Yahoo Movies BMO stock chief Brian Belski is bullish because ‘investors are nervous’ and ‘positioned for more downside’ — here are 3 easy ways to apply that contrarian mindset
The S&P 500 just had its worst start to a year since 1939 and investors are in panic mode. But according to BMO Capital Markets’ chief investment strategist Brian Belski, a rebound could be on the horizon.
“I’m bullish. I believe in our companies here in the U.S.,” he says in a recent interview with CNBC. “I will tell you this, that investors are nervous. They are positioned for more downside.”
Sentiment tends to be the lowest right at a market’s bottom. If you share Belski’s view and want to be a contrarian, here are three stocks that BMO Capital Markets finds particularly attractive.
Sign up for our MoneyWise newsletter to receive a steady flow of actionable ideas from Wall Street's top firms.
Microchip Technology (MCHP)
Microchip Technology makes microcontroller, mixed-signal, analog and flash-IP integrated circuits for a wide range of industries. Its solutions are used by more than 120,000 customers around the world.
The semiconductor industry isn’t exactly a market favorite at the moment, and Microchip’s stock price reflects that. Year to date, the shares are down about 24%.
That could give contrarian investors something to think about, given how well Microchip’s core business is doing. In Q1, the company generated record net sales of $1.84 billion, up 25.7% from a year ago. Operating cash flow came in at $747.7 million, also marking a new record.
BMO Capital Markets analyst Ambrish Srivastava has an ‘outperform’ rating on Microchip and a price target of $85 — roughly 32% above where the stock sits today.
HubSpot (HUBS)
As one of the leading providers of customer relationship management software, HubSpot was a market darling in 2020 and most of 2021.
But momentum has taken a sharp turn. Trading at $310 apiece today, the stock is down a staggering 64% from a top of $866 last November. Of course, you’d have a hard time knowing that from its latest earnings report.
In Q1, total revenue grew 41% year over year to $395.6 million, driven by a 42% increase in subscription revenue. HubSpot earned an adjusted net income of 54 cents per diluted share for the quarter, also marking a substantial improvement from the 31 cents earned a year ago.
BMO Capital Markets analyst Keith Bachman recently lowered his price target on HubSpot from $485 to $405. However, he maintained an ‘outperform’ rating on the stock, and the new price target still implies a solid upside of 30%.
Cigna (CI)
Unlike the previous two picks, Cigna shares have held up well in 2022. The healthcare insurance giant is up 10% year to date, substantially outperforming the S&P 500’s double-digit decline.
According to BMO Capital Markets analyst Matt Borsch, the stock could see even more gains ahead. On Monday, Borsch raised his price target on Cigna from $300 to $320 while reiterating an ‘outperform’ rating. The new price target suggests a potential upside of 25%.
Cigna’s business is on the right track. The company added 698,000 customers in Q1, bringing its total medical customer base to 17.8 million.
Revenue grew 7.4% year over year to $44 billion for the quarter, while adjusted income from operations per share increased 27% to $6.01.
Sign up for our MoneyWise newsletter to receive a steady flow of actionable ideas from Wall Street's top firms.
More from MoneyWise
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
