Earlier this week, analysts revealed some of their favorite stocks to buy in the second quarter. Many Wall Street firms reiterated that even though the macro uncertainty remains high, there are still plenty of quality buying opportunities. CNBC Pro combed through the most recent quarterly research reports to find stocks with upside as the new quarter gets underway. They include: Simon Property, Spotify , Netflix , Enphase and Palo Alto Networks. Simon Property Compass Point named the real estate investment trust and mall owner a top pick for the second-quarter earlier this week. But the firm says the stock is also a name to own for the long-term. “We are perhaps most constructive on shares of SPG over the next year, given their 12% lower valuation since the start of the year despite continued demand from luxury tenants & strong tenant sales performance,” Compass Point analyst Floris van Dijkum said earlier this week. The firm added that Simon has a “high quality” portfolio with one big tenant in particular. “SPG is also the largest landlord to Apple, the true anchor of high productivity retail, and is the biggest beneficiary of luxury tenant demand,” he wrote. In addition, van Dijkum says the company’s has a “well covered” dividend that investors can rely on to go along with a robust balance sheet. “SPG has over $7.8 billion of liquidity which we anticipate to be utilized during market disruption,” he said. Meanwhile shares are down 6.5% this year, but the firm says the stock remains extremely attractive. Netflix Netflix is cementing its position as a “world class brand” and “leading innovator,” according to Bank of America analyst Jessica Reif Ehrlich. The firm listed a myriad of reasons earlier this week why the streaming giant is a top pick this quarter and beyond. They include the recent crackdown on password sharing, the newly launched ad-supported tier, new subscribers and a free-cash flow inflection point. Reif Ehrlich is also bullish on the stock heading into first-quarter earnings on April 18. “We believe 1Q23 results will mark the low point of FY23 reflecting the initial impact of password sharing efforts in select markets,” she added. Shares of the company are up 15% this year and Reif Ehrlich has a price target of $410 per share. “We highlight NFLX as our 2Q23 top pick,” she says. Palo Alto Networks The cybersecurity company is firing on all cylinders, RBC said earlier this week in its top second-quarter picks note to clients. Shares of the company are up 37.5% this year, but analyst Matthew Hedberg says the stock still has room to run. “The company should be able to grow into a growing network & endpoint security market by expanding within its customer base while increasing its reach to new customers through a larger portfolio, geographical expansion & share shift,” he says. Hedberg believes Palo Alto has a unique opportunity to take share in a rapidly burgeoning field. Other growth initiatives to watch for include expanding international opportunities, subscriptions, regulations and further security breaches, according to the firm. “We view Palo Alto as well positioned to benefit from an increasingly complex security and threat landscape and as an industry leader in security,” Hedberg said. Enphase Energy- Deutsche Bank, buy rating “Enphase is a well positioned company in the micro inverter market for solar products, with its products often seen as superior vs peers. Execution has also been impressive, with improving gross margin and continuous innovation with new product generation brought into the market every 12-18 months, allowing for ENPH a value-based pricing.” Simon Property-Compass Point, buy rating “We are perhaps most constructive on shares of SPG over the next year, given their 12% lower valuation since the start of the year despite continued demand from luxury tenants & strong tenant sales performance. … . SPG has over $7.8 billion of liquidity which we anticipate to be utilized during market disruption. … .High Quality Portfolio. … .Dividend Well Covered. Netflix- Bank of America, buy rating “Supported by its world class brand, leading global subscriber base ( > 230mn ) and position as a leading innovator, we believe Netflix is poised to outperform driven by four main drivers. … .We highlight NFLX as our 2Q23 top pick. … .We believe 1Q23 results will mark the low point of FY23 reflecting the initial impact of password sharing efforts in select markets.” Spotify- Wells Fargo, outperform rating “Margin expansion over next ~18 months, resulting in re-rating on a stronger long-term financial outlook. … .We expect SPOT to outperform expectations on margin expansion over the next ~18 months, resulting in a re-rating on a stronger long-term financial outlook. SPOT has always been a strong consumer product, so the transition is about becoming a stronger business in the eyes of the market. Palo Alto Networks- RBC, outperform rating “The company should be able to grow into a growing network & endpoint security market by expanding within its customer base while increasing its reach to new customers through a larger portfolio, geographical expansion & share shift. … .We view Palo Alto as well positioned to benefit from an increasingly complex security and threat landscape and as an industry leader in security.”
