Not all stocks will be downgraded in the third quarter
Oh, times are changing Not only is the outlook for earnings growth for the S&P 500 clouding over, analysts are also becoming more defensive by the day. The latest round of comments isn’t a few downgrades and a reduction in price targets, but there is a bright spot for investors. The most recent upgrades are three stocks that we currently think are well positioned, including Dollar General, Crocs and Antero Resources.
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Dollar General Command Another upgrade
Dollar General (NYSE:DG, The trend is marching up, influenced by the results and analyst sentiment. The company has received the second of two upgrades in two weeks, beating consensus sentiment and Marketbeat.com price target. The latest comes from Cleveland Research, which upgraded the share to buy from neutral without setting a price target. According to the company, market share is increasing and this should be driven by flexible margins in the coming quarters. Favorable location of stores and alleviation of supply chain issues are also known to be driving forces.
The new Buy rating compares favorably to the Marketbeat.com consensus of Moderate Buy, but has done little to improve the target price. The $245 consensus price target suggests the stock is already significantly undervalued, but we believe it is underperforming the market. The consensus price target is moving past the 12, 3 and 1 months despite continued growth and outperformance. Looking at the charts, the stock might have some trouble moving above the $250 resistance target, but we see it declining towards the end of the quarter. Dollar General will report the next results on August 25th.
Crocs grabs an upgrade
crocs (Nasdaq: Crocs, This is just the first analyst upgrade since the last earnings report was released in early May. It’s surprising that Q1 results beat consensus on sales and earnings and guidance was raised, but who are we to criticize? The takeaway is that Loop Capital upgraded the stock to buy from hold and set a price target of $75 compared to the $134 consensus on marketbeat.com. Loop Capital believes the company’s valuation is attractive after a lucrative sell-off and channel testing looks promising.
Marketbeat.com consensus price target is about $20 below this year’s high, but is still well above last year’s and the downtrend appears to be ending. The new $75 target is about 50% above the current price trend, and an even lower price target offers investors some upside potential. The company is set to report next week in the first week of August and is expected to post strong sequential revenue growth of 46% driven by acquisitions and organic revenue increases.
Antero Resources introduces an upgrade
Given the high price of oil and the recent decline in energy supplies, it’s no surprise that energy operators, particularly independent drillers such as Antero Resources (NYSE:AR,, are updated. The latest comes from Truist Financial, which upgraded the stock to buy from neutral. The upgrade is compared to the Moderate Buy consensus and has a higher rating. The upgrade also comes with a price target of $50, which is $5 above analysts’ average target and assumes that upside of around 60% is available. Turning to the charts, price action at Antero Resources is down almost 40% since it peaked earlier this year. The price action is now testing the support at the 150-day EMA, where we expect a rally to begin.
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