Big rallies and massive sell-offs have been the theme going into May 2022. With technology stocks — once again — leading us lower, thanks in part to the 10-year note eclipsing 3%, many of the damaged blue chips are looking beyond oversold.
In this piece, we’ll use TipRanks’ Comparison Tool to check out three of them to see which holds the most bounce-back potential for the year ahead. Each firm may have lost its way, but valuations are starting to become absurd.
Boeing (BA)
Boeing has done nothing but nosedive over the past year. Shares collapsed from around $250 per share to $150 and change per share. The list of problems continues to grow for Boeing, with the abysmal quarterly earnings and an Air Force One deal that has CEO David Calhoun sounding regretful.
Former U.S. President Donald Trump’s Air Force One deal is haunting Boeing to this day. With operational hiccups delaying deliveries for select aircraft, it seems like nothing can go right for the aircraft maker.
Though Calhoun doesn’t yet plan to retire, a major shift at the upper level may be required to get Boeing back on the right track.
Although Boeing can’t seem to get any wind beneath its wings, demand is likely to remain, given the duopolistic market it operates in.
With a potential recession underway, Boeing seems like a lost cause. Still, the valuation is severely depressed, and being a member of a duopoly has its perks.
Wall Street analysts are standing by Boeing amid its freefall, with a Strong Buy rating and an average BA stock price target of $228, implying 71% upside from current levels. (See BA stock forecast on TipRanks)
Intel (INTC)
Intel is another company that’s lost its way. The once-cherished semi company fell behind in the chip race, and it could struggle to catch up. Though Intel has a new CEO Patrick Gelsinger, and a strategic multi-year plan to regain the lead in chips, questions linger as to whether the firm can execute.
The firm could face an uphill battle as it looks to keep pace with Apple, and its M-series line of chips.
Intel’s 14th-generation Meteor Lake chip is slated to launch in 2023. By then, Apple may have already raised the performance bar.
The stakes are high, and investors don’t seem to be giving Intel the benefit of the doubt. Why should they? The chip space is fiercely competitive, and the global chip shortage complicates things greatly.
Though long-term global chip demand is a positive for chip makers as a whole, one can’t help but worry that Intel may have to resort to discounting, given rivals could raise the bar to heights that could prove difficult to reach.
Wall Street analysts aren’t so convinced with Intel, even after its drop. It has a Hold rating, and an average INTC stock price target of $51.10, implying ~19% upside from current levels. (See INTC stock forecast on TipRanks)
AT&T (T)
AT&T is an old-time telecom titan that’s on the right side of 5G tailwinds. After spinning off its media businesses, management now has the opportunity to revamp growth in wireless.
For the first quarter, wireless growth was remarkable. The company is starting to do a lot of things right, and narrowing its focus is an effort that could allow T stock to break out of its funk.
Though wireless numbers are gaining traction, the implications of a recession on such growth are less clear. In any case, the company seems like it’s ready to continue swimming forward.
With media out of the equation, the new AT&T is arguably the best version of itself we’ve seen in decades. Its investments in next-gen telecom infrastructure will slowly pay meaningful dividends with time.
Still, the major question mark with AT&T is its considerable debt load. Even after spinning off the media assets, the company’s debt-to-equity ratio is on the high end at over one. As rates rise, so too will AT&T’s costs of borrowing, making the telecom scene somewhat less attractive than it used to be.
In any case, management continues to execute.
Wall Street analysts are mildly optimistic, with a Moderate Buy rating and an average T stock price target of $22.50, implying 15% upside from current levels. (See AT&T stock forecast on TipRanks)
Conclusion
Blue-chip stocks are feeling the selling pressure these days. The following blue chips may have lost their way, but with plans to regain dominance, the risk/reward may be getting too good to ignore.
Of the three, Wall Street analysts are most bullish on Boeing, and the least bullish on Intel. I’m inclined to agree with analysts. Boeing stock seems to be the best of the batch.
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Source: https://finance.yahoo.com/news/battered-blue-chip-stocks-most-225800027.html