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Three Wildly Undervalued Growth Stocks

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These stocks with enormous growth potential are too profoundly discounted to ignore.  

The growth stock collapse of 2022 has shifted to a growth stock resurgence in 2023. Cathie Wood’s growth-centric ARK Innovation ETF (ARKK) sank nearly 70% last year. This year it’s up more than 20% and may just be the beginning amid a shifting economic backdrop.

The Federal Reserve has become increasingly dovish in 2023, downshifting all the way back to a 25-basis-point rate hike at its most recent meeting. Recent talk of a pause and potential rate cuts in the future has made way for investors with an appetite for growth stocks with high reward potential.

Even after a hot start to 2023, some growth stocks look way too cheap. We’ve got three recommendations of stocks with stellar growth potential presenting attractive risk-reward propositions at their current prices.    

Meta Platforms Inc. (META)

One notable growth name that got hammered in 2022 is Meta Platforms Inc. The stock currently trades at less than 25x forward earnings. Still, with the most prominent family of apps and 4 billion users worldwide, META’s recovery this year has been swift. The ticker has stacked on 64% YTD. 

Despite its recent rally, the social media leader’s stock is still down 46% from its high and looks cheaply valued for long-term investors. Meta trades at under 20 times the expected annual profit and four times expected sales. With a core business that has held up well against intense pressures, underappreciated potential for success in the metaverse and shares trading at multiples that leave room for big upside, Meta stock continues to look significantly undervalued.

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Lithium Americas Corp (LAC) 

By 2029, electric vehicles could account for a third of the North American market and about 26% of vehicles produced worldwide, according to AutoForecast Solutions. Lithium Americas Corp is one company hoping to ride the wave of anticipated global EV demand. The company has full ownership of two development-stage mining operations in Argentina. One of which is approaching initial production, expected to come later this year. 

The high-growth -potential small-cap has been gaining the attention of the pros on Wall Street. “We believe 2023 could be an eventful year as there could be a number of key announcements on growth projects and Argentina divesture, which could be catalysts for the share price,” explained HSBC analyst Santhosh Seshadri. To this end, Seshadri recently initiated coverage of LAC with a Buy rating, backed by a $36 price target.

Most analysts agree with Seshadri’s thesis. LAC claims a Strong Buy consensus rating, based on 13 Buys vs. 1 Hold and no Sell ratings. At $37, the average price target makes room for 12-month gains of 74%.

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AssetMark Financial Holdings (AMK)

Leading asset manager AssetMark Financial continues to grow as it looks to become a full-service wealth management platform. Its recent acquisition of Adhesion Wealth, which provides wealth management technology solutions to investment advisors and asset managers, will expand its offerings. The company has been growing rapidly and has forecast annual EPS growth of 32% during the next five years. It has also seen its valuation come down to a P/E of 22, which is an excellent value for this growth stock.

The stock is up 34% already this year. Even if the market does retreat, AssetMark still expects roughly 10% growth in assets on its platform in 2023 and 20% year-over-year revenue growth. And as we emerge from this volatile market toward the next bull market, the company, a leader in the market, should see continued growth since asset managers thrive in bull markets.

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Three Stocks to Watch for the Week of March 27th

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Stocks oscillated between gains and losses last week but closed modestly higher amid concerns over the banking system, Fed outlook, and recession risks. The S&P 500 added 1.37%, the Dow rose 1.15%, and the Nasdaq finished the week 1.81% higher.  

This week, we’ll receive the latest updates on home prices, with the Case-Shiller National Home Price Index for January. Investors will also find out if inflation extended its uptick into February with the release of the Federal Reserve’s preferred gauge for checking prices. The most recent report showed that the Personal Consumption Expenditures Price Index rose 0.6% in January, marking the most significant month-to-month increase since last June.     

Growth stocks got hammered in 2022, but investors want a fresh start in 2023. If you believe in the buy-low, sell-high philosophy, you may want to read ahead. Our first recommendation was one of the biggest losers in 2022 as the inflation rate skyrocketed against historical norms. According to some of the pros, this stock is undervalued and poised for resurgence.

