"Lower oil prices may reduce the amount of cash returned to E&P shareholders but this is where the complaint of OFS stocks not keeping pace with oil prices provides an opportunity," Wicklund writes.
While the retreat in oil prices from four-year highs has lowered the outlook for deepwater stocks, Wicklund says E&P companies' conservative budgets means that onshore and shallow water activity will not be hurt and "the recovery is well underway."
Wicklund's top picks in pressure pumping include Halliburton (HAL -1%), ProPetro (PUMP -0.1%) and FTS International (FTSI -1.9%); in completions and production services, Wicklund likes Nine Energy (NINE -1.2%), C&J Energy (CJ -3.1%) and Solaris Oilfield Infrastructure (SOI +0.9%); in equipment manufacturing, he prefers Cactus (WHD -1.9%); and the favorite stocks in frac sand are U.S. Silica (SLCA -2.5%) and Hi-Crush Partners (HCLP -0.9%).
Morgan Stanley Chief U.S. Equity Strategist Michael Wilson expects to see "a choppy, range-trading index for years," and the firm selects 30 stocks it believes will offer the best ways to play a sideways market over the next three years.
Among his favorites is Alphabet (NASDAQ:GOOGL), as "core search continues to deliver strong growth, especially on mobile... but even in the 20-year old desktop business, which we view as a cash annuity."
JPMorgan Chase's (NYSE:JPM) "push into new markets, opportunity to gain share, efficiency improvements, and benefit from deregulation drive our positive long-term view."
Philip Morris (NYSE:PM) offer a "compelling risk-reward as tobacco weakness is overstated."
UnitedHealth (NYSE:UNH) is "furthest along integrating assets through through the healthcare system" among managed care organizations.
Catalyst #1 is a board and management focused on maximizing shareholder value.
Catalyst #2 is possible Russell 2000 inclusion should the bank grow its market cap to $150M by early May 2019.
Catalyst #3 is the that the bank just might make that $150M by the May 11 cutoff this year. With today's 14% rally, the market cap has just edged over $150M. The forced buying for this low-volume name could send shares into the high $20s.
Calling Ares Commercial Real Estate (ACRE +3.3%) a deep value opportunity with improving financial performance and a significant valuation discount, analyst Kenneth Bruce upgrades to Buy from Underperform.
Lame growth (in part thanks to the bank's regulatory issues and resulting Fed restrictions) is fully baked into the stock price, says analyst David Konrad, giving Wells Fargo (NYSE:WFC) a two-notch upgrade from Underperform to Outperform.
Instead, look to positive catalysts like lower expenses going forward and a likely pass of the Fed's stress tests.
Conrad's $61 price target suggests 16.5% upside from Friday's close.
First up is Long Pond Capital's John Khoury, and he sees 60% upside in D.R. Horton (NYSE:DHI). The company, he says, is focused on the entry-level homebuyer - the healthiest part of the market. But what about rising interest rates? Old news at this point, argues Khoury.
Shares have moved higher since Khoury hit the stage, now up 0.85% on the session.
Mizuho and BMO are both recommending buys on Macerich (NYSE:MAC) after the announcement last night of CEO Arthur Coppola's retirement.
His exit clears the way for a sale they say. Mizuho's Haendel St. Juste suggests a private market NAV value of $69 per share (vs. the current $57.55). He takes note of all-time highs in "dry powder" looking to be put to work by private-equity firms.
Keep an eye on Taubman Centers (NYSE:TCO) as well, says St. Juste, as it could be a beneficiary of M&A animal spirits in the mall sector.
The selloff in chipmakers over concern about iPhone weakness is overdone, says analyst Vijay Rakesh, noting even those names with little exposure to Apple are being punished.
He suggests buying ON Semiconductor (ON -6.9%), Cypress Semi (CY -4.5%), and Autoliv (ALV -1.3%) - each of which have less than 5% revenue exposure to the iPhone.
He's also still bullish on Intel (INTC -3.2%) and Micron (MU -5.2%) - each of which have less than 10% exposure.
Broadcom (AVGO -3.3%) could be far more affected than those others, but Rakesh is even bullish on that name. "One of he best-run companies we cover," he says, and notes July quarter guidance could see a positive impact from iPhone 9/iPhone XX builds.
It's been a rough 2018 for Santander Consumer (NYSE:SC) thanks to investor concern over what may or may not be deteriorating credit metrics.
Alongside uncertainty about what management has been saying, recent news reports of troubling signals in the U.S. subprime auto lending space have made for downward catalysts.
These concerns are misplaced, says BTIG's Mark Palmer. Santander is in a far different class than the smaller subprime lenders facing troubles. For one, it has highly sophisticated credit-decision models, and for another, it has the backing of parent Banco Santander (which owns more than 68% of SC).
Don't forget ample excess capital on the books at SC, as well as the potential for the parent to just go ahead and buy out the remaining shares it doesn't already own.
Palmer sticks with a Buy and $21 price target, suggesting about 40% upside.
U.S. shale oil output is surging but "the U.S. refining system is close to being maxed-out on the amount of shale oil it can process," but Morgan Stanley says some energy stocks should benefit.
Stanley also sees limited export opportunities for U.S. shale, all of which means light oil may soon trade at a discount to compete overseas - and that's good news for some refiners that process light crude, such as Delek US (DK +1.2%), HollyFrontier (HFC +1.3%) and Andeavor (ANDV +1.8%).
Canadian oil sands producers, which blend their heavy crude with lighter grades, also should reap rewards from discounted U.S. light oil; Stanley says Cenovus Energy (CVE -1.3%) and MEG Energy (OTCPK:MEGEF +1.6%) have the most exposure to light oil prices.
