Stocks like Shake Shack and CarMax are among several of JPMorgan’s short-term investment opportunities heading into the second half of the year. Stocks are broadening their rally from the first half of the year, with the S & P 500 and Dow Jones Industrial Average both up more than 3% this quarter already. Both indexes touched intraday highs on Monday while the 30-stock Dow closed at a new record. The Nasdaq Composite has also rallied about 4.3% this quarter. Analyst Nicholas Rosato wrote in a Tuesday note that the firm surveyed its equity research analysts for “structural or tactical short ideas,” which resulted in several picks across a variety of sectors, including consumer, financials and industrials. Take a look at five of JPMorgan’s picks below: Shake Shack made the list with an underweight rating. The stock is up 16% this year as Shake Shack expects to grow its total revenue by 11% to 15% and open 80 restaurants, bringing its total footprint to about 600 locations. However, shares have fallen 4.6% quarter to date amid a pick-up in discounting that could weigh on its profitablity. “High promotional activity could limit visibility to drive comps F25/+,” analyst John Ivankoe said. He added there is low visibility to traffic growth for non-destination sites that could hurt the brand as it attempts to grow its market. Another restaurant stock, Cheesecake Factory , made the cut as a short pick, as JPMorgan expressed concerns about its near-term outlook. According to Ivankoe, Cheesecake Factory has “unrealized organizational/store level efficiencies” that should remain, and its cost of goods sold, or COGS, are at cycle lows, which may hurt margin expansion. The company released a strong first-quarter print, but its second-quarter revenue forecast in May fell short of expectations, per analysts polled by FactSet. The stock appears “fully valued at current levels,” Ivankoe added, putting an underweight rating on the company. Shares are up 10.4% this year, but are in the red this month. Analyst Kenneth Worthington also included Chicago-based financial services firm CME Group as a short-term play. He holds an underweight rating on shares, which have lost about 6% this year as traders have maintained a cautious stance on the stock amid a high interest rate environment. Worthington said the FMX Futures Exchange launch in September will be the “most legitimate challenger” to CME’s historical monopoly in U.S. interest rates futures trading. He added, however, that “the overhang on CME’s multiple suggests to us that FMX does not necessarily need to gain market share immediately for CME stock to not work in the near term.” Other stocks included in JPMorgan’s shorts list include used car retailer CarMax and solar energy company SunPower .
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