than the current share price, which was $ 45.04 at the close of June 16. The analysts’ average price target is $ 85.44, according to TipRanks.

Financeen.net editorial staff

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