In this article, we will take a look at the 10 stocks with huge catalysts on the way.
The US stock market continues to be in a see-saw mode as investors gauge and digest latest data. The latest jobs report shows that the labor market continues to be strong, adding to the possibility of further rate hikes. In a September market update report, JPMorgan had said that the next few reports might show that inflation pressures are returning and that would be the test of investors’ nerves. Amid strong consumer spending and tight labor market, analysts believe the Federal Reserve’s battle against inflation is not over yet and the central bank is more than ready to continue raising interest rates. Major stocks like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META) are moving based on these events.
While the debate around the possibility of further rate hikes and stickiness of inflation is never ending, one thing is for sure: long-term investors take any sell-off in the current environment as a buying opportunity. Jim Cramer last month said that it does not make any sense to sell stocks just because the Federal Reserve is not providing enough clarity around its future plans. These are uncertain times and asking for total certainty and clarity is unrealistic. Cramer said that investors should buy stocks that do well during inflation and sell them once inflation begins to cool down. Cramer said that rising interest rates was one of the reasons why investors were selling stocks. However, he believes real investing means you buy stocks for long-term gains instead of relying on short-term news cycles. Cramer said:
“The Fed can’t upend the rally because there isn’t a rally. Higher rates won’t send stocks lower because they’re already down. That’s how you have to think about things like the stock market. Otherwise, you know what? There really isn’t a level where it feels safe to own stocks other than at the top, when nobody’s worried about anything. That’s not investing, though. That’s called stupidity.”
While most of the analysts talk about the possibility of rate cuts and cooling inflation in 2024, there’s another angle to this story that has started to become a topic of discussion lately. Some analysts are starting to believe that we are entering a new era where interest rates and inflation are expected to stay at elevated levels for several years to come. There’s no way around it, according to them. In March 2023, T. Rowe Price said in a report that the biggest reason why value made a huge comeback against growth in 2022 was the reality check investors had after a long period of time. When credit was cheap and inflation low, technology companies enjoyed huge gains. But the post-pandemic era and its realities started to give rise to inflation and the world of today is starkly different from the past. The report said that inflation and interest rates could stay at elevated levels for a long time, which could bode well for value stocks as investors flock to realistic valuations.
The T. Rowe Price report also said that in the next decade many dominant companies of today could be on a decline amid competition. The report said that several years from now people would still be using digital services and driving electric cars but there would be a lot of new players in digital services and companies dominating the futuristic technology markets today might not be very exciting investments 10 years from now. The report gives example of Volkswagen, which it believes is cheap when it comes to valuation. What if Volkswagen begins to produce EVs of standard at par with Tesla in the future? Given Volkswagen’s huge size and dominance in traditional car markets, the stock could become more attractive than Tesla in the future because big size gives advantage to survive and thrive when competition is high.
But not everyone is optimistic in the short term. JPMorgan’s Marko Kolanovic believes chances of markets avoiding a recession are thin. Talking to CNBC, the analyst said that in the short term stocks could still have upside but a few months from now the S&P 500 has downside.
“Could there be another five, six, seven percent upside in equities? Of course… But there’s a downside. It could be 20% downside,” Kolanovic said.
The analyst warned that the “magnificent seven” companies that have seen huge gains during 2023 are expected to see declines soon. These companies include tech giants like Microsoft, Meta, Alphabet and Amazon. Most of the stock market gains this year came from these mega-cap tech stocks. Several analysts have been consistently warning about the concentration of stock market gains problem. Most of the gains in the stock market this year came due to the AI boom which had investors jumping on the bandwagon of AI. But Kolanovic believes these companies could soon start to see declines. He’s also worried about the state of the consumer in the US, who is increasingly getting crushed by inflation and rate hikes.
