The S&P 500 has gained 8.9% this year through May 31. However, the Federal Reserve is still raising interest rates, and several bank failures have rattled the financial sector.
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The higher interest rates rise, the more difficult it becomes for S&P 500 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.
Here are nine recently upgraded stocks to buy, according to CFRA Research:
| Stock | Implied upside over May 31 closing price |
| Dillard’s Inc. (ticker: DDS) | 27.1% |
| News Corp. (NWSA) | 9.2% |
| Charles River Laboratories International Inc. (CRL) | 20.5% |
| Goodyear Tire & Rubber Co. (GT) | 45.7% |
| Revvity Inc. (RVTY) | 18.8% |
| Devon Energy Corp. (DVN) | 32.3% |
| ODP Corp. (ODP) | 27.3% |
| New Fortress Energy Inc. (NFE) | 40.8% |
| SAP SE (SAP) | 24.2% |
Dillard’s Inc. (DDS)
Dillard’s operates department stores in the U.S. that sell fashion apparel, cosmetics, home furnishings and other consumer goods. The company also has a construction segment that builds and remodels stores. Analyst Zachary Warring upgraded Dillard’s and says the company has done an impressive job of offsetting the negative impact of online competition by shrinking its share count and maintaining a strong balance sheet. Warring says the company has taken advantage of a strong U.S. consumer and is positioned to generate peak earnings and revenue in 2023. CFRA has a “buy” rating and $350 price target for DDS stock, which closed at $275.31 on May 31.
News Corp. (NWSA)
News Corp. is a media company that owns a diversified portfolio of newspapers, cable programming, books and digital media, including the Wall Street Journal, Barron’s and MarketWatch brands. Analyst Siye Desta upgraded the stock and says News Corp. continues to battle headwinds in advertising and digital real estate, but there are signs these pressures may be easing. The company also plans to cut costs by more than $160 million annually, and its professional information business grew revenue by an impressive 38% in the first quarter. CFRA has a “buy” rating and $20 price target for NWSA stock, which closed at $18.31 on May 31.
Charles River Laboratories International Inc. (CRL)
Charles River Laboratories provides purpose-bred rodents for drug testing, drug discovery and safety and manufacturing services. Analyst Sel Hardy upgraded the stock and says the company’s strong first-quarter financial performance, attractive valuation and improvements in alleviating nonhuman primate supply constraints make the stock a solid investment. Hardy says growth of biologic drug research will be a long-term tailwind for Charles River, and he says the company is the market leader in preclinical drug trial products and services. The company also has a strong order backlog in 2023. CFRA has a “buy” rating and $233 price target for CRL stock, which closed at $193.38 on May 31.
Goodyear Tire & Rubber Co. (GT)
Goodyear is the largest U.S. tire manufacturer. The company also produces other rubber, plastic and chemical products. Analyst Garrett Nelson upgraded Goodyear and says the stock’s big 2022 sell-off was a major buying opportunity given favorable 2023 travel demand should generate strong tire sales. About 80% of Goodyear’s tire sales in 2022 were high-margin replacement tires, and Nelson projects favorable replacement tire sales trends in 2023 as well. He forecasts 4% revenue growth in 2023 and 3% growth in 2024. CFRA has a “strong buy” rating and $20 price target for GT stock, which closed at $13.73 on May 31.
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Revvity Inc. (RVTY)
Formerly known as PerkinElmer, Revvity provides advanced scientific instruments and other products and services to pharmaceutical, industrial, academic and government customers. Hardy upgraded the stock and says the company has successfully executed both its May 2023 rebranding campaign and the sale of its enterprise and analytical solutions businesses. He says proceeds from the divestiture will help improve Revvity’s balance sheet, and the company is now a more focused business with higher growth potential and an attractive valuation. Hardy says Revvity has a long track record of technological innovation. CFRA has a “buy” rating and $137 price target for RVTY stock, which closed at $115.32 on May 31.
Devon Energy Corp. (DVN)
Devon Energy is one of the largest U.S. independent oil and gas exploration and production companies. Analyst Stewart Glickman upgraded the stock and says it is attractively valued after a nearly 20% year-to-date pullback. In addition, Glickman says services costs appear to have peaked, which could be good news for the company’s capital expenditures in the second half of 2023 and 2024. The stock trades at about 7.3 times his 2023 earnings-per-share estimate. CFRA has a “buy” rating and $61 price target for DVN stock, which closed at $46.10 on May 31.
ODP Corp. (ODP)
ODP is the parent company of Office Depot, an office supply retailer that also provides business services and digital workplace technology. Warring upgraded the stock and says the company’s business-to-business segment has been solid and its aggressive capital return program is creating value for investors. Online competition from Amazon.com Inc. (AMZN) and others will likely drive ODP to continue to close Office Depot locations and generate negative retail sales growth, but Warring says the company’s $1 billion buyback program represents more than half its entire market cap. CFRA has a “buy” rating and $51 price target for ODP stock, which closed at $40.06 on May 31.
New Fortress Energy Inc. (NFE)
New Fortress Energy is a global energy infrastructure company that specializes in the procurement and sale of liquified natural gas, or LNG. With the stock down more than 30% so far in 2023, Glickman upgraded New Fortress largely based on what he says is its overly pessimistic valuation. The company faces risks tied to its relatively large debt burden in a high-rate environment, but Glickman says European demand for U.S. natural gas will remain strong and the company has already sold 80% of its planned 2023 volumes. CFRA has a “buy” rating and $37 price target for NFE stock, which closed at $26.27 on May 31.
SAP SE (SAP)
SAP provides enterprise application software for accounting, supply chain management and customer relationship management. Analyst Angelo Zino upgraded SAP and says the company has a favorable outlook as it continues its transition to a cloud-based business model. He says cloud and software revenue provide significant financial visibility and should grow between 6% and 8% annually through at least 2024. The company’s cloud backlog grew 25% in the first quarter, and Glickman says cloud revenue will grow from 43% of total sales to 60% by 2025. CFRA has a “buy” rating and $162 price target for SAP stock, which closed at $130.44 on May 31.
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9 Upgraded Stocks to Buy in June originally appeared on usnews.com