The firm likes Continental Resources (CLR +0.6%), Oasis Petroleum (OAS +3.2%) and Whiting Petroleum (WLL +0.4%) as drillers of North Dakota's Bakken shale that produce crude that's better suited to making middle distillates, and it also favors drillers with more transportation options that make it easier to export, including Encana (ECA +1.3%), Occidental Petroleum (OXY +0.5%) and Pioneer Natural Resources (PXD +1.7%)
CLR "straddles both of these buckets and is therefore our most preferred way to retain exposure to the positives of U.S. shale while minimizing the risk associated with a potential oversupply of ultra-light crudes," Stanley says.
Earlier: Delek US big winner from Permian Basin bottlenecks, Tudor Pickering says (April 16)
Three-month implied volatility on the Health Care Select Sector SPDR (NYSEARCA:XLV) is low compared to that on the S&P 500, says Barclays' Maneesh Deshpande. This, even as the political rhetoric on drug prices has died down, and the rush of cash repatriation provides "firepower for transformational M&A."
Aircraft makers have been hinting at higher prices for narrow-body planes for some time, and with traffic growth up 5%-7% and five- to 10-year backlogs for Boeing 737s and Airbus A320s, Humphrey thinks both companies will announce rate increases up to 2021, news that could come as soon as Q2 or Q3.
Boeing shares have doubled in the past 12-18 months while Airbus has "greater longer-term leverage to profitability," as the A350 program matures, Humphrey says, and "both companies have a similar product offerings and industry position, yet Boeing’s market capitalization is about two times that of Airbus."
Finally, Humphrey also sees less trade risk for Airbus, as the danger of weakening international relations for the U.S. has "risen considerably," especially for Boeing.
A bullish item on Corporacion America (CAAP +4.4%) by Free Cash Flow 50 is Seeking Alpha's Top Idea of the Day.
Argentina is one of the few untapped nations left for low-cost carriers to enter, says the author, but the government is set on reforming archaic airline policies, with the goal of doubling air traffic over the next four years. Corporacion America is perfectly positioned to benefit.
Energy stocks are set to benefit from the shale boom, due to increased efficiencies among companies and fewer participants that are driving projects that are at or below shale on the oil cost curve, which makes U.S. energy more viable overall, Goldman Sachs analysts say.
"Non-shale scale" projects in total will not have enough volume to contribute to prolong the global oversupply in oil once shale decelerates, which should occur after 2020, making scale a major focus for the sector, Goldman's Brian Singer explains.
Singer says non-shale scale leads him to be more optimistic about long-term oil prices, seeing WTI crude remaining at the upper end of his $50-$55/bbl range after 2020.
Non-shale scale, where consolidation has played a role, favors energy majors, where Goldman maintains a Buy rating on Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP).
Shale scale prompts the firm to reiterate Buy ratings on Occidental Petroleum (NYSE:OXY), EOG Resources (NYSE:EOG) and Pioneer Natural Resources (NYSE:PXD).
Near-term bottlenecks in the Permian Basin and western Canada further enhance size as critical for near-term execution, which Goldman says boosts Suncor Energy (NYSE:SU), Andeavor (NYSE:ANDV) and PDC Energy (NASDAQ:PDCE) as well as OXY and PXD.
Northcoast Research expects Dentsply (NASDAQ:XRAY) to unveil a significantly improved competing product to Align's (NASDAQ:ALGN) Invisalign at the American Academy of Orthodontics conference next month.
Given Align's fancy valuation and a new competitive product on the horizon, it would be appropriate for investors to use caution in the short-term, says Northcoast.
Align, so far, is shrugging off the news, up 1.6% on the session. XRAY is up marginally.
Lower premiums can be offset through increased market-share and volumes to counter the dominance of the FHA in the mortgage insurance market, says Palmer, reiterating his Buy rating and $18 price target.
Chevron (NYSE:CVX) shares have tumbled into correction territory but may be poised for a comeback so long as crude oil prices hold some of their recent gains, says Miller Tabak equity strategist Matt Maley.
CVX, down 14% from its January highs, has diverged over the last two months from crude oil, to which it is typically closely tied, Maley cites as a technical reason for advocating the stock.
In the near term, CVX should enjoy a rebound if crude oil hold on to its recent bounce near the $60/bbl level, Maley maintains.
CVX also is a relatively high dividend yielding stock of nearly 4%, which Maley says may benefit investors as they wait for market uncertainties to dissipate.
Despite today's sea of red, Morgan Stanley's top U.S. equity strategist Michael Wilson thinks the market looks attractive ahead of a potentially strong earnings season and may open up a buying opportunity.
From a value perspective, Wilson says the S&P 500 still looks relatively cheap at a forward P-E ratio of ~17x and believes the potential negative catalysts troubling investors have been priced into stock prices at this point.
For investors looking to buy the dip, Wilson thinks energy might prove a sound place to start, as the group has dropped ~8% YTD, more than any other sector.
Wilson also cuts the utilities sector to Equal Weight following recent "tactical outperformance," after upgrading the group in early February on his expectation that rates would retrace some of their move and relative earnings revisions had been unduly burdened by tax benefits; now that both factors are "above abating," he is downgrading the sector.
A recent report from Wells Fargo's Lawrence Biegelsen tracks four medical equipment companies he covers for sales force hiring and attrition trends using publicly available LinkedIn data.
Nevro (NYSE:NVRO) led the way with gross hiring up 10%, followed by Globus Medical (NYSE:GMED) up 8%, K2M (NASDAQ:KTWO) up 6% and NuVasive (NASDAQ:NUVA) up 4%.
Wells notes that NUVA has indicated it plans to make hiring investments in 2018. In the U.S., NUVA will hire selectively in markets where they already have a strong hold and additional sales reps can further their current penetration.