“The job market is still strong. But you are starting to see the stress in [the] consumer if you look at sort of the delinquencies in the [credit] cards and auto loans. We remain somewhat negative still,” Kolanovic said.
source: pixabay
Our Methodology
For this article, we scoured several analyst reports and investing platforms to list down stocks that are expected to move on upcoming catalysts, events, and news. Some top names in the list include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META).
Stocks With Huge Catalysts on the Way
10. Acushnet Holdings Corp. (NYSE:GOLF)
Golf products company Acushnet Holdings Corp. (NYSE:GOLF) ranks 10th in our list of the stocks with catalysts on the way. The overall popularity of golf as a sport is the biggest growth catalyst for Acushnet Holdings Corp. (NYSE:GOLF). Recently, Tigress Financial analyst Ivan Feinseth said the company is expected to benefit from new product launches and biannual new golf ball design introductions. The analyst said Acushnet Holdings Corp. (NYSE:GOLF)’s strong brand is a growth catalyst, as its Titleist brand golf balls remain the preferred choice of PGA and LPGA Tour players. He increased Acushnet Holdings Corp. (NYSE:GOLF)’s price target to $68 from $62.
As of the end of the second quarter of 2023, 20 hedge funds in Insider Monkey’s database of funds had stakes in Acushnet Holdings Corp. (NYSE:GOLF).
9. Ambrx Biopharma Inc. (NASDAQ:AMAM)
Ambrx Biopharma Inc. (NASDAQ:AMAM) – ADR ranks 9th in our list of stocks with upcoming growth catalysts. Ambrx Biopharma Inc. (NASDAQ:AMAM) has already gained a whopping 950% over the past one year. Ambrx Biopharma Inc. (NASDAQ:AMAM) is a clinical-stage biotech company making engineered precision biologics using synthetic amino acids to enhance therapeutic functions. Ambrx Biopharma Inc. (NASDAQ:AMAM)’s treatment ARX788 for cancer therapeutics is promising and could become a strong growth catalyst in the future. Initial ARX788 trial data showed promise for treating HER2-positive metastatic breast cancer.
8. Inozyme Pharma, Inc. (NASDAQ:INZY)
Inozyme Pharma, Inc. (NASDAQ:INZY) is a clinical stage biotech company working on treatments of rare diseases affecting vasculature, soft tissue, and skeleton. Short-term potential growth catalyst for Inozyme Pharma, Inc. (NASDAQ:INZY) was the results for a recent Phase 1/2 trial for I be INZ-701. INZ-701 is a potential treatment for ENPP1 Deficiency and ABCC6 Deficiency, which are driven by low levels of inorganic pyrophosphate (PPi) and adenosine.
Inozyme Pharma, Inc. (NASDAQ:INZY) is also expected to announce important data points for its treatments in 2024.
As of the end of the second quarter of 2023, 17 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Inozyme Pharma, Inc. (NASDAQ:INZY). The biggest stakeholder of Inozyme Pharma, Inc. (NASDAQ:INZY) during this period was Phill Gross and Robert Atchinson’s Adage Capital Management which owns a $24 million stake in the company.
7. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Chipotle Mexican Grill, Inc. (NYSE:CMG) shares have gained about 30% year to date but Baird analyst David Tarantino believes the stock has more growth catalysts coming on the back of expected increase in same store sales near the year end. The analyst noted that Chipotle Mexican Grill, Inc. (NYSE:CMG) saw some weakness amid low traffic at restaurants in the second and third quarter. He sees Chipotle Mexican Grill, Inc. (NYSE:CMG) increasing its unit growth to the high end of its target of 8% to 10% annually.
“Specifically, we expect signs of strong same-store traffic momentum and further pricing actions to lead to an upward bias to EPS estimates and support robust valuation metrics on Chipotle Mexican Grill, Inc. (NYSE:CMG) heading into year-end,” the analyst said in a note.
