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Citi is looking at a more growth-style stock selection as it screens in all sectors.
“Our base case year end ‘22 price target of 4200 for the S&P 500 (SP500) (NYSEARCA:SPY) is predicated on both a scenario weighted probability approach and 18-19x a $226 full year ’22 top down earnings estimate,” strategist Scott Chronert wrote in a note.
“We project a growing recession probability during 1H ‘23. Over the intermediate term expect volatility between a 3650-4700 range as investors weigh weaker growth versus a potentially less hawkish Fed,” Chronert said.
“There is no change to our view that multiple compression, driven by rising real rates and Fed policy expectations, has mostly run its course,” he said. “Earnings expectations become the more important toggle from here.”
“With this note, we move more toward the Growth-style and further away from our style agnostic call since May. Among factors, we prefer Quality and Momentum over Min/Low Vol and Enhanced Value.”
We “include stock screen for each GICS sector of Citi’s top Buy- and Sell-rated stocks based on expected total return (ETR),” Chronert added. “We include S&P 1500 (SPTM) names to broaden our scope for investors looking for specific alpha opportunities.”
The picks by sector are:
Communications Services (XLC), Citi rates Market Weight
Buys
- DISH Network (DISH), ETR 96.6%
- Paramount Global (PARA), 64.9%
- Telephone and Data Systems (TDS), 64.9%
- Warner Bros Discovery (WBD), 59.5%
- Meta Platforms (META), 48.4%
- Disney (DIS), 44.4%
- AT&T (T), 37.9%
- Cogent Communications (CCOI), 37.3%
- Alphabet (GOOGL), 36%
- Omnicom (OMC), 29.2%
Sells
Consumer Discretionary (XLY), Underweight
Buys
- General Motors (GM), 114%
- MGM Resorts (MGM), 68.5%
- Boot Barn (BOOT), 68.9%
- Stride (LRN), 63.3%
- YETI (YETI), 60.6%
- Las Vegas Sands (LVS), 46.1%
- Amazon.com (AMZN), 46.5%
- Booking Holdings (BKNG), 43.1%
- Domino’s Pizza (DPZ), 37.2%
Sells
Consumer Staples (XLP), Market Weight
Buys
- Simply Good Foods (SMPL), 61.7%
- BellRing Brands (BRBR), 44.4%
- Walmart (WMT), 23%
- Hostess Brands (TWNK), 17.2%
Sells
Energy (XLE), Market Weight
Buys
- Oceaneering International (OII), 110.1%
- Baker Hughes (BKR), 67.4%
- Haliburton (HAL), 64.9%
- ProPetro Holding (PUMP), 62.4%
- Patterson-UTI Energy (PTEN), 43.7%
- APA (APA), 41%
- ChampionX (CHX), 37.2%
- Schlumberger (SLB), 27.4%
- Pioneer Natural (PXD), 13.1%
- Diamondback Energy (FANG), 12.2%
Financials (XLF), Underweight
Buys
- Synchrony Financial (SYF), 56.2%
- Capital One (COF), 55.1%
- Voya Financial (VOYA), 31.9%
- Hartford Financial (HIG), 30.2%
- Comerica (CMA), 22.3%
- SLM (SLM), 19%
- Bank of America (BAC), 18.5%
- MetLife (MET), 18.9%
- JPMorgan Chase (JPM), 17.9%
- Allstate (ALL), 17.3%
Sells
- Progressive (PGR), -19%
- Principal Financial (PFG), -16.5%
- Reinsurance Group (RGA), -13.4%
- Janus Henderson (JHG), -0.8%
Healthcare (XLV), Overweight
Buys
- Owens & Minor (OMI), 108.8%
- Community Health Systems (CYH), 102.7%
- OraSure Technologies (OSUR), 69.1%
- Tandem Diabetes (TNDM), 67.1%
- Sotera Health (SHC), 65.8%
- Tenet Healthcare (THC), 65.6%
- Arcus Biosciences (RCUS), 48.9%
- Bruker (BRKR), 46.9%
- Bio-Rad Laboratories (BIO), 48.1%
- Universal Health Services (UHS), 42.4%
Sells
- Becton Dickinson (BDX), -7.2%
Industrials (XLI), Market Weight
Buys
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