Match Group (MTCH)

The pandemic provided a bump in online dating and sent MTCH stock price soaring, reaching its ATH of around $169 in October 2021. Since the share price has lost nearly 75% of its value, but the global, fundamental need to meet people isn’t going anywhere. Match benefits from inelastic demand, compared to other consumer discretionary names. Which the company intends to continue capturing with its technologies, including Tinder, OkCupid, and Hinge, providing a solid and resilient subscription-based business. MTCH has a consensus Buy rating. A $60 price target implies a 50% upside.   

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Uber Technologies (UBER)

The global ride-sharing market is expected to grow from $84.30 billion in 2022 to a whopping $242.73 billion in 2028, representing a Compound Annual Growth Rate (CAGR) of 16.3% over the next six years. Uber stands out as a clear winner in the ride-sharing race based on profit growth and current valuation.

 Uber’s gross bookings rose 28% in 2022, down from its 56% post-pandemic growth in 2021, and it expects just 17%-21% year-over-year bookings growth in the first quarter of 2023. However, its adjusted EBITDA improved from a loss of $774 million in 2021 to a profit of $1.7 billion in 2022. It also expects to post a positive adjusted EBITDA of $660 million to $700 million in the first quarter. The impressive profit growth can be attributed to its cost-cutting measures and rising take rates across its mobility and delivery businesses.

For the full year, analysts expect Uber’s revenue to increase 16% to $36.9 billion as its adjusted EBITDA rises 86% to $3.2 billion. Based on those estimates, its stock trades at just two times this year’s sales and 21 times its adjusted EBITDA. It’s also still trading nearly 25% below its IPO price. 41 0f the 46 analysts offering recommendations say to Buy Uber stock. A median price target of $47 represents an increase of 50% from the current price.  

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UPS (UPS)

UPS stands to benefit from the current global supply chain disruptions, as the company’s expertise in logistics and supply chain management makes it well-positioned to navigate these challenges. As consumers increasingly turn to online shopping and same-day delivery options, UPS is poised to capitalize on these trends and continue its strong growth trajectory. With a 3.51% yield to sweeten the deal, it’s attractive to investors looking for stocks to hold long-term.

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Three Stocks to Avoid or Sell Next Week

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Seeking out great stocks to buy is important, but identifying quality investments is only half the battle. Many would say it’s just as essential for investors to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, figuring out which stocks to trim or get rid of is essential for proper portfolio maintenance.  

Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week.

Palantir (PLTR)

Some data points from Palantir’s fourth-quarter results indicate that, despite businesses and governments’ increased embrace of AI in recent months, the company’s growth is slowing a great deal. In Q4, the company’s U.S. revenue increased just 1.7% versus the previous quarter to $302 million. And its overall top-line growth slowed to 18% year-over-year in Q4, down from 22% in Q3.  

On a positive note (snicker), after nearly 20 years of existence, the company generated its first quarterly profit, as it reported a Q4 net income of $31 million or 1 cent per share. However, its operations still generated an $18 million loss, with its operating margin at a discouraging -4%.

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Big Lots (BIG)

Shares in the big box retailer may be down by nearly 71% over the past 12 months. Its 10.82% dividend yield is still tempting some investors. However, with the company reporting a net loss of $7.30 per share and expected to stay in the red through 2024, it’s highly questionable whether BIG’s high rate of payout will continue for long.

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Black Hills Corporation (BKH)

Natural gas producer Black Hills Corporation reset its growth outlook lower after reporting disappointing Q4 results, slashing its 2023 EPS view to $3.65-$3.85 from $4.00-$4.20. The revision was driven by a rapid shift in macroeconomic factors, including elevated natural gas price volatility and higher natural gas demand driven by winter storm Elliot in December 2022. With elevated natural gas price volatility, higher interest rates, and general inflationary pressures forecasted through 2024, Black Hills is only expected to grow earnings by 2% in 2024 and 4% in 2025.

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Uber vs. Lyft?  

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Analysts say one of the stocks is set to soar 50%.

