Earnings season is in full swing, and as financial giants like JPMorgan, Netflix, and Procter & Gamble report their results, it’s a great time to assess where opportunities lie. The second-quarter earnings season set the bar high, with 79% of S&P 500 companies beating expectations. This quarter, many are hoping for similar surprises, especially with certain stocks already up significantly in 2024.
We’ve identified three stocks that could have a lot more room to run based on a variety of catalysts and fundamental strength.
3M Co. (MMM) – Industrial Giant with Margin Growth Potential
Shares of 3M have already surged 47% year-to-date, but analysts see room for more. According to analysts, 3M could rally nearly 20% from its current levels, targeting a price of $162. The company, known for its Post-it notes and various industrial products, has seen a solid recovery, although it’s no longer the deep value play it was just a few months ago.
The company’s margins could surprise to the upside this quarter, thanks to steady top-line growth, operating leverage during a seasonally strong quarter, and lower restructuring charges. Despite the macro challenges for industrials, 3M’s ability to control costs and improve margins might allow it to outperform expectations.
Around 40% of analysts now rate 3M as a buy, a sharp increase from just 5% in March.
Oracle (ORCL) – Riding the AI Wave
Oracle has been one of the top performers in 2024, with its shares up 67%. Analysts believe the stock could climb another 19%, with a price target of $210. What’s fueling this optimism? Oracle’s aggressive expansion into cloud services, particularly its Oracle Cloud Infrastructure (OCI), which has seen growing demand, especially as artificial intelligence (AI) continues to drive new opportunities.
OCI’s success has provided Oracle with a strong new growth engine, which could last for years. The company’s top-line growth has been robust, and operating leverage from scaling OCI should translate into better margins and earnings in the quarters ahead.
While Oracle’s stock may seem expensive to some after its significant gains this year, the company’s positioning in the rapidly expanding cloud and AI markets could help it maintain upward momentum. Most analysts covering the stock are optimistic, with many seeing further gains ahead.
Target (TGT) – A Turnaround Story in the Making
Target’s stock has had a modest year so far, up 11%, but analysts believe the retailer could see even bigger gains. At it’s high end, a price target of $200 implies an additional 25% upside over the next 12 months, driven by a combination of rising revenue and expanding profit margins.
Target’s net sales grew by 2.3% in the third quarter, and Wall Street expects this momentum to carry into the second half of the year. The company has faced easy year-over-year comparisons, and its turnaround strategy seems to be gaining traction. As its strategy plays out, Target is likely to experience positive earnings momentum, making it an attractive buy ahead of earnings.
With more than half of the analysts covering Target rating it as a buy, there’s a growing consensus that the stock has significant upside potential as the company’s turnaround story continues to unfold.
As earnings season progresses, it’s essential to stay ahead of the curve and look for stocks where the market’s expectations might be too low. 3M, Oracle, and Target are three names that stand out for their potential to surprise to the upside. Whether it’s 3M’s margin growth, Oracle’s cloud success, or Target’s turnaround, these stocks have a lot to offer for investors willing to bet on their continued success.
