Stock Hotlist: Strong Conviction Buys

Picking the wrong stocks can decimate your portfolio.

They’re pure portfolio poison.  

But the right stocks…

If you pick the right stocks, you could find yourself jumping for joy on top of an enormous pile of cash.

With over 4000 stocks to choose from, picking 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 are primed for solid price action in the near future.  

This week, we’ve narrowed it down to three stocks that could skyrocket in the coming weeks.

Click here to get the full story on the stocks we’re watching this week… 

Chubb Limited (CB) 

Given the recent volatility stemming from bank closures, the sector can make an attractive environment to hunt for value. And while the rapid rise in interest rates has proved challenging to some banks, some segments of the financial sector benefit from higher rates. One of these is the insurance industry, where companies generally invest the premiums they receive in fixed-income instruments.

Insurers such as Chubb Limited collect premiums from policyholders typically at the start of a contract period and can now invest that money at much higher rates. 

With a market capitalization of $79.6 billion, Chubb is one of the world’s largest property and casualty (P&C) insurance providers and the largest publicly traded P&C insurer. The more than 140-year-old insurer is recognized for having a strong brand name, outstanding customer service, and careful management of its liabilities over the years.

Chubb stock has declined 13% YTD and currently trades at an attractive 10.8 time 12-month forward earnings, well below the industry average of 14.8 times 12-month forward earnings. The analysts offering recommendations say to Buy CB stock. A median 12-month price target of 244.00 represents a +26.96% increase from the current price.

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Entegris, Inc (ENTG)

While 2022 was wrought with challenges for semiconductor industry solutions and materials provider Entegris, 2023 has brought a stellar rebound. And this could be just the beginning. After losing more than half of their value last year, Entegris shares are up more than 71% YTD.  

The semis industry has been flashing signals that it is on the cusp of its next cyclical upturn adding steam to ENTG’s own organic growth drivers. The London Company Mid Cap Strategy made the following comment about Entegris in its first quarter 2023 investor letter:

Entegris rebounded in Q1 as the semiconductor industry showed signs of stabilization. We believe ENTG can continue to gain share due to its breadth of solutions, unit-driven business, and higher purity requirements. The transition of new technology and nodes will be tailwinds for some time. Over the years, ENTG has drastically increased its size and scale and expanded its addressable markets, becoming one of the most diversified players in the semi-materials industry. We remain attracted to the industry’s high barriers to entry, limited competition & high switching costs.”

The pros on Wall Street say to Buy ENTG. While shares are up significantly in recent months, we see a multi-year runway of outperformance for this unique semis player.

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NextEra Energy Inc. (NEE) 

Most stocks from the utility sector are slow-growing income plays. As such, an electric utility stock wouldn’t typically be considered a growth stock.   However, Wall Street expects NextEra Energy to grow its earnings by an annual average of around 9% over the next five years. This comes on the heels of averaging more than 8% adjusted earnings growth since 2007. For all intents and purposes, NextEra Energy is a growth stock within the utility sector.

The biggest differentiator that has helped NextEra achieve this stellar growth rate is its focus on renewable energy. NextEra is currently generating 31 gigawatts (GW) of capacity from renewable energy sources, including 23 GW from wind and 5 GW from solar – which has helped to substantially lower electricity generation costs for the company and its customers. 

NextEra Energy pays an annual dividend of 2.47% and is currently trading at its lowest 12-month forward price-to-earnings ratio in five years, which makes it a prime growth opportunity right now. Overall, NEE gets a Strong Buy rating from the consensus based on 19 recent reviews, including 15 Buys and 4 Holds. An average price target of $90.50 represents a 26% upside.  

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