Culling the weak, but holding the strong.
The S&P 500 ended the first quarter of the year on a high note, rising over 10%. Of the magnificent seven, two seem to have dropped out of the running, with Apple and Telsa noting a tough start to the quarter. Nvidia (NASDAQ:NVDA), along with other AI-synergy stocks, has continued gaining strength through the first quarter and has an optimistic outlook for the near term.
Generally, the consensus for stocks seems positive for the current quarter. In this article, we examine three stocks that are set up to take advantage of another positive quarter for stocks.
1. Occidental Petroleum
Since November’s coverage of this Texas-based oil company in the Permian Basin, Occidental Petroleum (NYSE:OXY) stock was at $62.27 vs the current $65.23. In other words, over one year, OXY broke even at positive 0.05% returns. This trend is likely to continue.
Oil companies’ fortunes rely on oil prices, naturally. And since the beginning of the year, Goldman Sachs pointed out that oil prices will likely remain soft throughout 2024 due to “surprisingly ample supply.”
Similarly, the Energy Information Administration (EIA) forecasted Brent crude oil prices to decrease from $87 per barrel to $82 and even $79 in 2025. These outlooks are not likely to excite investors to buy more OXY stock, despite Warren Buffett’s stake of $15 billion (28.2%) in the company.
Bolstering the case for a ditchable stock, 20 analyst insights pulled by Nasdaq place the average OXY price target at $68.71 per share, just 5.3% above the present level.
2. Marvell Technology, Inc.
Nvidia surprised many investors when its NVDA shares kept climbing repeatedly. The underlying drive behind this is that data center demand for generative AI is not fully priced in. That’s because AI is developing rapidly, with new surprises almost on a monthly basis.
The same proposition triggered Marvell Technology’s rise. The Delaware-based semiconductor company gained a 25% year-to-date boost and 73% over a one-year period. Marvell generates recurring revenue from patents, licensing fees, royalties, and data storage and networking products.
In its Q4 FY24 earnings delivered in March, Marvell (NASDAQ:MRVL) reported a net loss of $392.7 million. The company’s revenue increased by only 0.5% year-over-year to $1.427 billion. The bulk of the decline came from enterprise networking and carrier infrastructure, owing to its seasonal investment cycle.
As Marvell missed the estimated EPS of $0.29 at $0.28 for the first time in the last four quarters, investors see a buy on the weakness opportunity. In the ongoing AI infrastructure race, Marvell will likely play a vital role in bridging the gap between server platforms and AI clusters with high-speed optics.
To that end, Nvidia and Marvell have collaborated closely since 2019, as the company showed its technical prowess with the ThunderX2 platform. Twelve months ahead, 30 analyst inputs from Nasdaq positioned the average MRVL price target at $90.08 vs the current $72.65, a potential gain of 24%.
3. Pfizer
Following the conclusion of the viral scare, this global pharmaceutical company is down 33% over one year. The Pfizer (NYSE:PFE) stock is now just 8% above the 52-week low of $25.61 per share. Although it seemed that Pfizer would find itself in legal trouble from Texas AG for “false, deceptive, and misleading acts” in its vaccine rollout, the company’s bottom line is unlikely to be affected.
After all, Pfizer only played a part in a global, government-backed operation. With such FUD lingering, Pfizer’s price-to-earnings ratio lowered from 15 in 2023 to a forecasted 12.5 in 2024. This makes Pfizer a prominent buying on the weakness opportunity. Having bought cancer-treating Seagen for $43 billion, the company plans to expand into the growing obesity-treatment arena.
Just as these drugs boosted Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO), Pfizer is likely to gain market ground with its GLP-1 drugs, which mimic the GLP-1 hormone to treat type 2 diabetes. Similarly, according to the Leerink survey, Pfizer’s ATTR-CM drug, marketed as Vyndaqel and Vyndamax for heart problems, is expected to gain more ground.
Covering all key arenas, oncology, obesity, cardiovascular, and immunology, a PFE rally from a deep bottom is in the cards. Depending on FDA approvals, PFE could go as high as $45 vs the current $27.70, while the average price target is $31.44 per share. Interestingly, the lowest estimate of $27.04, among 23 analyst inputs by Nasdaq, aligns the price with the present level.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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