Analysts say you should buy these stocks in March.
For the second month in a row, the S&P 500 ended a hot month on a low note as investors sold off some of the hottest tech stocks of 2020. The fourth-quarter earnings season was better than feared. However, investors are growing increasingly concerned about inflation and rising interest rates since the government pumped trillions of stimulus dollars into the economy. But while some investors are taking profits, others are looking for opportunities to buy the dip. Here are nine stocks to buy that were recently upgraded by the CFRA analyst team.
AU Optronics (ticker: AUOTY)
AU Optronics is a Taiwanese company that manufactures thin film transistor liquid crystal displays. Analyst Hazim Bahari upgraded the stock and says demand for TVs, PC monitors and laptops has spiked in the work- and study-from-home environment. AU’s flat panel display prices have been creeping higher, boosting margins. Bahari says demand trends will remain strong into 2021. He projects AU’s revenue growth will increase from just 1% in 2020 to 18% in 2021 and 6% in 2022. AUOTY shares are already up more than 30% year to date. CFRA has a “buy” rating and a $7 price target for AUOTY stock.
For nearly a year now, global pharmaceutical giant Pfizer has been working to develop and roll out its FDA-authorized COVID-19 vaccine. Analyst Sel Hardy recently upgraded the stock and raised his 2021 and 2022 sales estimates. With the first wave of vaccines now deployed, Hardy says virus mutations suggest there is a good possibility multiple vaccinations will be needed down the road. The Joe Biden administration’s purchase of an additional 100 million vaccine doses on Feb. 11 will bring in another $2 billion in revenue for Pfizer. CFRA has a “buy” rating and a $39 price target for PFE stock.
U.S. Foods (USFD)
U.S. Foods is one of the two largest food service distributors in the U.S. and specializes in food away from home. Analyst Arun Sundaram has upgraded the stock and says the company will exit the pandemic with a leaner business, having already eliminated $180 million in annual fixed costs. U.S. Foods landed $800 million in new business in 2020, and Sundaram says its 2021 pipeline looks strong. Sundaram projects earnings per share will jump from 9 cents in 2020 to $1.37 in 2021. CFRA has a “buy” rating and a $44 price target for USFD stock.
Bio-Rad Laboratories (BIO)
Bio-Rad Laboratories produces life science tools used in research and clinical diagnostics. Hardy recently upgraded the stock and says the company should continue to benefit from elevated pandemic-related demand in the first half of 2021. COVID-19 testing and research products made up 16.7% of total sales in the fourth quarter. Hardy says the diagnostics segment will return to growth as well, as routine testing demand rebounds to pre-crisis levels. Hardy says Bio-Rad’s goal of $2.8 billion in 2023 revenue is “comfortably achievable.” CFRA has a “strong buy” rating and a $740 price target for BIO stock.
Markel is a specialty insurance and reinsurance underwriter. Analyst Catherine Seifert upgraded the stock after the company’s fourth-quarter earnings report indicated its sales growth is accelerating and insurance pricing trends are bullish. Seifert says Markel generates superior profitability relative to its peer group, and its premium growth rates are well above industry average. Organic operating revenues were up 15% in 2020. Seifert projects operating revenue will grow between 12% and 16% in 2021 and between 13% and 17% in 2022, roughly double the industry average. CFRA has a “buy” rating and a $1,320 price target for MKL stock.
Sun Life Financial (SLF)
Sun Life Financial is a global financial services company that provides wealth management and insurance services in the U.S., Canada, the U.K. and Asia. Seifert upgraded Sun Life after the company’s fourth-quarter EPS and revenue growth exceeded her expectations. Looking ahead, CFRA projects between 4% and 7% organic revenue growth in 2021 and between 5% and 8% growth in 2022. Seifert says Sun Life’s industry-leading growth numbers should be a bullish catalyst for the stock. She says the stock’s 3.5% dividend is also attractive. CFRA has a “buy” rating and a $55 price target for SLF stock.
ARC Resources (AETUF)
ARC Resources is an oil and gas exploration and production company that operates in Western Canada. Analyst Andrzej Tomczyk upgraded ARC and says the company is hedged against a downturn in oil prices and exposed to potential upside in natural gas prices in 2021. Tomczyk is bullish on natural gas prices in the near and midterm and says more gas will be needed to replace accelerating coal plant retirements. ARC recently acquired Seven Generations Energy, which Tomczyk says will boost ARC’s financial strength. CFRA has a “strong buy” rating and a $8.74 price target for AETUF stock.
BorgWarner is a leading global producer of automotive powertrain components. Analyst Garrett Nelson upgraded BorgWarner and says the stock has a very attractive risk-reward profile. He says the company’s 2020 Delphi Technologies acquisition makes sense from a long-term strategy standpoint, even though BorgWarner overpaid in the deal. Delphi’s exposure to electric and hybrid vehicle technology provides an excellent potential growth source. Nelson became more bullish on BorgWarner after the company updated its 2021 earnings guidance in February, which eased his concerns about deleveraging following the Delphi deal. CFRA has a “strong buy” rating and a $60 price target for BWA stock.
Advanced Energy Industries (AEIS)
Advanced Energy Industries produces both power conversion and control systems as well as thermal and gas flow control systems used in semiconductor and industrial manufacturing. Analyst David Holt upgraded Advanced Energy after the stock took a big hit following its fourth-quarter earnings report. The company guided for sequential declines in sales, gross margin and adjusted EPS in the first quarter of 2021, but Holt says the supply constraints driving those declines are only temporary. Holt says the share price weakness has provided an attractive entry point for long-term investors. CFRA has a “buy” rating and a $125 price target for AEIS stock.
Nine upgraded stocks to buy in March:
— AU Optronics (AUOTY)
— Pfizer (PFE)
— U.S. Foods (USFD)
— Bio-Rad Laboratories (BIO)
— Markel (MKL)
— Sun Life Financial (SLF)
— ARC Resources (AETUF)
— BorgWarner (BWA)
— Advanced Energy Industries (AEIS)
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