In this article, we discuss 5 stocks that can begin to rebound in 2023. If you want to see more stocks in this category, check out 10 Stocks That Can Begin to Rebound in 2023.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 53
YTD Share Price Decline as of August 29: 21.73%
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based home improvement retailer. On August 17, Lowe’s Companies, Inc. (NYSE:LOW) posted Q2 GAAP EPS of $4.67, exceeding estimates by $0.07. However, the firm’s revenue of $27.5 billion represented a drop of 0.3% year-over-year, and fell short of the market consensus by $680 million. The company expects FY2022 total sales of $97 billion to $99 billion, versus a consensus estimate of $97.5 billion. Lowe’s Companies, Inc. (NYSE:LOW) forecasts diluted earnings per share of $13.10 to $13.60, compared to the market’s estimate of $13.40. The company predicts total share repurchases of approximately $12 billion.
On August 26, Lowe’s Companies, Inc. (NYSE:LOW) declared a $1.05 per share quarterly dividend, in line with previous. The dividend is payable on November 2, to shareholders of record on October 19. The company’s shares deliver a dividend yield of 2.08% as of August 29.
On August 18, Truist analyst Scot Ciccarelli raised the price target on Lowe’s Companies, Inc. (NYSE:LOW) to $263 from $237 and maintained a ‘Buy’ rating on the shares after the company’s Q2 results. Lowe’s Companies, Inc. (NYSE:LOW)’s patterns remain strong and profitability is well-controlled, the analyst told investors, adding that the stock may re-rate higher in late FY22 or early FY23 if trends continue according to his expectations.
Among the hedge funds tracked by Insider Monkey, 53 funds were bullish on Lowe’s Companies, Inc. (NYSE:LOW) at the end of June 2022, compared to 65 funds in the prior quarter. Bill Ackman’s Pershing Square is the biggest stakeholder of the company, with 10.2 million shares worth $1.78 billion.
In its Q4 2021 investor letter, Pershing Square highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:
“Lowe’s Companies, Inc. (NYSE:LOW) is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing market
Positioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022
Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.
Lowe’s Companies, Inc. (NYSE:LOW) continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
4. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 63
YTD Share Price Decline as of August 29: 44.68%
Marvell Technology, Inc. (NASDAQ:MRVL) is a Delaware-based company that develops and sells analog, mixed-signal, digital signal processing, and embedded integrated circuits. The company posted Q2 non-GAAP EPS of $0.57, beating market estimates by $0.01. Revenue came in at $1.52 billion, climbing by 41% year-over-year, and being in-line with consensus. The firm’s GAAP gross margin was 51.8%.
On August 28, BofA analyst Vivek Arya raised the price target on Marvell Technology, Inc. (NASDAQ:MRVL) to $65 from $60 and kept a ‘Buy’ rating on the shares following the release of the company’s Q2 results. The analyst observed likely traces of weakness, but said that Marvell Technology, Inc. (NASDAQ:MRVL)’s overall demand backdrop seems robust.
According to Insider Monkey’s data, 63 hedge funds were long Marvell Technology, Inc. (NASDAQ:MRVL) at the end of Q2, with collective stakes worth $1.60 billion. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading stakeholder of the company, with approximately 5 million shares valued at $214 million.
Here is what the ClearBridge Investments Mid Cap Growth Strategy had to say about Marvell Technology, Inc. (NASDAQ:MRVL) in its Q4 2021 investor letter:
“The ClearBridge Mid Cap Growth Strategy continued to deliver strong absolute and relative returns as our focus on de-risking investments prior to purchase and managing position sizes has made a difference through recent market turbulence. Marvell Technology, a leader in semiconductor manufacturing, is in the second-largest position in the Strategy but just one of three stocks with a weighting of over 3% in a diversified growth portfolio of over 70 names. With a wide range of exposure to fast-growing IT subsectors, including 5G telecommunications, data centers, cloud computing, and electric vehicles, Marvell’s ability to secure a crucial supplier position at the nexus of these technologies leaves it well-positioned to participate in their long-term growth. Strength in companies like Marvell offset weakness in higher multiple growth names that were dragged down by negative sentiment or short-term execution issues.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
YTD Share Price Decline as of August 29: 29.21%
Tesla, Inc. (NASDAQ:TSLA) stock has plummeted over 29% year-to-date. However, the company has potential to regain its momentum heading into 2023, supported by the transition to clean energy, corporations shifting to electric vehicles to reach net-zero carbon emissions, and the Inflation Reduction Act of 2022.
On August 29, Tesla, Inc. (NASDAQ:TSLA)’s Elon Musk announced that he aims for the commercialization of self-driving Teslas by the end of this year. Musk said the goal is to have a large release in the United States, and potentially in Europe if the company gets timely regulatory approvals.
Deutsche Bank analyst Emmanuel Rosner reaffirmed a ‘Buy’ rating on Tesla, Inc. (NASDAQ:TSLA) on August 29 but lowered the price target on the shares to $375 from $1,125. The price target change factors in the firm’s 3-for-1 stock split. The analyst believes that Tesla, Inc. (NASDAQ:TSLA)’s new vehicle production in Europe “could be a game-changer”. The plan could make Tesla an “even more formidable competitor in the region, while likely boosting the company’s gross margins,” the analyst told investors in a research note. He thinks 2023 “could be a pivotal year” for Tesla, Inc. (NASDAQ:TSLA) and he sees the stock “as one of the most attractive stories in the autos sector”.
