As the new quarter begins, Wells Fargo’s equity research team has identified several investment opportunities for investors, as well as potential risks. The firm’s list includes eight stocks with near-term catalysts that could drive their share prices higher, as well as two stocks that may experience a decline. With the S & P 500 and Nasdaq Composite experiencing significant gains in the first half of the year, investors are questioning whether this positive trend will continue in the second half of 2024.
Stocks with Positive Catalysts
One of the stocks highlighted by Wells Fargo is Capital One, which could see a potential catalyst if the Discover merger goes through. Additionally, the firm believes that lower-income credit card holders may be more resilient than currently thought. Despite concerns about its credit card holders, Capital One’s stock has underperformed this year, rising only 6% compared to the S & P 500’s 14% surge. While the average analyst has a hold rating on Capital One, Wells Fargo sees an 18% rally potential in the stock.
Another stock recommended by Wells Fargo is Algonquin Power & Utilities, which is undergoing a strategic review of its non-regulated renewables platform. The firm suggests that the market is undervaluing the renewable business and estimates that it could be worth $2.4 billion. If Algonquin decides to sell its renewable assets, the proceeds could be used for share buybacks, potentially boosting the stock price. Despite falling more than 13% this year, Wells Fargo sees a 44% upside potential in Algonquin’s shares.
On Semiconductor is another company that Wells Fargo has a positive outlook on, as it believes the company is starting to see improvements in gross margins due to a cyclical upturn. The firm also anticipates important wins from OEMs in China for On Semi’s silicon carbide chip business. While the stock is down 14% for the year, Wells Fargo predicts a potential 37% increase in the stock price.
Stocks with Negative Catalysts
On the other hand, Wells Fargo has identified Tesla and Old Dominion Freight Line as two stocks that could see downside from negative catalysts in the third quarter. However, Wells Fargo’s prediction for Tesla has so far not been accurate, as the stock has surged 25% following better-than-expected second-quarter vehicle deliveries.
Wells Fargo’s equity research team has provided investors with a list of stocks with both positive and negative catalysts for the quarter. While the firm’s recommendations are based on thorough analysis and research, it is important for investors to conduct their own due diligence before making investment decisions. As the market continues to evolve, staying informed and being critical of investment recommendations is essential for successful investing.