According to Bank of America analysts, there are still plenty of opportunities to buy stocks as earnings reports continue to be released. The company recommends a number of companies investors should own ahead of the company’s quarterly results. CNBC Pro scoured recent Bank of America research to find the most attractive stocks that are well-positioned ahead of their reports. These include: Grab, Urban Outfitters, Block, SolarEdge and Fox. Fox is buying shares of the “best positioned” company in the media, analyst Jessica Reif Ehrlich recently said of Fox. The company is expected to report results in early February. Fox has the right mix of content to “drive relative outperformance against the market,” Reif Ehrlich said in a recent note to clients. She added that the news and sports programs are a “must-have” mix for some consumers. Additionally, Reif Ehrlich said she likes the company’s robust balance sheet and called its direct-to-consumer strategy “moderate.” The firm admitted Fox isn’t entirely immune to advertising market pressures, but said it has the skills to weather the storm. “We expect FOX’s F2Q23E will reflect the resilience of Fox’s portfolio, but will also show some signs of the weakening macro environment,” she said. However, with the stock down 9% over the past 52 weeks and generating significant free cash flow generation, the stock remains the most attractive, wrote Reif Ehrlich. Grab Holdings The Singapore-based tech company was recently upgraded to a “buy” from neutral by analyst Sachin Salgaonkar. Shares of Grab, which offers delivery, mobility, and financial services through a mobile app, have fallen 35% over the past year. But Bank of America said the risk/reward trade-off is becoming “more favorable.” “We see Grab in a good position to balance revenue growth with profitability in its two core businesses – delivery and mobility,” said Salgaonkar. Grab is also seeing a drop in competition and its management is heavily focused on cost control, he said. “We also believe that Grab’s super app gives it a competitive edge over its peers and helps the ecosystem unlock synergies across its four business units,” he wrote. The balance sheet is also robust and Salgaonkar expects EBITDA profitability through 2025. The company is expected to announce earnings in mid-February. SolarEdge The solar products company is running on all cylinders, according to analyst Julien Dumoulin-Smith. “Expect hits across the board in 4Q22,” he said ahead of SolarEdge’s quarterly earnings report in mid-February. Dumoulin-Smith said the stock was “in the right place at the right time,” and raised its price target to $382 a share from $367 earlier this week. “In Q4 ’22 we have a buy rating on SolarEdge Technologies which we believe appears poised to benefit from the macroeconomic environment versus continued headwinds in 2022,” he said. The company said SolarEdge is obviously a beneficiary of the Inflation Reduction Act, but it also benefits from a stronger euro as it gives consumers more pricing power. “The recovery in EUR/USD modestly benefits SEDG’s sales, resulting in ~$20 million in revenue growth,” he added. Shares are up more than 46% over the past year, but Dumoulin-Smith’s higher price target suggests there’s still room for improvement. “As tailwinds and structural improvements strengthen, 4Q22 looks to us to be a particularly attractive entry point for investors now that SEDG has glimpses of a fundamental recovery,” he wrote. The pandemic, along with new product launches, has caused SQ’s estimated TAM to grow from $60 billion (Square only) in 2017 to $190 billion in 2022. We maintain our Buy rating for the following reasons: 1) Cash App still has a long way to go for growth 2) Square continues to gain traction in the upper and international market 3) SQ is not receiving enough credit for continued operational discipline and has indicated its intention to remain disciplined in 1923, and 4) crypto and BNPL combined accounted for just 12% of 3Q22 gross profit. Fox: “We expect FOX’s F2Q23E to reflect the resilience of Fox’s portfolio but also to show some signs of the weakening macro environment. …While Fox’s collection of sports and news stocks should drive its relative outperformance versus the market, Fox is not entirely immune to macroeconomic pressures in the advertising market….We remain bullish on Fox as we believe that it is: the best positioned media company to profit from sports betting, has a more measured DTC strategy, is an owner of must-have news and Sport Grab Holdings “We are upgrading Grab to Buy from Neutral as we see that the risk/reward ratio is developing more favourably. Proposition: 1) We see Grab well positioned to balance revenue growth and profitability across its two core businesses – Delivery & Mobility. … .We also believe Grab’s super app gives it a competitive edge over its rivals and helps the ecosystem unlock synergy across its 4 divisions.” Urban Outfitters “Well positioned in F24 with better ability to hunt. We reiterate our Buy rating on Urban Outfitters as we believe it is well positioned with cleaner inventory in F24 (C23) now that its agile supply chain is normalized. … .Urban is, in our opinion, one of the most compelling growth stories in specialty retail. Its three proven concepts each offer scope for margin expansion, and its products are differentiated and compelling.” SolarEdge “Expect beats across the board in 4Q22. … .Right place at the right time + structural advantages. ….In 4Q22 we have a Buy rating on SolarEdge which we think appears poised to benefit from the macro environment versus continued headwinds in 2022. ….EURUSD recovery comes from the topline benefited slightly from SEDG, resulting in a sales hit of ~$20 million. … .As tailwinds and structural improvements strengthen, 4Q22 looks to us to be a particularly attractive entry point for investors now that SEDG has insight into the underlying recovery.”
