Analysts' 9 Top Stock Picks for Q1 – WTOP

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Here are analysts’ top stocks to buy in the first quarter.

The S&P 500 just finished its third consecutive year of double-digit percentage gains. But while some investors are concerned about persistently high inflation and rising interest rates, most remain optimistic that the global economy will continue to normalize in 2022. Bank of America anticipates elevated stock market volatility in the first quarter and throughout the upcoming year, which could make stock selection more important than ever. Bank of America recently released its quarterly list of top stock picks for the next three months. Here are nine high-conviction stocks to buy that should have bullish catalysts coming in the first quarter.

Citigroup Inc. (C)

Citigroup has been a disappointment for investors over the past decade, lagging behind the S&P 500 and many of its big bank stock peers. However, analyst Ebrahim Poonawala says Citigroup may finally be reaching a long-term inflection point in the first quarter. Poonawala says new CEO Jane Fraser has been aggressive in reshaping the bank’s business. Citigroup shares trade below tangible book value, and Poonawala says the company’s upcoming investor day event March 2 could be the bullish catalyst investors have been waiting for. Bank of America has a “buy” rating and $100 price target for C stock, which finished 2021 at $60.39.

Carrier Global Corp. (CARR)

Carrier Global provides heating, ventilation, air conditioning, refrigeration, fire and security products. Analyst Andrew Obin says the latest pandemic wave will likely keep demand for indoor air quality services high in the first quarter. Obin says Carrier has an attractive valuation relative to its peers, and the pending divestment of the Chubb Fire and Security business will significantly improve Carrier’s balance sheet and potentially unlock valuation upside in the first quarter. Finally, Obin says pricing power and supply chain improvements could drive first-quarter earnings upside for Carrier. Bank of America has a “buy” rating and $70 price target for CARR stock, which closed at $54.24 on Dec. 31.

CNH Industrial NV (CNHI)

CNH Industrial is one of the world’s largest farm equipment manufacturers. Analyst Ross Gilardi says CHN should benefit from several near-term tail winds, including a booming farm economy, precision agriculture investments and elevated pricing power. CNH had a potential bullish catalyst right out of the gate in 2022 when the company spun off its IVECO commercial vehicle business on Jan. 1. Gilardi says the spinoff could improve CNH’s earnings multiple given that its farm equipment business trades at a discounted valuation compared with competitor Deere & Co. (DE). Bank of America has a “buy” rating and $25 price target for CNHI stock, which finished 2021 at $19.43.

CrowdStrike Holdings Inc. (CRWD)

CrowdStrike is a leading cloud security software vendor. Analyst Tal Liani says investors should scoop up CrowdStrike stock, which is down about 30% from its November peak. Liani says CrowdStrike is expanding its already massive total addressable cybersecurity market by introducing new products and services. Zero-trust security adoption, cloud migration and displacement of legacy security software are all tail winds for CrowdStrike earnings heading into 2022. Liani says limited competition for cloud-based end-point services has allowed CrowdStrike to generate sustainably high annual recurring revenue growth. Bank of America has a “buy” rating and $315 price target for CRWD stock, which closed 2021 at $204.75.

Lamb Weston Holdings Inc. (LW)

Lamb Weston is a global producer of frozen potato products. Analyst Peter Galbo says pandemic pressures may finally ease for Lamb Weston in 2022 as demand rebounds and cost pressures abate. Galbo says Lamb Weston shares have significant valuation upside even if earnings recover to just 85% of pre-pandemic levels. Lamb Weston reports first-quarter earnings in the first week of January, but Galbo says investors should also watch for commentary from McDonald’s Corp. (MCD) and other restaurants throughout earnings season for insight on french fry demand trends. Bank of America has a “buy” rating and $80 price target for LW stock, which closed at $63.38 on Dec. 31.

Occidental Petroleum Corp. (OXY)

Oil and gas stocks were among the top performers in the S&P 500 in 2021 thanks to energy shortages around the world. Analyst Doug Leggate says bullish momentum for Occidental Petroleum will continue in 2022. Leggate says Occidental is the most capital-efficient U.S. oil and gas exploration and production company and has the lowest per-barrel sustaining capital in the group. High oil prices in 2021 allowed Occidental to make significant progress in deleveraging its balance sheet following its $55 billion acquisition of Anadarko in 2019. Bank of America has a “buy” rating and $47 price target for OXY stock, which closed at $28.99 on Dec. 31.

Rexford Industrial Realty Inc. (REXR)

Rexford Industrial Trust is a real estate investment trust that owns and operates industrial warehouse properties in Southern California infill markets. Analyst James Feldman says Rexford’s primary markets are among the strongest in the U.S. and are experiencing booming tenant demand and rent growth. In addition, Feldman says vacancy rates are at all-time lows. Feldman says Rexford shares are particularly attractive given expectations for rising interest rates and elevated inflation. Finally, Rexford has a healthy balance sheet and an attractive acquisition pipeline. Bank of America has a “buy” rating and $90 price target for REXR stock, which ended 2021 at $81.11.

ViacomCBS Inc. (VIAC)

Media giant ViacomCBS had a disappointing 2021 and will continue to battle cord-cutting headwinds in its legacy cable and network TV business. However, analyst Jessica Reif Ehrlich says the recent wave of consolidation in the media industry highlights ViacomCBS’s value as a potential takeover candidate given its premium content library. Ehrlich says TV advertising trends are healthy and the company’s Paramount+ streaming service is outperforming her expectations. The upcoming ViacomCBS investor day event in mid-February could be a bullish catalyst and provide clarity for investors. Bank of America has a “buy” rating and $53 price target for VIAC stock, which ended last year at $30.18.

Xcel Energy Inc. (XEL)

Xcel Energy is a regulated utility company based in the U.S. Midwest. Analyst Julien Dumoulin-Smith says Xcel is a top stock pick among premium regulated utilities. Dumoulin-Smith says improving regulatory relationships in Minnesota and Colorado are bullish for Xcel. He is projecting between 6% and 7% compound annual earnings per share growth from Xcel in coming years, potentially making it one of the top U.S. utility stocks for earnings growth. Xcel’s next positive catalyst could be approval of the company’s Colorado Pathway project. Bank of America has a “buy” rating and $72 price target for XEL stock, which closed at $67.70 on Dec. 31.

Analysts’ top stock picks to buy for Q1 2022:

— Citigroup Inc. (C)

— Carrier Global Corp. (CARR)

— CNH Industrial NV (CNHI)

— CrowdStrike Holdings Inc. (CRWD)

— Lamb Weston Holdings Inc. (LW)

— Occidental Petroleum Corp. (OXY)

— Rexford Industrial Realty Inc. (REXR)

— ViacomCBS Inc. (VIAC)

— Xcel Energy Inc. (XEL)

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