Here are five 'high quality' stocks with major upside, according to Bank of America
There's a slew of stocks that are firing on all cylinders, according to Bank of America. The firm said buy-rated stocks like Disney, Palantir Technologies , Cadence Design Systems, KLA Corp and Planet Fitness have plenty more room to run. CNBC Pro combed through Bank of America research to find names with upside. Disney Shares of the entertainment giant have room for upside following the company's recent earnings report, according to analyst Jessica Reif Ehrlich. "Resilient in the face of choppy macro trends," she wrote in a note to clients. The firm sees no shortage of positive catalysts in the months ahead including a robust slate of upcoming films, growth in direct-to-consumer and more investment in the parks business. The entertainment giant is also well positioned overseas as Disney announced a new park in the Middle East earlier this month. "International attendance remains strong, although per cap spending is weaker due to a challenged Chinese consumer," the analyst noted The stock is up almost 25% this month, and Reif Ehrlich said clients should buy shares now. Palantir The defense tech company is also going full throttle, according to Bank of America. Analyst Mariana Perez Mora and team raised their price target on the stock earlier this week to $150 per share from $125. The firm said Palantir continues to have a differentiated offering for investors. "We see PLTR as the market definer for organizations leveraging [artificial intelligence] to drive accelerated tangible results," she wrote. However, it's the company's growth potential that has the firm staying bullish. "The speed and scale at which PLTR can deploy products and convert customers is growing," Mora added. Meanwhile, shares are up 71% this year with plenty more room to run. "A blue-ribbon recipe for growth," she said. Planet Fitness Analyst Alexander Perry is standing by shares of the fitness giant following the company's recent earnings report. Planet Fitness is well positioned to benefit from a "generational shift," the firm said. That's because the Gen Z and millennial cohorts are prioritizing fitness and leisure activities, Perry wrote. "PLNT's strategy has aligned with the fastest growing fitness trends, as it was quick to identify the prioritization of strength by younger demographics and began tailoring its marketing and equipment approach accordingly," he said. Perry also said the company has a unique business model to go along with fast improving unit growth. The company also has relatively little tariff exposure, he added. Shares of the company are up 51% over the last 12 months. Cadence Design Systems "High quality compounder, resilient complexity leverage, low tariff risk. … We rate CDNS Buy. We like CDNS leading position in an EDA [electronic design automation] industry that is levered to the same secular trends as semis but with much more muted cyclicality. We think CDNS has defensiveness/scarcity value, and is a unique beneficiary of rising chip complexity." KLA Corporation "Best-in-class margins, high-quality compounder. … We believe KLAC's importance as a key enabler of new manufacturing technologies is underappreciated as it provides the equipment needed to inspect/monitor chips for defects. The necessity for its systems has made KLAC's business less cyclical and more profitable that its peers, resulting in more stable FCF and shareholder returns." Disney "Resilient in the face of choppy macro trends. … Strong trends in Experiences and continuing to invest. … Intl attendance remains strong, although per cap spending is weaker due to a challenged Chinese consumer. … Near term catalysts include: 1) profitability inflection in DTC, 2) reacceleration in the Parks business and 3) strong film slate which drives other businesses..." Palantir Technologies "We see PLTR as the market definer for organizations leveraging AI to drive accelerated tangible results. … The speed and scale at which PLTR can deploy products and convert customers is growing. … A blue-ribbon recipe for growth. … We see Palantir as a beneficiary of rapidly growing demand for Artificial Intelligence (AI)-platforms in both commercial and government end-markets." Planet Fitness "PLNT to benefit from generational shift to healthy habits. … PLNT's strategy has aligned with the fastest growing fitness trends, as it was quick to identify the prioritization of strength by younger demographics and began tailoring its marketing and equipment approach accordingly. … Better franchisee economics should accelerate unit growth."
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This retail stock is expected to move more than 13% on earnings this week. How to trade it
RH's unique position, with a high-end assortment, relative scale, and a small share of the home furnishings market, leaves room for long-term growth. However, the weak U.S. housing market is a significant headwind. This is something CEO Gary Friedman acknowledged on the earnings conference call last quarter… "While we expect a higher-risk business environment this year due to the uncertainty caused by tariffs, market volatility, and inflation risk, we believe it's important to separate the signal from the noise. The fact is, we've been operating in the worst housing market in almost 50 years. For context, in 1978, there were 4.09 million existing homes sold when the US had a population of 223 million. Contrast that to 2024, where 4.06 million existing homes sold with a population of 341 million, and it illuminates just how depressed the housing market has been this past year." 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Therefore, it's necessary to hedge any short-term option sales with some longer-term purchases if earnings provide more shocking surprises, whether good or bad whether one is betting on an upside post-earnings move with a calendar call spread, a downside move with a calendar put spread, or a move in either direction, which can be accomplished with a strangle-swap, illustrated in the example below… Buy RH Sep. 19 $240 call Buy RH Sep. 19 $150 put Sell RH July 18 $150 put Sell RH July 18 $240 call DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
