Not all stocks will be downgraded in the third quarter
Oh, times are changing. Not only is the outlook for S&P 500 earnings growth dimming, but analysts are becoming more defensive by the day. The latest round of commentary contains quite a few markdowns and target price reductions, but there are some silver linings for investors. Among the latest updates Those are three stocks that we think are well positioned for the times, including Dollar General, Crox and Antero Resources.
Dollar General orders another upgrade
general dollar (New York Stock Exchange: DG) it has been rising under the influence of results and analyst sentiment and that trend is not ending. The company just received the second of two updates in a two-week time span that have the Marketbeat.com consensus sentiment and price target trending higher. The latest comes from Cleveland Research, which updated to Buy from Neutral without setting a price target. In the eyes of the firm, market share gains they are accelerating and should be compounded by resilient margins in the coming quarters. Convenient store locations and facilitation of supply chain issues also stand out as drivers of strength.
The new buy rating compares favorably to the Marketbeat.com consensus of moderate buy, but did nothing to improve the price target. The consensus price target of $245 assumes that the stock is already fairly valued, but we think it lags the market. Consensus price target is rising on 12, 3 and 1 month comparisons despite steady growth and outperformance. Looking at the chart, the stock may have some trouble moving above the $250 resistance target, but we see it falling by the end of the quarter. Dollar General will next report earnings on August 25.
Crocs gets an upgrade
crocodiles (NASDAQ: CROX) just got the first update from analysts since the last earnings report was released in early May. This is surprising given the fact that first quarter results beat consensus on the top and bottom lines and guidance was raised, but who are we to criticize? The bottom line is that Loop Capital upgraded the stock to Buy from Hold and assigned a price target of $75 compared to the Marketbeat.com consensus of $134. In Loop Capital’s eyes, the company valuation is attractive after a massive sale and the channel checks are promising.
The Marketbeat.com Consensus Price Target is down around $20 from the high set this year, but it is still well above last year and the downtrend appears to be over. The bottom line here is that the new $75 target is roughly 50% above the current price action and even the low price target offers some upside for investors. The company will next report the first week of August and is expected to post a strong 46% sequential increase in revenue driven by acquisitions and organic sales gains.
Antero Resources drives an update
Between the high price of oil and the recent drop in energy stocks, it’s no surprise that energy operatorsespecially independent drillers like Resources Previous (New York Stock Exchange: AR), are being updated. The latest comes from Truist Financial, which upgraded the stock to Buy from Neutral. The update compares favorably to the moderate buy consensus and is rated up. The upgrade also comes with a $50 price target, which is $5 above the average analyst target and assumes about 60% of the upside is available. Looking at the chart, price action in Antero Resources has retraced nearly 40% since peaking earlier this year. Price action is now testing support along the 150 day EMA where we expect a bounce to start.