Among the hedge funds tracked by Insider Monkey, Cathie Wood’s ARK Investment Management is a significant stakeholder of the company, owning 1.4 million shares worth over $1 billion. Overall, 72 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA) at the end of Q2, compared to 80 funds in the earlier quarter.
Here is what Grantham Mayo Van Otterloo & Co. LLC had to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
2. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 80
YTD Share Price Decline as of August 29: 27.78%
The Home Depot, Inc. (NYSE:HD) operates as a home improvement retailer. On August 18, The Home Depot, Inc. (NYSE:HD) declared a $1.90 per share quarterly dividend, in line with previous. The dividend is payable on September 15, to shareholders of record on September 1. The stock delivers a dividend yield of 2.55% as of August 29. The board of directors also authorized a new $15 billion share repurchase program, to replace its last authorization. As consumer spending improves and people budget for home renovation, The Home Depot, Inc. (NYSE:HD) stock stands to rebound as soon as 2023.
Truist analyst Scot Ciccarelli raised the price target on The Home Depot, Inc. (NYSE:HD) to $399 from $375 on August 17 and reaffirmed a ‘Buy’ rating on the shares. The company’s Q2 results were “solid” and its business trends remain robust despite the macro backdrop, the analyst told investors. He added that considering the significant supply/demand disruption in the housing market, the notable increase in home values, and the fixed nature of most mortgage debt, he still remains bullish on the Home Improvement space.
According to Insider Monkey’s data, The Home Depot, Inc. (NYSE:HD) was part of 80 hedge funds’ portfolios at the end of Q2, up from 75 funds in the previous quarter. Ken Fisher’s Fisher Asset Management is the largest shareholder of the company, with 8.35 million shares worth $2.3 billion.
Here is what the Carillon Clarivest Capital Appreciation Fund had to say about The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Home Depot (NYSE:HD), the home improvement retailer, reported quarterly results that beat consensus on the top line, but noted uncertainty from ongoing inflation and supply chain constraints, dampening the outlook.”
1. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 93
YTD Share Price Decline as of August 29: 22.72%
Shares of Booking Holdings Inc. (NASDAQ:BKNG), the American travel technology firm, have suffered a year-to-date decline of about 23% as of August 29. However, the travel sector is seeing a recovery and the stock will potentially rebound on the back of this positive momentum in the industry.
On August 3, Booking Holdings Inc. (NASDAQ:BKNG) reported Q2 non-GAAP EPS of $19.08, beating market estimates by $1.41. The company’s revenue soared by 99.1% year-over-year, reaching $4.3 billion, but fell short of Wall Street’s consensus by $50 million. Gross travel bookings came in at $34.5 billion, an increase of 57% from the prior year quarter.
On August 4, Deutsche Bank analyst Lee Horowitz maintained a ‘Buy’ recommendation on Booking Holdings Inc. (NASDAQ:BKNG) but lowered the price target on the shares to $2,280 from $2,300. The company’s Q2 results continued to reflect the progress and resilience of the pandemic recovery, and Booking Holdings Inc. (NASDAQ:BKNG) showed a stabilization of the room night pattern into Q3, the analyst told investors in a research note.
According to Insider Monkey’s data, 93 hedge funds were bullish on Booking Holdings Inc. (NASDAQ:BKNG) at the end of June, compared to 99 funds in the prior quarter. Harris Associates is one of the leading shareholders of the company, with 616,383 shares worth over $1 billion.
Here is what LRT Capital Management had to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2022 investor letter:
“Booking Holdings was formerly Priceline.com but has changed its name to reflect that source of most of its revenue: Booking.com. Booking.com is the largest online travel agency (OTA) in the world, connecting travelers and hotels. The company has over 2.3 million properties in 220 countries on its site, along with photos, reviews and details about the amenities offered by each property. The accommodations offered range from hotels, motels, homes & apartments, hostels, and bed & breakfasts. The company occupies a dominant position in the travel booking funnel and collects revenue from hotel reservations booked through its site. Booking.com is particularly strong in Europe, where chain hotels are less dominant and smaller independent hotel rely on it to fill their rooms.
In addition to Booking.com, the company owns agoda.com, priceline.com, rentalcars.com, OpenTable and the KAYAK flight search engine. Hotel bookings account for most of the revenue, but the company also offers car rental reservations, flights, vacation packages, cruises, tours, airport taxis, etc.
The company benefits from economies of scale in its investments in technology, national advertising, and customer loyalty programs. The business also has enormous network effects, as consumers are most likely to use a booking platform with the most properties, broadest availability of reviews and strong customer service. This in turn drives hotels to make their room inventory available on booking.com, which drives most of the reservation traffic for many boutique hotels, thus reinforcing the network effect. Of note, Booking.com operates two models: the agency model, where the company simply acts as an agent for a hotel and collects a fee, and the merchant model, under which Booking.com buys the room-night from the hotel, but then retains the ability to optimize the pricing on the room.
Also of note is the fact that the acquisition of Booking.com by Priceline.com is amongst the most successful and value creating M&A transactions of all time.”
You can also take a look at This Analyst Is Bearish on These 15 Retail Stocks Amid “Soft Landing” Expectations and the 10 Best Stocks For Inflation According to Redditors.
