JPMorgan believes that a handful of stocks have what it takes to outperform their peers. A months-long rally for the equity market pushed the Dow Jones Industrial Average above 40,000 last week for the first time in history. But despite this upward move, good investment opportunities remain in the market, according to JPMorgan. In a recent note, the bank’s analysts shared their highest-conviction views, highlighting where they see the most interesting shift over the long term in their respective sectors. Here are a few of them: JPMorgan analysts highlighted healthcare as one sector they’re closely monitoring due to an “under-appreciated” pipeline of obesity and Alzheimer’s treatments, among others. Specifically, analyst Chris Schott called Eli Lilly one of his highest conviction opinions. “LLY remains our top pick in the Major Pharma space, where we see further upside to Street GLP-1 estimates as injectable capacity ramps and with a number of catalysts in the short term,” he wrote. Shares of Eli Lilly are up nearly 38% so far this year. The bank also sees opportunity within the semiconductor industry, which could be further boosted by new growth drivers such as artificial intelligence. Analyst Harlan Sur noted that one of his top picks includes semiconductor manufacturer Broadcom , which has rallied 25% in 2024. As catalysts, he highlighted Broadcom’s strong exposure to AI and a diversified revenue mix, alongside strong market share, profitability, free cash flow and capital return. In the report, the bank also highlighted data centers as an area that investors should watch. “The transformational shift to a data-centric world is driving enormous demand for data centers, with supply constraints for land, equipment and power likely supporting long-term pricing power,” it wrote. As demand grows for data centers, beneficiaries could include stocks such as Vertiv , up an eye-watering 106% in 2024, which is one of analyst Steve Tusa’s highest conviction picks in the electrical equipment industry. Other stocks JPMorgan listed in the report include Delta Airlines and Carvana . The stocks are respectively 30% and 117% higher this year. In the latter’s case, analyst Rajat Gupta expects growth for the used car platform. “We expect CVNA to continue gaining rapid [market] share while sustaining [profit] margins well above peers’, which could lead to positive earnings revisions in the medium term,” he wrote. — CNBC’s Michael Bloom contributed to this report.
These are JPMorgan’s highest conviction stock picks over the next 12 months
May 22, 2024
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