Five stocks with more room to run in October, Bank of America says
Bank of America named a slew of stocks that are best positioned in October. The Wall Street investment bank says companies like Disney are compelling, with more room to run. Other buy-rated names screened by CNBC Pro include: Birkenstock , CRH , Spotify and C.H. Robinson. CRH The construction and building materials supplier is “more than meets the eye,” according to Bank of America. Analyst Michael Feniger recently reinstated coverage of CRH with a buy rating, writing that the company has a “track record of driving value.” Further, CRH should benefit from easing interest rates, he added. Amid a slew of positive catalysts, Feniger said he likes the growth potential and the chance for robust free-cash flow. “We reinstate coverage with a Buy rating as we see an organic growth inflection ahead, significant portfolio optionality & a multiple re-rating story over time,” he wrote. Shares are up 30% this year. Birkenstock “Growth opportunities abound,” analyst Lorraine Hutchinson said after a visit to the company’s headquarters. “BIRK is growing its reach with a younger consumer through new product,” she wrote. This group is driving traffic to the stores, she said. “This customer is choosing an in-person, multi-brand shopping experience as its first touch with BIRK,” she said. Hutchinson also is particularly bullish on Asia, a region she sees as a top growth opportunity. The firm’s optimism comes even as shares have underperformed. The stock is down nearly 19% year to date. “We reiterate our Buy rating and remain optimistic about BIRK’s potential for mid- to high-teens sales growth at > 30% EBITDA margin,” she wrote. Disney Analyst Jessica Reif Ehrlich is sticking with the entertainment giant ahead of earnings in early November. The firm says the “underlying trends appear stable” and that a slew of tailwinds are on the horizon. “In advertising, Sports is a bright sport and continues to see strength relative to other categories, and the initial rollout of ESPN’s new [direct-to-consumer] services appears to be positive,” she said. In addition, the firm says Disney’s Experiences division, which includes cruises, is well positioned for growth. Reif Ehrlich also said she expects minimal impact this quarter from the suspension of “Jimmy Kimmel Live. ” “We maintain our Buy rating and $140 [price objective],” she said. The stock is up more than 20% over the last 12 months. CRH “More than meets the eye. … We reinstate coverage with a Buy rating as we see an organic growth inflection ahead, significant portfolio optionality & a multiple re-rating story over time. … That said, CRH is developing a track record of driving value.” Birkenstock “Growth opportunities abound. … We reiterate our Buy rating and remain optimistic about BIRK’s potential for mid- to high-teens sales growth at > 30% EBITDA margin. … BIRK is growing its reach with a younger consumer through new product. This customer is choosing an in-person, multi-brand shopping experience as its first touch with BIRK.” C.H. Robinson “New CEO Dave Bozeman is driving an overhaul of CHRW as it launches a new operating model, drives systemic improvements, aims to benefit from its status as the largest truck brokerage provider with scale benefits while still balancing results with volume growth. It is taking advantage of a sustained loose trucking market and improved ocean shipping market given red sea disruptions globally.” Disney “Underlying trends appear stable. … Despite this, we remain bullish on the longer-term opportunity in Experiences, with cruise ships in particular, driving a multiyear growth opportunity. In advertising, Sports is a bright sport and continues to see strength relative to other categories, and the initial rollout of ESPN’s new DTC services appears to be positive.” Spotify “We view SPOT as an attractive pure play on the high- growth streaming music market – a subscription-driven opportunity underpinned by the global appeal of music and rising smartphone adoption with optionality from recent audiobooks and video podcasting initiatives. Although high level of the company’s streaming music costs are less than ideal, we believe a path to improved profitability is visible, setting the stage for significant value creation potential provided execution continues.”
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