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Bank of America Analysts Identify Stocks Poised to Outperform
Rollins: A High-Growth Compounder in the Pest Control Industry
Analyst Jason Haas believes that Rollins, a pest control company, is positioned for explosive growth. Factors such as climate change, human population migration, and consumers shifting away from DIY pest control contribute to the bullish outlook. Additionally, Rollins is highly resilient during recessions with 80% of its revenue recurring. With these factors in mind, Bank of America has initiated coverage on the stock with a buy rating and a price target of $49 per share. Rollins is scheduled to report earnings later this month.
SolarEdge: A Healthy Setup for Earnings
Despite a 3% decline in its stock price this year, BofA analysts believe that SolarEdge is on track for a positive earnings report. Analyst Julien Dumoulin-Smith expects strong revenue and gross margin performance in the second quarter driven by volume and price resiliency. While concerns exist regarding flat U.S. residential growth, Dumoulin-Smith points out that Europe is driving the company's fundamentals. SolarEdge also benefits from its position as an Inflation Reduction Act beneficiary. With a strong technological value proposition and a track record spanning 5-10 years, SolarEdge remains well-positioned.
Thomson Reuters: Doubling Down on Data Analytics and AI
Analyst Heather Balsky is confident in Thomson Reuters' future performance, anticipating major sales acceleration and its role as a key player in generative AI. The company's established brand and content provide a competitive advantage and opportunities for market expansion, improved retention, and cross-selling. With excess cash available, Thomson Reuters can pursue M&A, return capital to shareholders, and buy back shares. Balsky sees further room for growth in the stock, emphasizing its attractive pricing and defensive compounder status.
Broadcom: A Long-Term EPS Compounder in the AI Market
Bank of America describes Broadcom as a long-term EPS compounder with a strong free cash flow. The development of the AI market is still in its early stages, providing Broadcom with robust AI-centric sales. With stable and growth assets, the company is well-positioned to deliver a 50% FCF margin and a 3%+ dividend yield. Trading at a favorable multiple, Broadcom is viewed as one of the most attractive opportunities in the semiconductors sector.
Overall, Bank of America's analysts have identified these stocks as high-quality buying opportunities that are often overlooked by investors.
Conclusion: Potential Impact on New Business
The analysis from Bank of America analysts highlighting stocks poised to outperform provides valuable insights for new businesses seeking investment opportunities. In particular, the identified stocks - Rollins, SolarEdge, Thomson Reuters, and Broadcom - offer unique prospects for growth and profitability in their respective industries.
Rollins, a pest control company, stands out as a high-growth compounder in a sector often overlooked by investors. With factors such as climate change and consumer shifts away from DIY pest control driving demand, a new business in the pest control industry could benefit from the bullish outlook. The resilience of Rollins during recessions also adds to its attractiveness, making it an intriguing space for new ventures.
For businesses involved in solar energy, SolarEdge presents a healthy setup for earnings. Despite a recent stock price decline, its strong revenue performance, especially driven by its presence in Europe, signals potential profitability. New businesses operating in the renewable energy field could tap into SolarEdge's track record and technological value proposition to fuel their growth.
Thomson Reuters, with its focus on data analytics and AI, offers opportunities for new businesses seeking to enter the technology and information industry. The company's established brand and competitive advantage in generative AI position it for major sales acceleration. Moreover, Thomson Reuters' available cash for M&A and market expansion could represent potential partnerships or acquisition targets for new businesses in the sector.
Lastly, Broadcom's long-term growth potential in the AI market could be appealing to new businesses in the semiconductor sector. With the AI market still in its early stages, businesses focusing on AI-centric sales could find opportunities to thrive. Broadcom's stable assets, strong free cash flow, and attractive valuation make it an attractive choice for new businesses in the semiconductor industry.
In summary, the stocks identified by Bank of America analysts not only provide potential investment opportunities but also offer valuable insights for new businesses looking to enter or expand in these industries. Considering the growth prospects and market dynamics highlighted, entrepreneurs and start-ups can shape their strategies and capitalize on the identified areas of growth and profitability.
Article First Published at: https://www.cnbc.com/2023/07/15/bank-of-americas-top-stocks-ahead-of-second-quarter-earnings.html