Stock Hotlist: Three Strong Conviction Buys for the Week Ahead

In the ever-shifting landscape of the stock market, separating the wheat from the chaff is no easy feat. It’s a world where the wrong picks can erode your hard-earned gains, but the right ones? They have the power to catapult your portfolio to new heights. With thousands of stocks in the fray, pinpointing those poised for a breakthrough can feel like searching for a needle in a haystack.

This is where we step in. Every week, we comb through the market’s labyrinth, scrutinizing trends, earnings reports, and industry shifts. Our goal? To distill this vast universe of stocks down to a select few – those unique opportunities that are primed for significant movement in the near future.

This week, we’ve zeroed in on three standout stocks. These aren’t your run-of-the-mill picks; they are the culmination of rigorous analysis and strategic foresight. We’re talking about stocks that not only show promise in the immediate term but also hold the potential for sustained growth.

Curious to see which stocks made the cut? Click here to access the full watchlist and discover the exceptional opportunities we’ve unearthed this week. Trust us, this is one reveal you don’t want to miss.

Hershey (HSY): Ready for a Turnaround

Let’s talk about Hershey (HSY), a name that’s been somewhat of an underdog in the past year but is now showing signs of a delicious turnaround. Despite the broader market reaching new heights, Hershey has had its share of ups and downs, with a nearly 17% slide over the last 12 months. However, the tide seems to be turning for this chocolate giant, and here’s why it deserves a spot on our Strong Conviction Watchlist. 

First off, Hershey’s recent performance has been a bit of a rollercoaster, but with a positive twist. After posting fourth-quarter adjusted earnings that blew past analyst expectations, shares jumped 4% in a single day. This kind of momentum, even if it faced a slight pullback, signals that Hershey is more resilient than many might have thought. It’s not just about the numbers, though; it’s about what’s driving them.

Analysts, including those from AllianceBernstein, have started to see Hershey in a new light, upgrading it to an outperform rating earlier this January. The reasons? Attractive valuation and a trajectory of continued top-line growth. Hershey isn’t just resting on its laurels; it’s actively leveraging its pricing power and innovation to push the envelope in the confectionery space. Whether it’s through expanding its core offerings or exploring potential acquisitions, Hershey is all about sweetening its portfolio and, by extension, its appeal to investors.

What’s particularly compelling about Hershey is its blend of stability and growth potential. In a market where equities are generally seen as expensive, Hershey stands out as a value play with the added bonus of upside potential. The consensus among analysts suggests an 8% upside, but given Hershey’s recent strides, there’s room to believe that the actual growth could be even more appetizing.

In essence, Hershey represents a unique opportunity in today’s market. It’s a stock that’s been overlooked but is now poised for a comeback. With its solid fundamentals, strategic growth initiatives, and a favorable market position, Hershey is shaping up to be a strong conviction buy for investors looking to diversify with a stock that offers both security and growth. Keep an eye on HSY; this could very well be the week it starts to outperform expectations, making it a sweet addition to any investment watchlist.

Global Payments Inc (GPN): A Hidden Gem in the Payments Space

As we gear up for another week of earnings reports, there’s one stock that’s flying under the radar but deserves your full attention: Global Payments Inc (GPN). With its earnings call slated for February 14th, this payment processing powerhouse is poised for what could be a pivotal moment. And here’s the kicker: it’s not just any stock gearing up for an earnings reveal; it’s a stock that’s been tagged as undervalued and underappreciated by those in the know.

Bank of America’s analyst Jason Kupferberg is not just optimistic about GPN; he’s doubling down on it. Why? For starters, Global Payments isn’t your average payment processor. It boasts a unique edge with a hefty portfolio of owned software assets in niche verticals, setting it apart in a crowded field. This competitive differentiation is a key reason why Kupferberg and his team see GPN as a standout buy, especially for those willing to play the long game.

But there’s more to the story than just unique assets. The company has been making moves on the management front, with changes announced in 2023 that signal a more conservative approach to earnings. This strategy shift is something the market is expected to welcome with open arms. Plus, there’s an analyst day on the horizon that’s anticipated to act as a significant positive catalyst for the stock.

Despite a modest 7% uptick this year, the sentiment around GPN remains bullish. It was highlighted as a top pick in Bank of America’s Year Ahead ’24 report, thanks to its growth profile, competitive positioning, and, let’s not forget, an attractive valuation pegged at 11.4x ’24 P/E. The tech-led offerings, a strong portfolio of software assets, and a focus on lucrative SMB volume are what make Global Payments a source of competitive differentiation.

As we edge closer to February 14th, keep a close eye on GPN. With expectations of a conservative yet strategic approach from the new CEO, the upcoming earnings could very well be the catalyst that shifts Global Payments from underappreciated to fully valued. For those looking for a tech-forward company in the financial space with solid growth potential, Global Payments Inc might just be the opportunity you’ve been waiting for.

Tesla (TSLA): Poised for a Future Beyond Today’s Volatility

Tesla (TSLA) finds itself at a pivotal moment early in 2024, with its stock down nearly 20% following an earnings report that fell short of expectations. Despite these challenges, including a warning about stagnant vehicle volume growth, the narrative around Tesla remains deeply compelling for forward-looking investors.

Cathie Wood of Ark Invest continues to champion Tesla, seeing the recent dip as a buying opportunity. Her optimism is rooted in Tesla’s potential to revolutionize transportation with autonomous taxi networks expected within the next two years. This innovation could significantly enhance Tesla’s growth and profitability.

Wood’s vision extends to a future dominated by electric vehicles and robotaxis, with Tesla at the forefront. She maintains a bold prediction for Tesla’s share price to reach $2,000 in five years, suggesting a transformative impact on its market valuation.

Despite recent setbacks, including losing the top global EV seller spot to China’s BYD, Tesla’s fundamentals and future prospects suggest the current stock price dip may offer an attractive entry point for investors. The stock’s 14-day relative strength index (RSI) of 24.6 indicates an oversold condition, hinting at potential for a near-term recovery.

Analysts currently have a consensus ‘Hold’ rating on Tesla, but the anticipated 14.5% upside reflects a broader belief in the company’s capacity to rebound. Tesla’s journey in 2024 has been marked by price cuts and cautious growth forecasts, yet its long-term vision for electrification and autonomous mobility remains as compelling as ever.

For those looking beyond the immediate turbulence, Tesla represents an investment in the future of transportation. With its commitment to innovation and sustainability, Tesla stands out as a strong conviction buy for the week ahead. The company’s ability to navigate short-term challenges while laying the groundwork for future success offers a unique blend of risk and opportunity for long-term investors.