Stock Hotlist: Strong Conviction Buys

Picking the wrong stocks can decimate your portfolio. The wrong stocks will eat away at your long-term profits. They’re pure portfolio poison. But the right stocks can make you rich. 

With over 4000 stocks to choose from, the task of selecting the right stocks can prove to be nearly impossible unless you’re spending hours each day combing the markets. That’s why we’ve done it for you. We sort through thousands of stock ideas and narrow them down to a few that seem primed for solid price action in the near future.  

We strongly believe that these three tickers are poised to move in the coming days and weeks. To learn more about these stocks and what makes them stand out among the rest, continue to the full article.  

ON Semiconductor Corp (ON)

Semiconductor giant Onsemi is firing on all cylinders with a large market footprint in exciting growth sectors like automotive computing. ON share price is up nearly 300% in the three years since the summer of 2020, and revenue has grown 28.3% over the past twelve months. The US-based chipmaker has solidified its reputation as a top player among its auto/industrial peers. However, several factors support the case that plenty of runway is left for this bet on an electric future.  

Following ON’s stellar performance of the past few years, the stock still looks undervalued at just 15.8x earnings and 19.3x 12-months forward earnings. In fact, it’s currently one of the cheapest tech names in the S&P 500.  

Onsemi recently initiated a $3 billion share repurchase plan at its final 2022 financial update. The new shareholder return policy is good through 2025. Management targets about 50% of free cash flow to be returned to stockholders each year. If the company uses up all $3 billion in authorized buybacks through 2025, that would equate to nearly 10% of the current market cap or roughly 3% a year in cash returns to shareholders over the next three-year stretch. Not too shabby.  

Bank of America sees ON as a top-3 global/top US vendor of smart power and sensing chips for EVs, and they’re alone. Onsemi holds a highly attractive 1.37 (overweight) rating from the Wall Street pros who cover it.  

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Nike Inc (NKE) 

There are compelling reasons to invest in one of the most well-known sports apparel brands ever put on the market; the company I’m talking about is Nike Inc. With solid demand on its side, NKE’s direct, wholesale, and digital sales have all grown over the years. NKE also has control over its inventory levels, which increased in line with the company’s sales. Also, a benefit for NKE is its market share expansion and its dominance over its competitors. Adidas and UnderArmour, NKE’s two biggest challengers, have faced difficulties, only solidifying NKE’s market position. 

NKE’s stock is down year-to-date by 4.50%, it shows TTM revenue of $50.68 billion at $3.57 per share, and it made a same-period net income of $5.5 billion via its 10.82% profit margin. NKE has a PEG ratio of 1.88x, an ROE of 37.34%, and year-over-year revenue growth+13.97%). For the most recent quarter, NKE reported an EPS of $0.79 per share vs. the $0.55 projected by analysts (a 44.57% surprise), and it reported $12.39 billion in sales vs. the $11.48 expected (a 7.92% beat). NKE has an annual dividend yield of 1.21% and a quarterly payout of 34 cents ($1.36/year) per share. With fra ee cash flow of $2.87 billion and a 10-day average volume of 9.91 million shares, NKE has a median price target of $138, with a high of $160 and a low of $95, allowing the potential for a 43% price increase. NKE has 22 buy ratings and ten hold ratings. 

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PayPal Holdings Inc. (PYPL)

Unlike many fintech companies, digital payment giant Paypal is incredibly profitable. Yet its stock is down more than 80% from its July 2021 ATH a, and it trades at a reasonable 29 times price to earnings, well below its historical average P/E of 50.  

With e-commerce activity on the decline since the thick of the pandemic, PayPal is seeing slower growth. Unrelenting high levels of inflation have put a dent in discretionary spending, which has hurt PayPal, but thanks to its firm financial footing, the company has plenty of room to handle a possible prolonged economic downturn.   Despite estimates calling for roughly 20% earnings growth this year, PayPal stock trades below 16 times free cash flow and about 14 times operating cash flow, indicating that investors may be underestimating its recovery potential. Among 48 polled analysts, 33 say to Buy PYPL, and 15 call it a Hold. There are no Sell ratings for the stock. A median 12-month price target of $89.50 represents a 35% increase from today’s price. 

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