In the midst of market unease and uncertainty, investors are faced with the challenge of making sound investment decisions. Piper Sandler, a reputable investment firm, suggests that now might be the ideal time to shift focus towards quality stocks. The firm emphasizes the importance of prioritizing companies with strong fundamentals at a reasonable price, rather than getting caught up in the chaos of an unpredictable market.
Piper Sandler outlines specific characteristics that investors should look for when considering quality stocks. These include:
– Attractive value: determined by high free cash flow yield
– Cash flow profitability: determined by high cash flow return on investment
– Realized growth: determined by high earnings per share growth
– Expected near-term growth: determined by high earnings per share revisions ratio
The investment firm backs up its recommendation by highlighting the success of its Macro Select portfolio. The strategy has consistently delivered strong returns, placing it in the top decile of excess return over the past year. Piper Sandler’s Macro Select model has effectively capitalized on macroeconomic trends since its inception in 2018, showcasing its ability to adapt to changing market conditions.
Several names in the S&P 1500 index have recently caught Piper Sandler’s attention and moved into the “most attractive” rankings of their Macro Select model. One such stock is communications services giant Verizon, which has seen an improvement in its ranking from 6 to 2 in the current quarter. Despite mixed analyst ratings, Verizon has shown a potential upside of 5.3% and has already gained nearly 13% this year.
United Airlines is another stock that Piper Sandler identifies as a quality pick for investors. Despite facing challenges surrounding its fleet of Boeing aircraft, the airline carrier has maintained a strong buy rating from analysts, with an average price target indicating a potential 42% increase. Similarly, tech titan Microsoft is highlighted as a promising investment opportunity, having seen a 12% rally this year. Analysts see a 9.4% upside to Microsoft’s average price target, reinforcing its status as a top performer in the market.
Prioritizing quality over quantity when it comes to investing in stocks can be a prudent strategy in times of uncertainty. By focusing on companies with solid fundamentals and growth potential, investors can position themselves for long-term success in a volatile market environment. With the guidance of reputable firms like Piper Sandler, identifying quality stocks that align with your investment goals becomes a more achievable task.