Amid inflation, rising rates, and a fractured financial sector, it might seem safer to park your cash in a safe haven until the market stabilizes. However, opportunistic investors see this as an ideal time for actively seeking out undervalued stocks that could rally as the macro environment improves. One beaten-down area of the market that is poised for rapid recovery as global economies rebuild strength is ride-sharing.   

The global ride-sharing market is expected to grow from $84.30 billion in 2022 to a whopping $242.73 billion in 2028. That figure represents a Compound Annual Growth Rate (CAGR) of 16.3% over the next six years, mainly split between two competitors. In the world of ride-sharing companies, Uber and Lyft form a de facto duopoly. It’s estimated that the two names together command more than 95% of the rapidly expanding market.

Over the last couple of years, both companies have made a number of strategic investments that are beginning to materialize. However, one of these two names stands out as a clear winner based on profit growth and current valuation. Institutional investors have recently taken notice, and many of the Wall Street pros have expressed bullish sentiment on one of these two stocks. In fact, analysts see one of the two ride-hailing competitors’ share price stacking on more than 50% over the next 12 months.  

Uber Technologies (UBER) 

Uber’s gross bookings rose 28% in 2022, down from its 56% post-pandemic growth in 2021, and it expects just 17%-21% year-over-year bookings growth in the first quarter of 2023. However, its adjusted EBITDA improved from a loss of $774 million in 2021 to a profit of $1.7 billion in 2022. It also expects to post a positive adjusted EBITDA of $660 million to $700 million in the first quarter. The impressive profit growth can be attributed to its cost-cutting measures and rising take rates across its mobility and delivery businesses.

Analysts expect Uber’s revenue to increase 16% to $36.9 billion for the full year as its adjusted EBITDA rises 86% to $3.2 billion. Based on those estimates, its stock trades at just two times this year’s sales and 21 times its adjusted EBITDA. It’s also still trading nearly 25% below its IPO price. 41 0f the 46 analysts offering recommendations say to Buy Uber stock. A median price target of $47 represents an increase of 50% from the current price.  

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Lyft (LYFT) 

After cratering last year, Lyft’s share price plunged again recently following the release of its latest disappointing financial results and lowered guidance. Shares have continued to slide since the release, and the stock today changes hands at single-digit prices. Yet while at first glance, LYFT may seem like a bargain, it could easily end up being a cheap stock that keeps getting cheaper. Although the company has worked to lower costs, it is difficult to see how it can be competitive on price and also ramp up its margins towards levels indicated in its guidance objectives without further and substantial cost cuts.  

Analysts have slashed their 2023 earnings forecasts as concerns rise that the company’s efforts to regain ground lost to Uber will result in lower profits, with little to show for it. The consensus among 43 polled analysts is to hold Lyft stock. An average price target of $12.25 represents an increase of 23%. 

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Three AI Stocks to Buy for Explosive Growth

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Investors have been pouring into rapidly developing AI tech names over the past few months, and this is likely just the beginning. According to Grand View Research, the global artificial intelligence market reached a valuation of $136.55 billion in 2022. It’s projected that by 2030 the industry will command a revenue of nearly $1.9 trillion.  

Anyone looking to profit from the paradigm shift may wonder which companies stand to gain the most as breakthrough advancements are made in the industry. Here we’ll look at three Buy-rated standouts from the burgeoning AI group with plenty of runway ahead, including one ticker the Wall Street pros see stacking on more than 100% over the next 12 months.  

With cyber threats materializing all the time, cybersecurity technology specialists, CrowdStrike (CRWD), is one of the most relevant AI stocks to buy. After losing nearly half of its value in 2022, CRWD is up 32% this year. Of 37 analysts offering a recommendation for the stock, 33 have an optimistic view, yielding a consensus Strong Buy assessment. In addition, their average price target stands at $165, implying an upside potential of over 22%. Therefore, CRWD is one of the top AI stocks to buy.

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Luminar (LAZR) is at the forefront of lidar technology development with products designed to integrate sensors with AI, giving cars autonomous safety features to support a human driver. After losing more than 70% of its value in 2022, LAZR is up nearly 50% this year. The stock garners a solid Buy rating from the 12 analysts offering recommendations. An average price target of $12 represents a 55% upside from the current price. 

