The major market indexes advanced yesterday, continuing their momentum from last week into the first session of the new year. The S&P 500 notched another record close in yesterday’s trading session, gaining 0.6% to finish at 4,796.56. The index has returned more than 27% over the past year. It also outperformed the Dow Jones Industrial Average by 8.16% points and the Nasdaq Composite by 5.50% points last year, marking the widest margin of outperformance by the S&P 500 against both those indexes in the same calendar year since 1997.
The Fed’s aggressive purchases of government-backed debt to stimulate the economy during a recessionary environment contributed to the market indexes’ record-breaking run. Most Federal Reserve governors see three interest rate hikes this year. With the economy expected to continue its strong recovery and companies reporting higher than expected earnings in 2022, the bull run for equities seems far from over. Indeed, according to a FactSet report, analysts expect the S&P 500 to report 9.2% earnings growth in 2022, which is higher than the 10-year average (annual) earnings growth rate of 5%.
Given this backdrop, we think it could be wise to add S&P 500 stocks Twitter, Inc. (TWTR), Carnival Corporation & plc (CCL), Viatris Inc. (VTRS), and Under Armour, Inc. (UAA) to one’s watchlist. Wall Street analysts expect these stocks to rally by more than 20% in price in the coming months.
Twitter, Inc. (TWTR)
Famous micro-blogging and social networking service provider TWTR allows public self-expression and conversation in real-time. The San Francisco company offers products and services for users, advertisers, developers, and data partners. Also, its products and services include Twitter, Promoted Tweets, Promoted Accounts, and Promoted Trends.
On January 1, 2022, TWTR announced that it had closed the sale of MoPub to AppLovin Corporation (APP). GM of Revenue Products, Bruce Falck, said, “With the sale of MoPub completed, we continue to concentrate our efforts on enhancing ads across our platform. Our goal is to deliver faster growth in key areas and accelerate our product development.”
TWTR’s revenue for its fiscal third quarter, ended September 30, 2021, increased 37% year-over-year to $1.28 billion. The company’s average monetizable DAU increased 13% year-over-year to 211 million. Also, its net cash from operating activities increased 81.1% year-over-year to $388.98 million.
Analysts expect TWTR’s EPS for its fiscal 2022 to increase 405.3% year-over-year to $0.96. The company’s revenue for fiscal 2021 is expected to grow 37% year-over-year to $5.09 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past six months, the stock has declined 38% in price to close yesterday’s trading session at $42.66. However, Wall Street analysts expect the stock to hit $66.73 in the near term, indicating a potential 56.4% upside.
Carnival Corporation (CCL)
Miami, Fla.-based CCL is a leisure travel company that operates across North America, Australia, Europe, and Asia. Its portfolio consists of Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises, Costa Cruises, AIDA Cruises, P&O Cruises, and Cunard.
On Dec. 20, 2021, CCL announced its partnership with Jabil, Inc. (JBL) to launch the first Experience Internet of Things consumer wearables manufacturing and fulfillment location in the Florida/Caribbean region. The partnership will likely enable the company to fulfill the increased demand for IoT wearables.
For its fiscal fourth quarter, ended Nov. 30, 2021, CCL’s revenue increased 3,685.2% year-over-year to $1.28 billion. The company’s passenger revenue came in at $674 million, representing a 16,750% year-over-year increase. Also, its customer deposits increased 56.5% year-over-year to $3.50 billion.
For fiscal 2023, analysts expect CCL’s EPS to increase 746.2% year-over-year to $1.68. Its revenue for fiscal 2022 is expected to increase 807.2% year-over-year to $15.30 billion. Also, over the past nine months, the stock has declined 19.3% in price to close yesterday’s trading session at $21.41. However, Wall Street analysts expect the stock to hit $26.67 in the near term, indicating a potential 24.5% upside.
Viatris Inc. (VTRS)
Healthcare company VTRS in Canonsburg, Pa., develops, licenses, manufactures, markets, and distributes generic drugs, complex generics, biosimilars, and active pharmaceutical ingredients (APIs) worldwide. The company offers medications in various therapeutic areas like oncology, immunology, endocrinology, ophthalmology, and dermatology.
On Dec. 29, 2021, VTRS announced that it had won court decisions that affirm the U.S. Patent and Trademark Appeal Board’s prior rulings that found the challenged claims of Sanofi’s Lantus SoloSTAR device patents unpatentable.
VTRS’ net sales for its fiscal third quarter, ended September 30, 2021, increased 53% year-over-year to $4.52 billion. The company’s adjusted EBITDA increased 68% year-over-year to $1.69 billion. And its adjusted net earnings came in at $1.19 billion, representing an increase of 76% year-over-year.
Analysts expect VTRS’ EPS for its fiscal 2022 to increase 0.3% year-over-year to $3.72. Its revenue for fiscal 2021 is expected to increase 49.7% year-over-year to $17.88 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has declined 24.1% in price over the past year to close yesterday’s trading session at $14.21. However, Wall Street analysts expect the stock to hit $23.50 in the near term, indicating a potential 65.3% upside.
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Under Armour, Inc. (UAA)
UAA develops, markets, and distributes branded performance apparel, footwear and accessories for men, women, and youth. The Baltimore, Md., company offers its apparel in compression, fitted, and loose types of wearing in hot and cold. Its brand portfolio includes HEATGEAR, COLDGEAR, and ARMOUR FLEECE.
On Nov. 10, 2021, UAA announced that it had selected Amazon Web Services, Inc. as its cloud provider for SAP. The partnership will likely enable UAA to enhance security, increase resilience and provide valuable insights across its business.
For its fiscal third quarter, ended September 30, 2021, UAA’s revenue increased 7.9% year-over-year to $1.54 billion. The company’s adjusted income from operations increased 42.2% year-over-year to $188.82 million. In addition, its adjusted net income came in at $144.81 million, up 22.6% year-over-year.
For fiscal 2021, UAA’s EPS and revenue are expected to increase 392.3% and 25.5%. respectively, year-over-year to $0.76 and $5.62 billion. It surpassed its consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has retreated 10% in price to close yesterday’s trading session at $21.24. However, Wall Street analysts expect the stock to hit $32.31 in the near term, indicating a potential 52.1% upside.
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TWTR shares were trading at $41.38 per share on Tuesday morning, down $1.28 (-3.00%). Year-to-date, TWTR has declined -4.26%, versus a 0.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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