Chipotle Mexican Grill, Inc. (NYSE:CMG) also saw a jump in hedge fund sentiment during the second quarter. As of the end of the period, 55 hedge funds tracked by Insider Monkey reported owning stakes in Chipotle Mexican Grill, Inc. (NYSE:CMG), up from 47 hedge funds in the previous quarter.
Pershing Square Holdings made the following comment about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2023 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG)’s business strength continued in 2023, driven by the company’s focus on exceptional food and operational excellence. During the second quarter, Chipotle grew same-store sales by 7.4%, or 40% from 2019 levels. Transactions grew 4.4%, a sequential improvement compared to the first quarter, and price increases from 2022 contributed 5.5% offset somewhat by a shift from group to individual orders which was a 2.5% headwind. The negative group to individual impact should shrink in the balance of the year and cease to be a headwind as we enter 2024.
Chipotle’s ongoing traffic momentum is fueled by improving in-restaurant execution and its continued cadence of successful menu innovation. The current limited time offering, chicken al pastor, is ordered in one out of every five transactions. Management plans to launch a new limited time offering later in the third quarter. Unlike most competitors, Chipotle has not yet taken pricing in 2023, thereby further improving its industry-leading value proposition. Management did, however, signal its openness to increasing menu prices later this year if cost inflation persists…” (Click here to read the full text)
6. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Raymond James analyst Andrew Marok recently upgraded Take-Two Interactive Software Inc (NASDAQ:TTWO) to Outperform from Market Perform and maintained a price target of $170. The analyst thinks the launch of GTA 6 could be a catalyst for the stock.
Some top names in our list of stocks with huge catalysts on the way include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META). We will take a look at them in the next part.
5. Apple Inc. (NASDAQ:AAPL)
Earlier this year Morgan Stanley analyst Erik Woodring had said that he sees at least five ‘underappreciated’ catalysts for Apple Inc. (NASDAQ:AAPL) shares heading into the next year. The analyst was anticipating “a catalyst-rich event path over the next 12 months that is underappreciated by investors.” Among the notable catalysts expected by the analyst include an improvement in Apple Inc. (NASDAQ:AAPL)’s margins helped by an expected decline in FX headwinds.
The analyst also said that Apple Inc. (NASDAQ:AAPL)’s software revenue could gain and thanks to increasing update cycles Apple’s new iPhones are expected to see pent-up demand.
A total of 135 hedge funds in Insider Monkey’s database of hedge funds had stakes in Apple Inc. (NASDAQ:AAPL) as of the end of the second quarter.
Choice Equities Capital Management made the following comment about Apple Inc. (NASDAQ:AAPL) in its second quarter 2023 investor letter:
“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)
Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.
On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…” (Click here to read the full text)
4. Meta Platforms, Inc. (NASDAQ:META)
JMP Securities analyst Andrew Boon in July this year said Meta Platforms, Inc. (NASDAQ:META) is in “early stages” of many catalysts that could boost the company’s stock price. These catalysts include Reels content and the effects of Meta Platforms, Inc. (NASDAQ:META)’s cost cutting measures. Boon analyzed data and said Meta Platforms, Inc. (NASDAQ:META)’s Reels engagement is strong, “adding incremental time and impression growth” to Meta. The analyst also said AI was playing a key role in the amount of time people spend watching Reels content, thanks to improved recommendation algorithm. Meta Platforms, Inc. (NASDAQ:META) invested heavily in Reels last year and the company is ready to enjoy the fruits of its investments. The analyst said the growth in Reels has contributed “toward revenue neutrality with the Feed, which we believe is still on pace to be achieved by year end.”
Artisan Global Value Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2023 investor letter:
“Our best performing stocks this quarter were Meta Platforms, Inc. (NASDAQ:META), Alphabet and Heidelberg Materials. Meta was the largest contributor to performance. Its shares have almost fully recovered from last year’s declines, rising 35% during the quarter and 138% YTD. During the quarter, the company reported earnings that showed a return to growth and healthy user engagement metrics. Most importantly, profitability appears to have stabilized and is poised to improve as significant cost reduction actions implemented over the past six months begin to have an impact. Separate from fundamental performance, there is excitement over AI’s potential to help the company’s business. While Meta’s technology prowess and massively scaled media platform certainly position the company to take advantage of AI, we believe it’s far too early to estimate any discrete tangible benefits. Overall, we view AI as one of several drivers that will contribute to Meta’s continued growth.”