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Small-cap Berkshire Grey (BGRY) leans to the speculative side of the scale, but according to certain Wall Street pros, BGRY has the potential to reward investors with a more than 110% projected upside. The American tech company develops integrated artificial intelligence and robotic solutions for e-commerce, retail replenishment, and logistics and has been gaining investor attention. The share price is up a whopping 77% YTD and may have plenty of room to run if the two analysts’ recommendations are correct.    

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Three Stocks to Watch for the Week of March 20th

Pressures on the financial sectors were in the spotlight last week as headlines took markets on a wild ride resulting in returns that varied widely across all asset classes. Despite a sell-off on Friday, the Nasdaq and the S&P 500 posted solid weekly gains while the Dow fell slightly.  

The collapse of Signature Bank and Silicon Valley Bank has injected new uncertainty into this week’s Federal Reserve meeting. Policymakers are expected to announce the central bank’s next move on interest rates on Wednesday. Following the banking industry turmoil, expectations for another rate hike have been thrown into doubt. However, according to fed funds futures data, most traders still project a 25 basis point increase. 

In light of the current conditions, our first recommendation for this week comes from a sector that is typically less reactive to Fed decisions. Bargain hunters will appreciate the value proposition this stock brings to the table, and so will anyone looking to pad their portfolio with reliable passive income.  

Bunge (BG)

No matter what’s going on with the economy, civilizations need access to sustenance. Bunge Limited is an agribusiness and food company headquartered in Missouri, USA. In its Q4 earnings report (published in February 2022), the company announced revenue growth of over 32%. 

Bargain hunters will appreciate the value proposition that Bunge brings to the table—currently, the market prices BG at a trailing multiple of 9.05. As a discount to earnings, Bunge ranks better than 76.36% of the competition. Further, BG trades at 8.04 times forward earnings, which sits well below the industry median of 16.97 times. The stock also provides some decent passive income with a forward yield of 2.63%, backed by a 22.1% payout ratio, indicating a highly sustainable yield.

BG has a consensus strong buy rating and an average price target of $125, implying over 35% upside potential.

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Taiwan Semiconductor’s (TSM)

For market participants looking to strengthen their portfolios through diversification or create new avenues to explosive growth, stocks with global exposure can be an excellent addition. Taiwan Semiconductor’s share price has been on the rise after hitting a two-year low in October due to a sharp slowdown in global chip demand. Still down more than 35% from its January 2021 peak, anyone on the sidelines might consider now an appropriate time to strike. “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn.

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General Motors (GM)

Fundamentally, GM is firing on all cylinders. Most notably, the company made substantial investments in the electric vehicle space. Further, by electrifying marquee models such as the Hummer, GM can feed nostalgia with current-generation technologies. The automaker represents an attractive proposition for bargain hunters. Right now, the market prices GM at a forward multiple of 6.39. As a discount to earnings, General Motors ranks better than 84.18% of its competition. Wall Street analysts peg GM as a consensus moderate buy with an average price target of $45.50, implying 38% upside potential.

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Three Stocks to Avoid or Sell Next Week

Seeking out great stocks to buy is important, but identifying quality investments is only half the battle. Many would say it’s even more important for investors to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, figuring out which stocks to trim or get rid of is essential for proper portfolio maintenance.  

Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week. 

Lemonade (LMND)

Thus far, the self-proclaimed insurance industry disruptor has gained a healthy following. But in all of the enthusiasm surrounding its  AI-based underwriting technology, investors may be turning a blind eye to its laundry list of flaws.

In 2022, Lemonade generated a 116% increase in premiums. By contrast, the company expects just 12% year-over-year growth in 2023. Aside from the dramatic slow-down in overall business, the company is bleeding cash, posting an adjusted EBITDA loss of $225 million last year. This year’s EBITDA loss is expected to come in at around $242 million.

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Ascent Solar Technologies (ASTI) 

The photovoltaic specialist carries significant implications for the solar energy industry. With society gravitating toward clean and renewable energy solutions, the company should be enjoying extraordinary relevance. Unfortunately, its narrative hasn’t been so fortunate. Year to date, ASTI share price is down 69%. In the trailing year, it’s down almost 96%.   Glaringly, its three-year revenue growth rate sits at 90.3% below parity. Profit margins have slipped to ridiculously negative rates while the balance sheet is a mess. Gurufocus.com warns that Ascent Solar is a possible value trap.  

