In this article, we will take a look at the 10 stocks with huge catalysts on the way. To see more such companies, go directly to 5 Stocks With Huge Catalysts on the Way.
The US stock market continues to be in a see-saw mode as investors gauge and digest latest data. The latest jobs report shows that the labor market continues to be strong, adding to the possibility of further rate hikes. In a September market update report, JPMorgan had said that the next few reports might show that inflation pressures are returning and that would be the test of investors’ nerves. Amid strong consumer spending and tight labor market, analysts believe the Federal Reserve’s battle against inflation is not over yet and the central bank is more than ready to continue raising interest rates. Major stocks like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META) are moving based on these events.
While the debate around the possibility of further rate hikes and stickiness of inflation is never ending, one thing is for sure: long-term investors take any sell-off in the current environment as a buying opportunity. Jim Cramer last month said that it does not make any sense to sell stocks just because the Federal Reserve is not providing enough clarity around its future plans. These are uncertain times and asking for total certainty and clarity is unrealistic. Cramer said that investors should buy stocks that do well during inflation and sell them once inflation begins to cool down. Cramer said that rising interest rates was one of the reasons why investors were selling stocks. However, he believes real investing means you buy stocks for long-term gains instead of relying on short-term news cycles. Cramer said:
“The Fed can’t upend the rally because there isn’t a rally. Higher rates won’t send stocks lower because they’re already down. That’s how you have to think about things like the stock market. Otherwise, you know what? There really isn’t a level where it feels safe to own stocks other than at the top, when nobody’s worried about anything. That’s not investing, though. That’s called stupidity.”
While most of the analysts talk about the possibility of rate cuts and cooling inflation in 2024, there’s another angle to this story that has started to become a topic of discussion lately. Some analysts are starting to believe that we are entering a new era where interest rates and inflation are expected to stay at elevated levels for several years to come. There’s no way around it, according to them. In March 2023, T. Rowe Price said in a report that the biggest reason why value made a huge comeback against growth in 2022 was the reality check investors had after a long period of time. When credit was cheap and inflation low, technology companies enjoyed huge gains. But the post-pandemic era and its realities started to give rise to inflation and the world of today is starkly different from the past. The report said that inflation and interest rates could stay at elevated levels for a long time, which could bode well for value stocks as investors flock to realistic valuations.
The T. Rowe Price report also said that in the next decade many dominant companies of today could be on a decline amid competition. The report said that several years from now people would still be using digital services and driving electric cars but there would be a lot of new players in digital services and companies dominating the futuristic technology markets today might not be very exciting investments 10 years from now. The report gives example of Volkswagen, which it believes is cheap when it comes to valuation. What if Volkswagen begins to produce EVs of standard at par with Tesla in the future? Given Volkswagen's huge size and dominance in traditional car markets, the stock could become more attractive than Tesla in the future because big size gives advantage to survive and thrive when competition is high.
But not everyone is optimistic in the short term. JPMorgan’s Marko Kolanovic believes chances of markets avoiding a recession are thin. Talking to CNBC, the analyst said that in the short term stocks could still have upside but a few months from now the S&P 500 has downside.
“Could there be another five, six, seven percent upside in equities? Of course... But there’s a downside. It could be 20% downside,” Kolanovic said.
The analyst warned that the “magnificent seven” companies that have seen huge gains during 2023 are expected to see declines soon. These companies include tech giants like Microsoft, Meta, Alphabet and Amazon. Most of the stock market gains this year came from these mega-cap tech stocks. Several analysts have been consistently warning about the concentration of stock market gains problem. Most of the gains in the stock market this year came due to the AI boom which had investors jumping on the bandwagon of AI. But Kolanovic believes these companies could soon start to see declines. He’s also worried about the state of the consumer in the US, who is increasingly getting crushed by inflation and rate hikes.
“The job market is still strong. But you are starting to see the stress in [the] consumer if you look at sort of the delinquencies in the [credit] cards and auto loans. We remain somewhat negative still,” Kolanovic said.
Stocks With Huge Catalysts on the Way
source: pixabay
Our Methodology
For this article, we scoured several analyst reports and investing platforms to list down stocks that are expected to move on upcoming catalysts, events, and news. Some top names in the list include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META).