3. Alphabet Inc. (NASDAQ:GOOGL)
There are several growth catalyst for Alphabet Inc. (NASDAQ:GOOGL) in the coming months and years, including AI, Cloud and search, but Morgan Stanley recently highlighted two catalysts for the stock that could boost the stock price. These include the potential release of Alphabet Inc. (NASDAQ:GOOGL)’s Gemini Model and the wider availability of search generative experience. Later this year Google is expected to roll out SGE for everyone in an effort to integrate more AI into its search results.
Out of the 910 hedge funds tracked by Insider Monkey, 204 hedge funds out of the 910 funds tracked by Insider Monkey were long Alphabet Inc. (NASDAQ:GOOGL). The biggest stakeholder of Alphabet Inc. (NASDAQ:GOOGL) was Natixis Global Asset Management’s Harris Associates which owns a $3.2 billion stake in the company.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Analysts believe the Prime day event of 2023 and and AWS event scheduled for this year could be strong growth catalysts for AMZN.
Diamond Hill Large Cap Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2023 investor letter:
“Among our top contributors were insurance company American International Group (AIG), auto retailer CarMax and global online retailer Amazon.com, Inc. (NASDAQ:AMZN).
Amazon’s management team has been working to improve retail profitability, and Q1 results showed progress. In the case of Amazon’s web services (AWS), the market has shifted its focus from where growth will bottom in the near term to how AI can help accelerate the adoption of public cloud services in the future. We believe Amazon’s competitive advantages will continue to grow and that the business has the potential to grow faster than the overall economy in the coming years.”
1. Microsoft Corporation (NASDAQ:MSFT)
AI remains the biggest growth catalyst for Microsoft Corporation (NASDAQ:MSFT) which has already gained on the back of the AI boom this year, thanks to the company’s investments in Open AI and its head-on approach in the emerging industry. Citi analysts opened a 90-day catalyst watch on MSFT recently. Some growth catalysts for Microsoft Corporation (NASDAQ:MSFT), according to Citi, include a stabilizing PC market, improved Azure inputs, and a revenue-acceleration trend. Citi analysts set a $420 price target on Microsoft Corporation (NASDAQ:MSFT).
Microsoft Corporation (NASDAQ:MSFT) is the most popular stock among the elite hedge funds tracked by Insider Monkey. A total of 300 funds in Insider Monkey’s database had stakes in Microsoft Corporation (NASDAQ:MSFT).
ClearBridge Value Equity Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q2 2023 investor letter:
“We initiated a small position in Microsoft Corporation (NASDAQ:MSFT) during the quarter, which may seem surprising given our concerns about index concentration. However, we seized the opportunity on a compelling entry point below our business value estimate, due to an anticipated acceleration of demand for Microsoft’s Azure cloud business and incremental revenues from integration of Microsoft’s AI Copilot program into its office platform. We believe this could support double-digit growth, while simultaneously solidifying Microsoft’s competitive position as an AI winner. Even as a small position, we believe Microsoft provides a large portfolio construction benefit given low correlation to the rest of the portfolio.”
You can also take a peek at 15 Most Innovative Companies in Canada and 15 Best Casino Stocks To Buy Heading Into 2024.
Suggested articles:
- 12 Best Upwork Alternatives for Freelancers and Employers
- Top 20 Countries With Most Natural Resources in the World
- 23 High-Paying Trade and Vocational Jobs in 2023
Disclosure: None. 10 Stocks With Huge Catalysts on the Way is originally published on Insider Monkey.