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Carvana (CVNA) 

Used car prices skyrocketed coming out of the pandemic. However, it looks like the used car market is entering a correction, with some analysts calling for an impending collapse. The Manheim Used Vehicle Value Index showed that used car prices sank 14.9% year-over-year in December 2022, the most significant annualized price decline in the 26-year history of that index.

Due to the steep decline in used car prices, Carvana stock has lost 95% of its value over the last 12 months. The company’s profit per vehicle was lower by 25% in 2022. Meanwhile, its total debt stands at $9.25 billion, with only $650 million of cash on hand. There have also been confirmed media reports that the company’s creditors have signed an agreement on how to handle negotiations with Carvana if it goes bankrupt. That’s not a good sign.

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Dump These Overblown Tech Stocks Before it’s Too Late

Tech stocks have come roaring back to start 2023. But after the stunning rebound, some tech names have little room to run. In addition to industry-specific concerns, the technology sector faces headwinds from rising interest rates and a central bank that hasn’t finished its fight against inflation. As such, now seems like a good time to lock in gains on certain tech stocks that have rallied sharply to start the year. In particular, these three tech stocks look vulnerable and may see severe downside in the coming weeks.

SoFi Technologies (SOFI)

SOFI has stacked on 50% in 2023, but the rebound may be fleeting. Shares have already started to fall back toward pre-earnings price levels. In the months ahead, if current economic challenges worsen or if further challenges arise regarding student loans, the impact on revenue could place additional pressure on the stock.

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Uber Technologies (UBER)

Uber shares surged higher immediately following its Feb. 8 earnings call. The ride-share giant reported strong numbers, and management provided an upbeat outlook for the current quarter. However, the stock has already given back some of those gains amid recession concerns. UBER’s current valuation may be overly optimistic about subsequent quarterly results. Another big run may not be in store for the ticker anytime soon.

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Bigbear.ai Holdings (BBAI) 

In 2023, BBAI stock is up a startling 645%, with shares advancing from penny stock territory to more than $5/share today. But the current hype cycle around consumer AI products isn’t likely to move the needle for Bigbear.Ai’s business, considering that it’s far from a consumer-facing product like ChatGPT. The company has historically struggled to reach profitability from its operations, and the stock’s recent run seems dramatically overblown.

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Three Ways to Benefit From the Global Banking Nightmare

The collapse of Signature Bank and Silicon Valley Bank sent shockwaves through the financial markets, but it may be fueling a rebound in some assets. 

After panic ripped through markets last week, analysts are sounding the alarm on some tickers that have well overshot their downside. What’s more, some analysts have suggested that the added pressure on the financial sector could slow the pace of Fed rate hikes, which would likely help certain risk assets.

Whether you’re looking for a short-term win or to shore up your long-term returns ahead of more volatility, you’ll want to keep an eye on these assets in the coming days.   

Bitcoin (BTC)

On Sunday evening, two days after Silicon Valley Bank’s collapse, the government announced that the bank’s depositors would get their money back, and it would provide an additional funding facility for distressed banks.

Bitcoin bulls have claimed the digital currency is a way for investors to shield themselves against government moves, such as quantitative easing and looser monetary policy, which they say erodes the value of fiat currency. Industry insiders say that the anticipation of a slower pace of interest rate hikes from the Federal Reserve is helping bitcoin. Proponents also point to bitcoin’s finite supply as a critical feature of it being a store of value.

“This past week’s events around the failure of SVB and other banks have also shone a spotlight on the power of decentralized currencies that people can fully custody and own,” said Vijay Ayyar, vice president of corporate development at crypto exchange Luno.  “Decentralized finance is beginning to hit home in terms of a concept to many more people now.”

Bitcoin is up nearly 50% this year, beating major stock indexes and commodities.

