Earnings season is revving up, and Bank of America has picked out a series of stocks to buy in advance of their quarterly reports. The firm said there is no shortage of companies that are priced to perfection and still have room for upside. CNBC Pro combed through top research from Bank of America to find buy-rated stocks ahead of earnings. They include Broadcom , Eletrobras , Taiwan Semiconductor Manufacturing, CompoSecure and New Oriental Education & Technology Group . Eletrobras Analyst Arthur Pereira is pounding the table for shares of the Brazilian electric utilities company. U.S.-traded shares are off 16% in 2024. Pereira recently said he is seeing a “potential inflection point in (pessimistic) sentiment,” and the analyst urged the firm’s clients to buy the dip in a recent note. He said he sees fundamentals picking up, which will position the stock for a re-rating. Other positive catalysts include “higher power prices, upward revisions to transmission revenues [and] accretive asset sales,” Pereira wrote. “Reiterating as one of the top-picks for the next 12M [months],” he said. The company is set to report earnings in early August. Broadcom Shares of the chipmaker are up 52% this year, and they still have higher to go, according to analyst Vivek Arya. He recently raised his price target on the stock to $2,150 per share from $2,000. Broadcom remains on a “transformation to a growth from a value stock,” Arya wrote, as artificial intelligence takes hold and the company enjoys further synergies from its VMware acquisition . “Growth could inflect 2x driven by AI silicon and VMware,” he wrote. Broadcom uses silicon chips for data center, networking and various other applications. Meanwhile, competition remains fierce from the likes of Nvidia , but Arya said he’s standing by Broadcom’s “best-in-class management team.” “In our view, AVGO’s diverse growth drivers, highly regarded management team, and unique track-record of capital appreciation, dividend growth and above mkt. div yield can justify a premium multiple,” he added. Broadcom is scheduled to report earnings later this quarter. CompoSecure The maker of metal credit cards is “poised for stellar growth,” according to analyst Cassie Chan. She and her team initiated coverage of the stock with a buy rating earlier this week, noting that CompoSecure’s relationship with card issuers is unparalleled. “It commands ~83% market share and we think it stands to further dominate the space as metal card issuance soars,” she wrote. Chan also said CompoSecure is an innovator, developing cards out of gold and glass as a “status symbol” for wealthier cardholders. Shares are up nearly 40% this year, but Chan said she sees further upside. “We think its enviable competitive status and large addressable market position it well to deliver on its longer-term growth targets of double-digit revenue growth, 50%+ gross margins, and 30%+ adj. [earnings before interest, taxes, depreciation and amortization] margins,” Chan wrote. CompoSecure is scheduled to report earnings in early August. New Oriental Education “We believe the market well understands that the expected margin contraction in May-Q is a temporary hiccup. The key focus should be on topline growth and expansion pace, which we expect to be both strong in May-Q. … EDU is the largest player in the education space riding on the industry boom to deliver solid growth outlook. It is one of our top picks in China consumer cluster.” Eletrobras “Reiterating as one of the top-picks for the next 12M. …. We see a potential inflection point to the recent peak pessimism on the stock driven by improving fundamentals: 1) higher power prices, 2) upward revisions to transmission revenues, 3) accretive asset sales. … Potential inflection point in (pessimistic) sentiment…” Broadcom “Tale of transformation… from value to growth. … Growth could inflect 2x driven by AI silicon and VMware. … Best-in-class management team, low relative ownership. In our view, AVGO’s diverse growth drivers, highly regarded management team, and unique track-record of capital appreciation, dividend growth and above mkt. div yield can justify a premium multiple.” Taiwan Semiconductor “We lift 2024/25/26 earnings estimates by 0.3%/4.9%/3.7% to reflect a stronger demand from leading edge nodes, cloud AI, and a more favorable ASP outlook. … The ongoing semi content growth in mobile, rise of artificial intelligence (AI), and proliferation of Internet of Things (IoT) should result in sustainable upside in aggregate computing power globally.” CompoSecure “Market-leading card player poised for stellar growth. … It commands ~83% market share & we think it stands to further dominate the space as metal card issuance soars. … With its partners, CMPO has made metal cards a status symbol, particularly among the mass affluent. … We think its enviable competitive status & large addressable market position it well to deliver on longer-term growth targets of double-digit revenue growth, 50%+ gross margins & 30%+ adj. EBITDA margins.”
Buy these stocks ahead of earnings, including this Nvidia peer, Bank of America says
Jul 14, 2024
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