Wedbush says to buy these 16 stocks that represent its analysts' best ideas and are set to outperform in the next 6-12 months

  • Stocks did not react well to the rising 10-year Treasury yield, which ended Friday at 1.577%.
  • High-growth stocks plunged while investors continued to rotate into value and cyclicals.
  • Wedbush analysts maintain a list of best-ideas stocks that are the firm’s highest-rated equities.
  • Visit the Business section of Insider for more stories.

Amid fast-rising US Treasury yields last week, investors continued to rotate out of high-growth tech stocks and into cyclical and value stocks. 

The S&P 500 rallied on Friday to end the week positive, while the tech-heavy Nasdaq rose 1.64% on the day but fell 2.1% for the week. Amid inflation and interest rate fears, market darlings like Cathie Wood’s main fund — the ARK Innovation ETF (ARKK) — dropped 12.27% in the past week as hyper-growth stocks like Tesla and Invitae were in free fall. 

As investors decide how to allocate between the traditionally categorized value and growth stocks, Wedbush analysts share their best-ideas stock list in March. The list, which represent analysts’ highest-rated equities, includes cyclical value names that could benefit from higher rates such as Fifth Third Bancorp (FITB). 

However, Wall Street strategists appeared less than worried about potentially higher rates, rising inflation expectations, and last week’s retreat of tech dominance. 

One of the reasons stems from the Federal Reserve’s commitment to accommodative monetary policies. Speaking at the Wall Street Journal jobs summit on Thursday, Fed Chairman Jerome Powell said the central bank would remain patient and continue monitoring the rise in bond yields before stepping in to control the markets and consider rate hikes. 

“Nothing in Powell’s comments suggests to us that the path for interest rate hikes or the terminal rate is different, and it was always unlikely that the Fed would act to control yields while financial conditions remain so loose. We maintain our view that the 10-year yield will end the year close to 1.5%,” UBS Global Wealth Management’s Chief Investment Officer Mark Haefele said in a note immediately after. 

Despite higher bond yields’ negative pressure on long-duration tech stocks, some strategists believe that investors should not rule them out completely. 

“Tech was oversold with 18.6% of NASDAQ stocks above their 50-day moving average last Friday morning,” Dennis DeBusschere, a macro research analyst at Evercore ISI, wrote in a Sunday note. “Tech returns are typically stronger than normal when the percentage of NASDAQ names trading above their 50day moving average falls below 20%.”

He added: “High quality, higher growth and high cash return technology companies will be fine after the adjustment in real yields happens. Even if the 10yr gets to 2%, real yields will still be negative.”

That helps explain why the tech behemoth Amazon (AMZN) is on Wedbush’s list alongside value and cyclical stocks. As a whole, the list had returned 23.7% year-to-date as of March 3, compared to the S&P 500’s 1.5% and Nasdaq’s 2.4% gains during the same period.

The 16 stocks, along with their tickers, market caps, and price targets, are listed below in alphabetical order. 

To be sure, the analysts said they would automatically sell a stock in the list should it fall 25% on a relative basis versus the average move of the S&P 500 and the Russell 2000 in order to manage risk and avoid justifying a failed investment thesis.

1. Advanced Micro Devices

Ticker: AMD

Market cap: $97.56 billion 

Price target: $110.00

Source: Wedbush Securities

2. Amazon

Ticker: AMZN

Market cap: $1.5 trillion 

Price target: $4,000.00

Source: Wedbush Securities

3. Activision Blizzard

Ticker: ATVI

Market cap: $72.32 billion 

Price target: $125.00

Source: Wedbush Securities

4. Dine Brands Global

Ticker: DIN

Market cap: $1.34 billion 

Price target: $83.00

Source: Wedbush Securities

5. Fidelity National Information Services

Ticker: FIS

Market cap: $85.95 billion 

Price target: $165.00

Source: Wedbush Securities

6. Fifth Third Bancorp

Ticker: FITB

Market cap: $25.43 billion 

Price target: $39.00

Source: Wedbush Securities

7. Huntington Bancshares

Ticker: HBAN

Market cap: $16.14 billion 

Price target: $18.00

Source: Wedbush Securities

8. Harley-Davidson

Ticker: HOG

Market cap: $5.58 billion 

Price target: $42.00

Source: Wedbush Securities

9. Jack in the Box

Ticker: JACK

Market cap: $2.26 billion 

Price target: $120.00

Source: Wedbush Securities

10. Microsoft

Ticker: MSFT

Market cap: $1.7 trillion 

Price target: $300.00

Source: Wedbush Securities

11. PayPal

Ticker: PYPL

Market cap: $297.55 billion 

Price target: $300.00

Source: Wedbush Securities

12. Signature Bank

Ticker: SBNY

Market cap: $12.2 billion 

Price target: $280.00

Source: Wedbush Securities

13. Silicon Motion Technology

Ticker: SIMO

Market cap: $2.06 billion 

Price target: $75.00

Source: Wedbush Securities

14. Wix.com

Ticker: WIX

Market cap: $17.77 billion 

Price target: $420.00 

Source: Wedbush Securities

15. Williams-Sonoma

Ticker: WSM

Market cap: $10.11 billion 

Price target: $132.00

Source: Wedbush Securities

16. Zynga

Ticker: ZNGA

Market cap: $11.96 billion 

Price target: $15.00

Source: Wedbush Securities

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