The S&P 500 had its second-best start to a year in the past 25 years, fueling optimism among investors. However, this achievement was not the main story of the year. In fact, the flagship index’s 16% year-to-date gains have been completely overshadowed by the dominance of the tech sector. With the AI hype driving the surge, it became the best performing sector in 2023, up 31.5%.
That’s a significant amount and in fact represents the best first half of a year ever for the sector, as it pulled away from the S&P 500 by the biggest gap in a six-month period since 1999.
Is the technology ready to make further gains in the second half? That remains to be seen though the segment is by no means the only game in town. There are other corners of the market that could provide opportunities for investors, and analysts at Raymond James are keen to point them out. They looked for stocks expected to move forward for the rest of the year and labeled some non-tech names as Strong Buys.
We ran a pair of their picks across the TipRanks database for a broader view of the outlook and it seems the rest of the street agrees with the pundits at Raymond James – both are also rated as “Strong Buys” by analyst consensus. Let’s take a closer look.
Everest Band (FOR EXAMPLE)
Granted, insurance doesn’t have the same appeal as technology and AI, but as investment legend George Soros said, “good investing is boring,” and that brings us to Everest Group. , one of the world’s leading providers of reinsurance and insurance solutions.
Founded in 1973, the company is an established insurance name, with its global presence enabling it to serve customers in over 100 countries on 6 continents. Providing tailored solutions to meet the unique needs of clients, Everest operates through its subsidiaries and offers a diverse portfolio of products, including property and casualty, specialty and life reinsurance, as well as insurance coverage.
Everest has managed to post sequential improvements in revenue over the past few quarters and this was again the case in the first quarter of 2023. Revenue reached $3.29 billion, up from 3.25 billion shipped in the fourth quarter and amounting to 13.8% year-on-year increase. The figure also exceeded the consensus estimate of $190 million.
At the other end of the scale, driven by continued improvement in underwriting margin, net operating income reached $443 million, translating into EPS of $11.31 and an improvement over to $10.31 delivered in the same period last year. However, the final figure missed analysts’ forecast of $1.23.
Assessing the outlook for this business, Raymond James analyst Charles Peters maintains its Strong Buy rating, citing a “positive outlook for Everest to report accelerating revenue and earnings growth.”
Expounding on this, the 5-Star Analyst said, “Our rating reflects improving reinsurance market conditions with strong pricing and terms/conditions trends continuing through mid-year renewals. ‘year. While we acknowledge the hurricane/disaster concerns in 2H23, we believe the risk-reward favors (Everest) due to the hard market and our outlook for ROBE trading 19%+ over the next two years.
“We continue to believe that our estimates could be higher if the company hits the bottom of management’s 2023 u/w targets with further improvements in 2024,” Peters summed up.
Alongside the Strong Buy rating, Peters’ $450 price target on EG leaves room for 12-month returns of around 28%. (To see Peters’ track record, Click here)
Looking at the consensus breakdown, the rest of the street agrees with Peters’ assessment. With 6 buys and no take or sell, the word on the street is that EG is a strong buy. The average price target of $449.17 is virtually the same as Peters’ target. (See EG Stock Forecast)
Copa Holdings (PCA)
Now let’s move on from insurance to the airline industry. Copa Holdings is a Panama-based company that operates as a holding company for Copa Airlines and Copa Colombia (Wingo). The company has positioned itself as a major player in the Latin American region, providing connectivity between cities in South America, Central America, North America and the Caribbean, with an extensive network of 79 destinations in 31 countries. Copa operates a fleet of modern aircraft (a total of 99 at the end of the first quarter) and has established a reputation for high quality service, punctuality and efficient operations.
Travel demand has increased following the Covid-induced lull and the Copa has benefited from this development. In the first quarter, revenue rose 51.7% from the same period a year ago to $867.3 million, while beating Street’s forecast of $27.94 million. The figure also represented a 29% increase on pre-Covid 1Q19 levels. The company has also been cautious with costs and this has resulted in adjustments. EPS of $3.99, a number that beat the Street forecast of $3.25.
Tech stocks aren’t the only ones to have outperformed the market this year. This display has helped the stock achieve 32% year-to-date gains. Still, according to Raymond James analyst Savanthi Syth, there’s more to come.
The analyst notes that Copa shares a strong buy while its price target of $155 implies a 40% upside over the next few months. (To see Syth’s track record, Click here)
Explaining his bullish stance, the 5-star analyst wrote: “We believe the relative attractiveness of Copa’s geographically advantageous and defensible center has improved. As such, while the inflection of competitive ability in a lower fuel environment is likely to put pressure on returns, Copa’s cost initiatives coupled with an attractive overall competitive setup (further supported by global supply constraints) should support strong margins.
Overall, this is another stock that has full street support. With 8 unanimous buys, the stock benefits from a consensual strong buy rating. If the average price target of $148.63 is reached, in one year investors will pocket returns of around 35%. (See CPA Holdings Stock Forecast)
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Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.