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Charles Schwab Corp. Common Stock (SCHW)

Charles Schwab shares plunged 24% last week along with regional banks as traders worried they would have to sell their bond holdings early at significant losses to cover deposit withdrawals, like Silicon Valley Bank. However, Schwab CEO Walt Bettinger said in an interview with CNBC that Schwab is still experiencing “significant” asset inflows.

Earlier this week, Credit Suisse analyst Bill Katz upgraded the brokerage firm to outperform from neutral, saying it’s time for investors to “take advantage of the sharp share price decline.” 

“We expect the net new asset (NNA) story to remain robust and capital ratios to quickly rebuild as we look into 2024-25, with the current value giving investors an opportunity to step into a high-quality, large-cap secular beneficiary,” Katz wrote.

The analyst’s $67.50 target price, down from $81.50 previously, means shares can rise another 14% from Wednesday’s closing price. The stock is down nearly 32% this year.

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 Ark Innovation ETF (ARKK)

While most of Wall Street is in panic mode amidst the banking crisis, Cathie Wood’s flagship fund ARKK reeled in $397 million in new money on Tuesday, the most significant one-day inflow since April 2021, according to FactSet.

Investors are piling into the innovation fund under the belief that the current banking chaos may cause the Federal Reserve to pause its rate hike campaign, which would benefit growth stocks. “Once the Fed stops looking backwards at CPI inflation and starts addressing the deflationary banking crisis that a 19-fold increase in short rates and an inverted yield have caused, we would not be surprised to see a return to the Roaring Twenties,” Wood said in a tweet early Wednesday.

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Three Stocks to Watch for the Week of March 13th

Stocks pulled back sharply last week as renewed inflation concerns sparked worries of extended rate hikes, erasing nearly all of 2023’s market gains. Tough talk from Fed Chair Jerome Powell during his testimony before Congress on Tuesday suggested that the course of interest-rate hikes could steepen and last longer than expected if inflation remains high. The three major indexes all sustained steep weekly losses of around 4.5%, and the S&P 500 fell to its lowest level since early January.

Market participants will be focused on the latest inflation readings in the coming days, starting on Tuesday with the Consumer Price Index (CPI) report for February, followed by the Producer Price Index (PPI) reading on Wednesday. These reports will follow January data that showed prices for consumers and producers remained high, fueling concerns that there’s no immediate end in sight when it comes to interest-rate hikes. 

On paper, this week’s first featured company should be reeling from the pressures impacting the consumer economy, but its brand remains as powerful as ever. The stock is a favorite among hedge funds, and it garners a Strong Buy rating from the Wall Street pros. 

Apple (AAPL) 

Apple’s greatest strengths center on its operational dominance. For instance, its three-year revenue growth rate stands at 20%, beating out 85.62% of its competitors. Its net margin pings at 24.56%, outpacing 95.52% of rivals. Currently, Wall Street analysts peg AAPL as a consensus Strong Buy. Further, their average price target stands at $173, implying over 16% upside potential.

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Matador resources (MTDR) 

2022 was a huge year for energy stocks, but so far, in 2023, the sector’s performance has been underwhelming. However, several Wall Street pros say the bull market for energy stocks still has room to run.   

Anyone seeking to beef up their energy position would do well to consider Matador resources. Matador shareholders can take confidence from the fact that EBIT margins are up from 36% to 60%, and revenue is growing. Earnings are expected to grow by 6.21% per year over the next ten years. MTDR is a good value with a PE ratio of 5.4 times compared to the US Oil and Gas industry average of 7 times.

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Archer-Daniels-Midland (ADM)

Despite the challenging conditions in the stock market last year, ADM stock has gained over 6.4%. Stronger-than-anticipated results from South America have helped it post robust top and bottom-line numbers in recent quarters. In its fourth quarter, sales and operating profits were up 13.6% and 18%, respectively. Surprisingly, ADM stock trades at 0.4 times forward sales estimates, roughly 62% lower than the consumer staples sector average.

ADM has a yield of 2.21% and boasts an A-graded dividend profile, demonstrating dividend growth for 50 consecutive years. Moreover, its forward dividend per share growth of 7.4% is more than 40% higher than the sector average.

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