Bank Of America is becoming more optimistic about an economic recovery. It believes that small-cap shares could be the biggest winners during the inflection point. The company’s U.S. Regime Indicator had been in a downturn phase for the past six months, but it showed improvement in July. A further advance in August will officially signal a shift into an early-cycle recover. According to Jill Carey Hall, the historical best phase for small cap stocks is now. “For small-cap investors who are looking to hedge their cycle risk, Cash Return (Div.) has consistently outperformed both in Downturn and Recovery regimes. Hall wrote about FCF/EV and Yield & share repurchase in a note dated August 18. Hall’s screen for the month looked at Russell 2000 stocks that were rated as buys based on a number of criteria. These included: Value: Top quintile index based on cash flow from operations/price (or EBITDA/EV), sales/EV, or book/price. Cash return: dividend payers or shares bought back in the past 12 months. Non-earners: excluded from the list. Names with a high level of short interest have also been left off. Look at the names below and see where analysts think they will go. Both Northern Oil and Gas and Chord Energy are energy names. RBC Capital stated in July that it believes Chord Energy could go above its minimum 75% shareholder payout. The shares have gained 14% in the last year. According to Refinitiv, the average analyst price target for shares indicates an additional 17% upside. Analysts have a similar outlook on Northern Oil and Gas. Refinitiv reports that more than 90% of analysts rate the stock as a buy. Their average price target implies a 21.5% potential upside. The shares have increased by more than 30% since 2023. Wall Street doesn’t seem to be so confident about Urban Outfitters, as seven of the 15 analysts who cover the company rate it as a hold. The consensus analyst’s price target is $35.82. This implies that shares could rise more than 16% since Friday’s closing. Urban Outfitters does not pay a dividend. In 2023, shares are up by about 40%. URBN YTD Mountain Urban Outfitters shares Patterson Companies, a supplier of dental products, also made the list as the economy enters a new phase. The stock is rated a Hold by four-fifths (45%) of analysts who cover it, with an average price target that suggests a 5.3% potential upside. The stock is up 20% so far this year. Michael Bloom, CNBC’s Michael Bloom, contributed to this report.
© Gold Coast News HQ - All rights reserved.