Oppenheimer Says the S&P 500 Could Surge 15% in 2023 — Here Are 2 Stocks to Bet on It

The bear run of 2022 was brutal on inventory traders, actually, it was the worst market 12 months because the Nice Recession of 2008. However – among the Avenue’s strategists are predicting that this 12 months has a restoration, or at the least a partial rebound, in retailer.

Although the S&P 500 misplaced almost 20% final 12 months, inflation remains to be operating at greater than 7% annualized, and the Federal Reserve has bumped rates of interest as much as 4.25% in response, John Stoltzfus, Oppenheimer Asset Administration chief funding strategist, remains to be taking the upbeat outlook on the New Yr.

“We proceed to see ‘the glass half full’ as the tip of a interval of ‘free cash and overstimulation of the economic system counsel higher occasions forward,” Stoltzfus mentioned in a latest be aware, through which he additionally predicts a 15% achieve for the S&P by 12 months’s finish.

“Fed Funds hike cycles are by no means a lot enjoyable; they will produce completely different ranges of discomfort and market volatility however finally have confirmed previously to have optimistic impact for the economic system and markets in uncovering excesses stemming from issues at their supply and offering an exit regime that may result in a sustainable financial restoration,” Stoltzfus added.

And if we’re present financial coverage makers organising the situations for a ‘sustainable financial restoration,’ then some shares are going to cleared the path. Oppenheimer’s high analysts level to 2 shares specifically that would take off within the subsequent twelve months. We ran the tickers by way of the TipRanks database to see what makes them stand out.

XPO Logistics (XPO)

The primary Oppenheimer choose we’re is XPO Logistics, a Connecticut-based agency within the freight hauling enterprise, specializing in less-than-truckload, or LTL, transport. This can be a important hyperlink within the provide chain, comprising freight consignments which might be too giant for parcel shippers however don’t fully fill a semi-trailer truck. In late summer season of 2021, and in November of 2022, XPO spun off its logistics and transport brokerage companies; in its present configuration, the corporate is a pure-play LTL agency. As an LTL shipper, XPO can attain 99% of US postal zip code areas, in addition to giant components of Canada and Mexico.

XPO’s final monetary launch, for 3Q22, confirmed a robust backside line end result – working earnings got here in at $185 million, up 65% year-over-year. This end result was derived from the highest line of $3.04 billion. It’s essential to notice the achieve in operation earnings got here whereas whole quarterly income was down 7%, and that regardless of the drop in income, the working earnings was an organization quarterly report. The corporate reported diluted earnings from persevering with operations of $1.13, far above the mere 19 cents recorded within the year-ago interval.

On the stability sheet, XPO offered further sound outcomes, with $265 million in money from operations – a complete that included $142 million in free money stream. XPO had $544 million in money and money equivalents on the books as of the tip of 3Q22, plus one other $1 billion in obtainable credit score, for greater than $1.54 billion in whole liquidity.

For Oppenheimer’s Scott Schneeberger, a 5-star analyst, XPO is an organization with a transparent path ahead within the coming months. He writes, “We’re incrementally constructive on XPO’s alternative to optimize LTL operations by way of its technological capabilities, which have superior considerably lately. XPO’s a Prime 4 trade competitor with strong development prospects and working ratio enchancment alternative by way of anticipated quantity beneficial properties/pricing over inflation/working prices optimized by way of know-how/ linehaul insourced from third events.”

“We take into account XPO Logistics’ North American Much less-Than-Truckload (LTL) enterprise attractively positioned for operational/monetary enchancment. XPO’s pursuing a number of self-improvement initiatives inside an trade with strong pricing traits,” Schneeberger added.

Trying ahead, Schneeberger extrapolates his stance to an Outperform (i.e. Purchase) score, and a $45 worth goal that means a one-year upside potential of ~35% for the shares. (To observe Schneeberger’s monitor report, click here)

Oppenheimer’s take just isn’t an uncommon one on Wall Avenue; based mostly on 11 further Buys and three Holds, the inventory boasts a Sturdy Purchase consensus score. The shares are promoting for $33.40 and their $50.13 common worth goal implies a 50% potential achieve on the one-year timeframe. (See XPO stock forecast on TipRanks)

Papa John’s Worldwide (PZZA)

For the second inventory on this listing, we’ll shift over to the quick meals supply area of interest and have a look at Papa John’s, the third-largest pizza supply chain on the planet. The corporate, which maintains headquarters in each Atlanta, Georgia and Louisville, Kentucky, boasts over 5,500 places in 49 international locations globally. Papa John’s has been in enterprise since 1984.

The corporate’s revenues are remarkably secure, having held at or close to $500 million per quarter for the final couple of years. In 3Q22, the final reported quarter, the corporate had a high line of $511 million; this was down $2 million from the prior 12 months’s Q3.

On the backside line, the corporate stays worthwhile, though earnings are below strain. Papa John’s confirmed a non-GAAP adjusted EPS of 54 cents for 3Q22; this was down from the 83 cents reported in 3Q21, or a decline of 34%.

The corporate opened 18 new items in 3Q22, and is on monitor to internet 240 to 260 new items for the complete 12 months 2022.

Brian Bittner, one other of Oppenheimer’s 5-star analysts, has regarded below the hood at Papa John’s, and what he noticed indicated a potential path ahead for the pizza chain, regardless of the latest drop in earnings.

“After a difficult 12 months in ’22 associated to elevated prices and declining margins, we consider the earnings setup might enhance in ’23 and past… PZZA stays extremely assured in its goal so as to add 1,400–1,800 internet new items between 2022–2025, fueled by worldwide development. This suggests +380–520 items per 12 months for ’23–’25 relative to +250 [in 2022]… Total, gross sales seem strong, unit development is in acceleration mode and drivers for margin enchancment are surfacing. We consider this creates a extra enticing setup into 2023,” Bittner opined.

Loads of gross sales potential, and plan for growth, gave Bittner purpose to price PZZA shares an Outperform (i.e. Purchase). His $105 worth goal signifies room for ~28% share appreciation by the tip of 2023. (To observe Bittner’s monitor report, click here)

Total, there are 11 latest analyst critiques on file for Papa John’s, favoring Buys over Holds (i.e. Neutrals) by an 8 to three margin for a Reasonable Purchase consensus score. The inventory is promoting for $82.05 and its $96.50 common worth goal suggests ~18% one-year upside potential. (See PZZA stock forecast on TipRanks)

To seek out good concepts for shares buying and selling at enticing valuations, go to TipRanks’ Best Stocks to Buy, a software that unites all of TipRanks’ fairness insights.

Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather essential to do your individual evaluation earlier than making any funding.

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