Analysts recommend these upgraded stocks for January.
The S&P 500 once again made new all-time highs in December, and the index finished its third consecutive calendar year of double-digit percentage gains. Looking ahead to 2022, investors are now focusing on persistently high inflation, supply chain disruptions, Federal Reserve interest rate hikes and the ongoing pandemic. Despite the uncertainties, analysts are generally optimistic about the economic outlook and still project modest S&P 500 growth in 2022. The CFRA Research team sees some fresh investment opportunities heading into the new year. Here are nine recently upgraded stocks to buy, according to CFRA.
Oneok Inc. (ticker: OKE)
Oneok is a U.S. natural gas processing and transportation company. Analyst Stewart Glickman upgraded Oneok and says investors should be buying the dip in OKE stock after it dropped in the past two months. Glickman says elevated natural gas prices have led to an uptick in well completion work and newly drilled wells in Oneok’s key regions, which is a bullish sign for future gas processing demand. In addition, he says the company’s near-term backlog of roughly $4.5 billion in capital projects provides opportunity for cash flow growth. CFRA has a “buy” rating and a $67 price target for OKE stock, which closed at $61.40 on Jan. 4.
Rivian Automotive Inc. (RIVN)
Rivian Automotive is an electric vehicle startup that completed its initial public offering in November 2021. Analyst Garrett Nelson upgraded Rivian and says the stock’s significant pullback from post-IPO highs offers long-term investors an attractive entry point. Rivian has reported strong preorder demand for its vehicles. Nelson is particularly impressed with the R1T, which was recently named MotorTrend’s 2022 truck of the year. In addition, Nelson says the company’s deal to supply Amazon.com Inc. (AMZN) with 100,000 delivery vans is a major vote of confidence in Rivian. CFRA has a “buy” rating and a $135 price target for RIVN stock, which closed at $101.39 on Jan. 4.
Applied Materials Inc. (AMAT)
Applied Materials is a semiconductor, solar energy equipment and computer display manufacturer. Analyst Keven Young upgraded the stock and says Applied Materials should benefit from improving business fundamentals and valuation upside. Foundry and logic transitions coupled with memory capacity growth are demand tail winds for Applied Materials, Young says. In addition, a growing installed user base benefits Applied Materials’ services business and represents potential for high-quality recurring revenue streams. Finally, Young says capital expenditure guidance from Intel Corp. (INTC) and other chipmakers suggests upside for Applied Materials’ earnings estimates. CFRA has a “strong-buy” rating and a $175 price target for AMAT stock, which closed at $158.36 on Jan. 4.
Ambarella Inc. (AMBA)
Ambarella develops semiconductor solutions for video processing. Young upgraded Ambarella, citing its opportunities in video surveillance and automotive applications. Young says Ambarella’s deals with Rivian, KeepTruckin Inc., Yandex NV (YNDX) and Solera Holdings suggest that the company is growing its presence in the auto industry, and Ambarella is gaining market share in the high-growth home security camera business. In addition, Young is optimistic about Ambarella’s CVflow products, which facilitate factory and automotive automation and are improving work and travel. Young projects 19% revenue growth for Ambarella in fiscal 2023. CFRA has a “buy” rating and a $230 price target for AMBA stock, which closed at $205.04 on Jan. 4.
Paycom Software Inc. (PAYC)
Paycom Software provides cloud computing services for human capital management. Analyst David Holt upgraded Paycom and says the recent pullback in the stock is a buying opportunity for long-term investors. Holt says Paycom will be well positioned in a post-pandemic world given its unique, internally developed cloud services and opportunities for upmarket expansion. Rising employment rates should also serve as a tail wind for increased client activity and provide potential upside for Paycom’s recurring revenue, Holt says. He projects 24% revenue growth and 26% earnings growth in 2022. CFRA has a “buy” rating and a $525 price target for PAYC stock, which closed at $391.87 on Jan. 4.
Atlassian Corp. PLC (TEAM)
Atlassian specializes in software used to develop, test, deploy and operate other software, known as meta-software. Analyst John Freeman upgraded the stock and says he has strong conviction in the company’s fundamental trends and management team. Freeman says Atlassian should generate greater than 25% revenue growth “well beyond” 2024. He says Atlassian is one of the best pure-play investments in “the rise of meta-software.” The company’s collaborative communication apps and tools — including Jira, Confluence and Trello — profit from the digital transformation of the workplace, Freeman says. CFRA has a “strong-buy” rating and a $474 price target for TEAM stock, which closed at $334.99 on Jan. 4.
MP Materials Corp. (MP)
MP Materials is the largest producer of rare earth elements in the Western Hemisphere. Analyst Matthew Miller upgraded MP and says the company is the top supplier of neodymium and praseodymium to the North American market. Miller says these elements are a key component in several long-term growth markets, including electric motors, wind turbines, robotics and drones. In December, MP announced an agreement with General Motors Co. (GM) to supply magnets for more than a dozen GM vehicle models. MP is also constructing a magnet manufacturing facility in Texas. CFRA has a “strong-buy” rating and a $57 price target for MP stock, which closed at $50.40 on Jan. 4.
Healthpeak Properties Inc. (PEAK)
Healthpeak Properties is a real estate investment trust that invests in health-care-related facilities. Analyst Michael Elliott upgraded Healthpeak and says the company’s decision to dispose of senior housing assets and take advantage of booming life sciences demand is a savvy move. While divesting an estimated $1.5 billion in senior housing assets in 2021, Healthpeak has been acquiring properties in Boston, San Diego and the San Francisco Bay Area. Elliott says life sciences property demand is up 34% in major markets since mid-2020. CFRA has a “buy” rating and a $37 price target for PEAK stock, which closed at $36.66 on Jan 4.
Canadian Imperial Bank of Commerce (CM)
Canadian Imperial Bank of Commerce is a commercial bank with an expanding footprint in the U.S. and Caribbean markets. Analyst Alexander Yokum is predicting “robust” Canadian retail lending growth and mortgage origination market share gains for Canadian Imperial in 2022. In addition, he says the bank will benefit from expanded U.S. commercial banking opportunities and improving financial efficiency following new cost-control measures. Finally, Yokum says a booming housing market and solid capital reserve levels provide a buffer for Canadian Imperial against future loan losses. CFRA has a “buy” rating and a $127 price target for CM stock, which closed at $117.67 on Jan. 4.
9 upgraded stocks to buy in January:
— Oneok Inc. (OKE)
— Rivian Automotive Inc. (RIVN)
— Applied Materials Inc. (AMAT)
— Ambarella Inc. (AMBA)
— Paycom Software Inc. (PAYC)
— Atlassian Corp. PLC (TEAM)
— MP Materials Corp. (MP)
— Healthpeak Properties Inc. (PEAK)
— Canadian Imperial Bank of Commerce (CM)
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