Buy these stocks in December.
The S&P 500 hit all-time highs in November on optimism surrounding the U.S. election results, positive coronavirus vaccine data and the potential for another large-scale government stimulus package in coming months. Third-quarter earnings season was better than many investors had expected, and some analysts are eyeing a big rebound for the economy in 2021. For investors willing to stomach some potential near-term volatility, the CFRA analyst team has identified buying opportunities in a handful of stocks heading into the end of the year. Here are CFRA’s nine most recently upgraded stocks to buy in December.
Uber Technologies (ticker: UBER)
Ride-hailing giant Uber has endured a steep drop-off in its mobility business, so it has relied heavily on its Uber Eats food delivery service in 2020. CFRA analyst Angelo Zino upgraded Uber shortly after the November election in which California voters passed Proposition 22, exempting Uber from classifying drivers as employees. Zino says Uber has an attractive growth trajectory and a compelling valuation. He says a coronavirus vaccine will be the next catalyst for Uber’s mobility business, and Uber could be profitable by the end of 2021. CFRA has a “strong buy” rating and $55 price target for UBER stock.
Kinross Gold Corp. (KGC)
Kinross Gold is one of the world’s largest gold producers. The U.S. government issued unprecedented amounts of economic stimulus in 2020 and is expected to follow up with another round of payments in early 2021. Investors concerned about the inflationary impact of all those funds are turning to gold as a hedge. Analyst Matthew Miller recently upgraded Kinross. Miller says Kinross trades at a steep valuation discount to its peers despite its attractive growth prospects and its long-term track record of meeting or exceeding guidance. CFRA has a “strong buy” rating and $12.32 price target for KGC stock.
Delta Air Lines (DAL)
Airline stocks have been soaring in recent months on increasing optimism that a coronavirus vaccine will be widely available in 2021. Delta Air Lines shares are up about 50% in the past six months, but analyst Colin Scarola recently upgraded Delta and says there’s plenty more upside ahead in 2021. Scarola says investors are not fully appreciating Delta’s long-term earnings potential in 2022 and beyond. In fact, Delta shares are trading at less than 10 times Scarola’s 2022 earnings per share estimate of $4.31. CFRA has a “buy” rating and $44 price target for DAL stock.
Activision Blizzard (ATVI)
Activision Blizzard is a leading U.S. video game publisher and owner of franchises such as Call of Duty, Overwatch and World Of Warcraft. Analyst John Freeman upgraded Activision and is extremely bullish on video game stocks following the recent launch of next-generation Xbox and PlayStation consoles. Freeman is anticipating a boom in gaming activity this winter due to the social distancing environment and the console launches. In addition, Call of Duty had a great third quarter, including 250% sales growth and 23% user growth year over year. CFRA has a “strong buy” rating and $109 price target for ATVI stock.
Take-Two Interactive Software (TTWO)
Take-Two Interactive Software is another leading American video game publisher and owner of franchises such as Grand Theft Auto, Red Dead and NBA 2K. Freeman upgraded Take-Two based on the same near-term catalysts of new gaming console launches coupled with a socially distanced holiday season. Freeman says the ray tracing capabilities of the new consoles should generate “stunning jumps in audio-visual realism,” driving demand for new games that are optimized for the next-gen consoles. Freeman is projecting 8% revenue growth for Take-Two in fiscal 2021. CFRA has a “strong buy” rating and $204 price target for TTWO stock.
Electronic Arts (EA)
Electronic Arts is the third top public video game publisher Freeman upgraded in recent weeks. EA owns popular franchises such as Madden, FIFA and Battlefield. Freeman anticipates the favorable climate will benefit all three gaming stocks. EA shares took a hit following the company’s third-quarter earnings report, but Freeman says the sell-off was an overreaction and has created a buying opportunity for long-term investors. Freeman says investors should continue to monitor Madden and FIFA launch delays but should not be concerned at this point. CFRA has a “strong buy” rating and $150 price target for EA stock.
Cheesecake Factory (CAKE)
Much like the airline business, the casual dining industry has taken a big hit in 2020. Cheesecake Factory shares are down about 1.5% this year, but analyst Tuna Amobi recently upgraded the stock on vaccine optimism. Amobi says Cheesecake Factory is exactly the type of stock that could be a big winner as the economy slowly returns to normal. In the meantime, Amobi says the company is gaining traction in its digital ordering and third-party delivery businesses. Amobi is projecting margins will rebound to 3.8% in 2021. CFRA has a “buy” rating and $40 price target for CAKE stock.
Patterson-UTI Energy (PTEN)
Patterson-UTI Energy is the second-largest U.S. land oil driller. It has been another brutal year for oil and gas stocks, but analyst Andrzej Tomczyk recently upgraded Patterson and says the company’s business is trending in the right direction heading into 2021. Positive vaccine news, rising rig counts, normalized oil prices and improving margins are all bullish catalysts for Patterson, according to Tomczyk. He says the company is better-positioned for profitability in a 2021 oil market recovery than it was during the previous recovery in 2016. CFRA has a “buy” rating and $5 price target or PTEN stock.
CF Industries Holdings (CF)
CF Industries is the largest North American nitrogen fertilizer producer. Analyst Richard Wolfe recently upgraded CF and says he has a bullish outlook for U.S. agriculture in 2021 based on higher crop prices and easing geopolitical tensions between the U.S. and trading partners. Nitrogen fertilizer prices have rebounded in the second half of the year, and Wolfe is projecting a return to 7% revenue growth for CF in 2021. Finally, he says CF will benefit in the long term from environmental sustainability projects, such as green ammonia. CFRA has a “buy” rating and $38 price target for CF stock.
CFRA’s upgraded stocks:
— Uber Technologies (UBER)
— Kinross Gold Corp. (KGC)
— Delta Air Lines (DAL)
— Activision Blizzard (ATVI)
— Take-Two Interactive Software (TTWO)
— Electronic Arts (EA)
— Cheesecake Factory (CAKE)
— Patterson-UTI Energy (PTEN)
— CF Industries Holdings (CF)
More from U.S. News