The S&P 500 has started off 2023 on a strong note after a brutal 2022. The Federal Reserve is still raising interest rates, however, and several bank failures have rattled the financial sector. The higher interest rates rise, the more difficult it becomes for companies to grow earnings. In fact, many economists still fear a U.S. recession is just around the corner. Fortunately, analysts say the unpredictable macroeconomic environment has created a handful of fresh investment opportunities in the market.
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Here are nine recently upgraded stocks to buy, according to CFRA Research:
| Stock | Implied upside over April 4 closing price |
| Eversource Energy (ticker: ES) | 6.3% |
| RPM International Inc. (RPM) | 14.6% |
| Whirlpool Corp. (WHR) | 26.5% |
| Eaton Corp. PLC (ETN) | 9.7% |
| Fifth Third Bancorp (FITB) | 21% |
| Netflix Inc. (NFLX) | 12.5% |
| Goldman Sachs Group Inc. (GS) | 24% |
| Welltower Inc. (WELL) | 16.5% |
| Morgan Stanley (MS) | 23.8% |
Eversource Energy (ES)
Eversource Energy is a utility holding company that operates electric, water and gas distribution businesses in New England. Analyst Daniel Rich upgraded Eversource and says the stock deserves to trade at a premium valuation due to its earnings and dividend growth potential. Rich projects Eversource can grow earnings per share by 6.9% annually and grow its dividend by 6% annually through at least 2025, adding to its April 5 dividend yield of 3.5%. In addition, he says the planned sale of offshore wind assets will help support capital expenditures. CFRA has a “buy” rating and $83 price target for ES stock, which closed at $78.05 on April 4.
RPM International Inc. (RPM)
RPM International produces specialty chemicals used for industrial and niche applications, including for do-it-yourself and remodeling projects. Analyst Emily Nasseff Mitsch upgraded RPM and says growth in manufacturing and nonresidential construction spending will be growth drivers for the company. In fact, S&P Global projects manufacturing construction will grow 17% and institutional construction will grow 7% in 2023. Mitsch anticipates consumer demand will decline in 2023, but she says RPM’s exposure to reshoring, manufacturing and nonresidential construction will help the stock outperform. CFRA has a “buy” rating and $98 price target for RPM stock, which closed at $85.53 on April 4.
Whirlpool Corp. (WHR)
Whirlpool is the world’s largest home appliance manufacturer. Analyst Kenneth Leon says Whirlpool remains the U.S. appliance market leader and its stock is attractively valued. He anticipates weak appliance demand in 2023, but Whirlpool has still guided for $800 million in free cash flow this year. Leon says Whirlpool’s free cash flow should continue to support the stock’s sizable 5.3% dividend. In addition, he estimates the divestment of Whirlpool’s Europe, Middle East and Africa unit will boost 2024 free cash flow by $350 million. CFRA has a “buy” rating and $165 price target for WHR stock, which closed at $130.45 on April 4.
Eaton Corp. PLC (ETN)
Eaton is an industrial equipment and parts manufacturer that produces electrical systems and components for industrial, mobile and aircraft applications. Analyst Jonathan Sakraida upgraded Eaton and says the company has opportunities for near-term margin expansion thanks in part to strong end-markets, such as commercial and military aerospace, industrial facilities and data centers. Sakraida says the 2021 bipartisan infrastructure bill and the Inflation Reduction Act will help drive investments in power grid modernization and electric vehicle charging stations, and Eaton is highly exposed to both areas. CFRA has a “buy” rating and $178 price target for ETN stock, which closed at $162.25 on April 4.
Fifth Third Bancorp (FITB)
Fifth Third Bancorp is a U.S. bank that provides retail and commercial banking, asset management and consumer lending services in the Midwest and Southeast regions. Analyst Alexander Yokum upgraded Fifth Third and says the stock’s recent pullback is a buying opportunity because its strong franchise is less susceptible to a bank run than failed banks SVB Financial Group and Signature Bank. Yokum says Fifth Third has a diversified banking business, a large geographical footprint and a high percentage of insured deposits. CFRA has a “buy” rating and $31 price target for FITB stock, which closed at $25.61 on April 4.
[SEE: 8 Best Cheap Stocks to Buy Under $10.]
Netflix Inc. (NFLX)
Netflix is a market leader in video streaming and has more than 230 million paid subscribers around the world. Leon upgraded Netflix and says the company has a key content advantage over its peers. In addition, new ad-supported subscription tiers will be growth drivers for Netflix in 2023. While many competitors are struggling to generate profits and are dealing with complex mergers, Leon says Netflix is focused on profits. He projects revenue growth will accelerate in 2023, driven by advertising, ad-pay plans and Netflix’s planned account-sharing crackdown. CFRA has a “strong buy” rating and $390 price target for NFLX stock, which closed at $346.75 on April 4.
Goldman Sachs Group Inc. (GS)
Goldman Sachs is one of the world’s top investment banks. Leon upgraded Goldman and says the company’s losses on assets held to maturity are “immaterial” given the bank’s impressive liquidity risk management. He says Goldman will gain wallet share in the next 12 to 18 months as the investment banking and wealth management environments improve. Leon also anticipates rebounds in the equity and debt capital markets, as well as the merger and acquisition market. He projects between 5% and 6% growth in the equity and debt underwriting market in 2023. CFRA has a “strong buy” rating and $400 price target for GS stock, which closed at $322.65 on April 4.
Welltower Inc. (WELL)
Welltower is a health care real estate investment trust that invests in senior housing, specialty care facilities and medical office buildings. Analyst Michael Elliott upgraded Welltower and says occupancy rates and pricing power should continue to improve over the next several quarters. Elliott says COVID-19 risks associated with additional variants are subsiding, and the senior housing market currently has favorable supply and demand conditions. In the longer term, Elliott says Welltower will benefit from an aging U.S. population and an increase in health care spending. CFRA has a “strong buy” rating and $82 price target for WELL stock, which closed at $70.38 on April 4.
Morgan Stanley (MS)
Morgan Stanley is one of the largest U.S. financial services firms, providing investment banking along with wealth and investment management services. Leon upgraded Morgan Stanley and says the stock’s recent weakness is a buying opportunity given the bank’s minimal liquidity risk. Leon anticipates Morgan Stanley will gain wallet share in the next 12 to 18 months as the investment banking and wealth and asset management markets improve. High interest rates will continue to weigh on investment banks, but Leon projects 5.3% revenue growth for Morgan Stanley in 2023. CFRA has a “strong buy” rating and $105 price target for MS stock, which closed at $84.82 on April 4.
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9 Upgraded Stocks to Buy in April originally appeared on usnews.com
Update 04/05/23: This story was previously published at an earlier date and has been updated with new information.