Golf products company Acushnet Holdings Corp. (NYSE:GOLF) ranks 10th in our list of the stocks with catalysts on the way. The overall popularity of golf as a sport is the biggest growth catalyst for Acushnet Holdings Corp. (NYSE:GOLF). Recently, Tigress Financial analyst Ivan Feinseth said the company is expected to benefit from new product launches and biannual new golf ball design introductions. The analyst said Acushnet Holdings Corp. (NYSE:GOLF)’s strong brand is a growth catalyst, as its Titleist brand golf balls remain the preferred choice of PGA and LPGA Tour players. He increased Acushnet Holdings Corp. (NYSE:GOLF)’s price target to $68 from $62.
As of the end of the second quarter of 2023, 20 hedge funds in Insider Monkey’s database of funds had stakes in Acushnet Holdings Corp. (NYSE:GOLF).
Ambrx Biopharma Inc. (NASDAQ:AMAM) – ADR ranks 9th in our list of stocks with upcoming growth catalysts. Ambrx Biopharma Inc. (NASDAQ:AMAM) has already gained a whopping 950% over the past one year. Ambrx Biopharma Inc. (NASDAQ:AMAM) is a clinical-stage biotech company making engineered precision biologics using synthetic amino acids to enhance therapeutic functions. Ambrx Biopharma Inc. (NASDAQ:AMAM)’s treatment ARX788 for cancer therapeutics is promising and could become a strong growth catalyst in the future. Initial ARX788 trial data showed promise for treating HER2-positive metastatic breast cancer.
Inozyme Pharma, Inc. (NASDAQ:INZY) is a clinical stage biotech company working on treatments of rare diseases affecting vasculature, soft tissue, and skeleton. Short-term potential growth catalyst for Inozyme Pharma, Inc. (NASDAQ:INZY) was the results for a recent Phase 1/2 trial for I be INZ-701. INZ-701 is a potential treatment for ENPP1 Deficiency and ABCC6 Deficiency, which are driven by low levels of inorganic pyrophosphate (PPi) and adenosine.
Inozyme Pharma, Inc. (NASDAQ:INZY) is also expected to announce important data points for its treatments in 2024.
As of the end of the second quarter of 2023, 17 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Inozyme Pharma, Inc. (NASDAQ:INZY). The biggest stakeholder of Inozyme Pharma, Inc. (NASDAQ:INZY) during this period was Phill Gross and Robert Atchinson’s Adage Capital Management which owns a $24 million stake in the company.
Chipotle Mexican Grill, Inc. (NYSE:CMG) shares have gained about 30% year to date but Baird analyst David Tarantino believes the stock has more growth catalysts coming on the back of expected increase in same store sales near the year end. The analyst noted that Chipotle Mexican Grill, Inc. (NYSE:CMG) saw some weakness amid low traffic at restaurants in the second and third quarter. He sees Chipotle Mexican Grill, Inc. (NYSE:CMG) increasing its unit growth to the high end of its target of 8% to 10% annually.
"Specifically, we expect signs of strong same-store traffic momentum and further pricing actions to lead to an upward bias to EPS estimates and support robust valuation metrics on Chipotle Mexican Grill, Inc. (NYSE:CMG) heading into year-end,” the analyst said in a note.
Chipotle Mexican Grill, Inc. (NYSE:CMG) also saw a jump in hedge fund sentiment during the second quarter. As of the end of the period, 55 hedge funds tracked by Insider Monkey reported owning stakes in Chipotle Mexican Grill, Inc. (NYSE:CMG), up from 47 hedge funds in the previous quarter.
Pershing Square Holdings made the following comment about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2023 investor letter:
“Chipotle Mexican Grill, Inc. (NYSE:CMG)’s business strength continued in 2023, driven by the company’s focus on exceptional food and operational excellence. During the second quarter, Chipotle grew same-store sales by 7.4%, or 40% from 2019 levels. Transactions grew 4.4%, a sequential improvement compared to the first quarter, and price increases from 2022 contributed 5.5% offset somewhat by a shift from group to individual orders which was a 2.5% headwind. The negative group to individual impact should shrink in the balance of the year and cease to be a headwind as we enter 2024.
6. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Raymond James analyst Andrew Marok recently upgraded Take-Two Interactive Software Inc (NASDAQ:TTWO) to Outperform from Market Perform and maintained a price target of $170. The analyst thinks the launch of GTA 6 could be a catalyst for the stock.
Some top names in our list of stocks with huge catalysts on the way include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Meta Platforms, Inc. (NASDAQ:META). We will take a look at them in the next part.
