9 Upgraded Stocks to Buy in February

Analysts recommend these upgraded stocks for February.

After logging a third consecutive year of double-digit percentage gains in 2021, the S&P 500 pulled back from all-time highs in January. Investors are concerned about persistently high inflation, supply chain disruptions, Federal Reserve interest rate hikes, geopolitical tensions in Ukraine and the ongoing pandemic. Despite the uncertainties and the January volatility, analysts still have some optimism about the economic outlook and project S&P 500 growth in 2022. In fact, the CFRA Research team sees some fresh investment opportunities heading into February. Here are nine recently upgraded stocks to buy, according to CFRA.

Home Depot Inc. (ticker: HD)

Home Depot is one of the largest U.S. home improvement retailers. Analyst Kenneth Leon upgraded the stock and says Home Depot shares have upside potential following a significant pullback from all-time highs in January. Uncertainty and volatility in the lumber market stemming from supply chain disruptions may continue to cause problems for Home Depot in 2022, but Leon says do-it-yourself home remodeling demand should ramp up in the spring. He says Home Depot deserves a premium earnings multiple given its lack of competition outside of Lowe’s Cos. Inc. (LOW). CFRA has a “buy” rating and a $420 price target for HD stock, which closed at $366.54 on Jan. 28.

Signature Bank (SBNY)

Signature Bank is a full-service commercial bank that serves private businesses in New York, Connecticut, California and North Carolina. Analyst Alexander Yokum upgraded Signature and says it will be one of the biggest winners from rising interest rates, given that 90% of its revenue comes from net interest income. In the fourth quarter, Signature’s net interest income was up 11% quarter-over-quarter and 36% from a year ago. Yokum projects revenue growth in the 22% to 27% range for 2022 and continued expansion of Signature’s digital asset banking. CFRA has a “strong-buy” rating and a $420 price target for SBNY stock, which closed at $301.07 on Jan. 28.

Citigroup Inc. (C)

Citigroup is one of the largest global banks. Leon upgraded Citigroup and says the bank’s strategy of exiting underperforming markets in Mexico and Asia should free up capital that Citi can invest in its strong core businesses. Leon says Citigroup’s stock should also close its significant price to tangible book value discount relative to other bank stock peers. In addition, Citigroup’s upcoming investor day event on March 2 could shed some additional light on its transformation strategy and serve as a bullish catalyst for the stock. CFRA has a “buy” rating and a $76 price target for C stock, which closed at $64.69 on Jan. 28.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry. Analyst Hazim Bahari upgraded the stock and says the company is well positioned to achieve its target of 15% to 20% compound annual revenue growth over the next several years. Bahari says Taiwan Semi has a dominant market share in leading-edge chip production, and 5G wireless network growth should provide a demand tail wind in 2022 and beyond. Bahari says tight supplies will support margins, and Taiwan Semi’s leading-edge chip exposure helps insulate it from an industry downturn. CFRA has a “strong buy” rating and a $180 price target for TSM stock, which closed at $117.61 on Jan. 28.

Monster Beverage Corp. (MNST)

Monster Beverage develops and sells energy drinks. Analyst Garrett Nelson says Monster’s recent acquisition of Canarchy Craft Brewing Collective LLC opens the door for Monster to further expand into the U.S. alcohol beverage market. In addition, he says Monster’s core energy drink business still has international expansion opportunities. Nelson says Monster’s debt-free balance sheet, its robust free cash flow and its track record of share buybacks should serve long-term investors well. Nelson projects Monster will maintain at least 10% revenue growth per year through 2023. CFRA has a “buy” rating and a $115 price target for MNST stock, which closed at $85.31 on Jan. 28.

State Street Corp. (STT)

State Street is one of the world’s largest custody banks and specializes in investment research and asset management. Analyst Michael Elliott upgraded State Street and says the company has a diversified revenue mix and a better expense trajectory than peers. Elliott says the company’s restructuring progress and synergies from recent acquisitions of Charles River and Brown Brothers Investor Services should help State Street eliminate its valuation discount relative to peers. Finally, Elliott says rising interest rates will ease pressures on the bank’s net interest income. CFRA has a “strong buy” rating and a $112 price target for STT stock, which closed at $93.65 on Jan. 28.

TD Synnex Corp. (SNX)

TD Synnex specializes in enterprise technology hardware products and services. Analyst Keven Young upgraded TD Synnex and says catalysts such as big data and artificial intelligence will drive upside for the stock. Young says infrastructure and security are top priorities for the enterprise market in 2022, which is good news for the company. Following the completed merger with Tech Data, Young projects fiscal 2022 revenue growth of 87%. Young says cloud, security and the “internet of things” are critical revenue growth sources for TD Synnex in the future. CFRA has a “buy” rating and a $133 price target for SNX stock, which closed at $100.76 on Jan. 28.

Prologis Inc. (PLD)

Prologis is a real estate investment trust that owns a portfolio of industrial infrastructure assets. Elliott upgraded the stock and says demand is strong for Prologis’ key logistics centers, and zoning restrictions create a barrier to entry for competitors. Elliott says Prologis’ impressive land portfolio differentiates it from peers. In addition, Prologis benefits from pricing power, and global e-commerce growth will continue to drive warehouse demand in the long term. Elliot projects at least 8% revenue growth in 2022 and 5% growth in 2023. CFRA has a “buy” rating and a $170 price target for PLD stock, which closed at $155.07 on Jan. 28.

Essex Property Trust Inc. (ESS)

Essex Property Trust is a REIT that owns and operates multifamily residential properties in California and the Pacific Northwest. Leon upgraded Essex and says multifamily residential properties are an inflation hedge for investors, given that REITs have fixed-rate mortgage debt on buildings and the pricing power to raise rates on leases. The West Coast is experiencing a shortage of single-family condo and housing units, which is forcing potential buyers to rent and is fueling higher new and renewal rental rates, Leon says. Essex shares also pay a 2.5% dividend. CFRA has a “buy” rating and a $385 price target for ESS stock, which closed at $332.14 on Jan. 28.

9 upgraded stocks to buy in February:

— Home Depot Inc. (HD)

— Signature Bank (SBNY)

— Citigroup Inc. (C)

— Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

— Monster Beverage Corp. (MNST)

— State Street Corp. (STT)

— TD Synnex Corp. (SNX)

— Prologis Inc. (PLD)

— Essex Property Trust Inc. (ESS)

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