Stocks with tactical downside in a bear market bounce

Aug. 08, 2022 7:59 AM ETNetflix, Inc. (NFLX)SPY, XLV, XLI, XLK, XLP, XLY, AMD, GPS, TXN, BBWI, JWN, AMAT, LRCX, KLAC, CMG, ILMN, ETN, ANSS, ROK, W, SHOP, ABNB, DKNG, CDAY, XLC, BYND, SP500, CHWY, BEAM, UBy: Kim Khan, SA News Editor6 Comments

Bull vs bear

Florent Molinier

Barclays is skeptical about a Goldilocks narrative for stocks where weak data and peak inflation push central banks to the dovish side.

Investors should fade the recent rally, but keep in mind that sentiment is still very bearish and could extend a short squeeze, according to equity strategist Emmanuel Cau.

Barclays screened for stocks with "tactical downside," or "stocks that have outrun their price targets over the course of what could prove to be a bear market bounce."

We "screened for a minimum price return of 15% QTD, which corresponds roughly to the top quintile of the S&P 500 (SP500) (SPY). We then further narrowed the list to Equal Weight and Underweight-rated stocks with double-digit downside to their current price targets. Finally, we added a tradability factor, limiting the results to stocks with an average daily trading value of at least $50 million over the last 30 days."

The stocks by sector are:

  • Communication Services (XLC)
  1. Netflix (NASDAQ:NFLX), rating Equal Weight, price target $170, downside to price target 25%
  • Consumer Discretionary (XLY)
  1. Airbnb (ABNB), EW, $100, 13%
  2. Bath & Body Works (BBWI), EW, $33, 16%
  3. Chewy (CHWY), EW, $28, 34%
  4. Chipotle (CMG), EW, $1,400, 12%
  5. DraftKings (DKNG), EW, $14, 17%
  6. The Gap (GPS), UW, $6, 39%
  7. Nordstrom (JWN), UW, $21, 16%
  8. Wayfair (W), UW, $57, 12%
  • Consumer Staples (XLP)
  1. Beyond Meat (BYND), EW, $25, 27%
  • Healthcare (XLV)
  1. Beam Therapeutics (BEAM), EW, $38, 40%
  2. Illumina (ILMN), UW, 33%
  • Industrials (XLI)
  1. Eaton (ETN), UW, $124, 17%
  2. Rockwell Automation (ROK), EW, $212, 16%
  • Info Tech (XLK)
  1. Applied Materials (AMAT), EW, $95, 13%
  2. AMD (AMD), EW, $85, 13%
  3. Ansys (ANSS), UW, $245, 13%
  4. Ceridian (CDAY), UW, $52, 12%
  5. KLA (KLAC), EW, $325, 18%
  6. Lam Research (LRCX), EW, $450, 14%
  7. Shopify (SHOP), EW, $30, 28%
  8. Texas Instruments (TXN), UW, $150, 18%
  9. Unity Software (U), EW, $35, 22%

See Credit Suisse's overview of the new stock market leadership.

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