- Credit Suisse says Wall Street has low expectations for some very promising stocks.
- These are stocks with better performance if the analysts are particularly strong against consensus.
- The firm’s analysts say 12 of the shares will rise 10% or more in the next year.
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Markets are upside down by rising interest rates and growing stocks, and such moments can deliver a premium on experts’ best ideas.
Credit Suisse’s Americas team has just rolled out a series of ideas, as well as stocks to avoid, by identifying their analysts who are the top convincing names in every major market sector. Thereafter, they further narrowed the search by applying the firm’s HOLT framework to obtain the best-rated stocks that have ‘the least demanding market expectations’.
Credit Suisse evaluated market expectations by looking at the difference between the cash flow return on investment, or CFROI, that the market currently expects, as well as the 12-month forecast for CFROI and the historical five-year CFROI.
The firm’s process also compared the analysts’ earnings forecasts and target price estimates with the analyst’s consensus, and measured a “level of consensus bullishness” based on buy, sell and hold ratings.
They say these stocks could beat the market due to the combination of strong stock prospects and the low expectations of Wall Street.
Of these 13 stocks with better-than-average performance, Credit Suisse’s price targets mean that six would make a profit of 20% or more in the next year, and 12 of the 13 have a lead of at least 10% . All upside figures, ranked from lowest to lowest, were calculated based on Thursday’s closing prices.