Wolfe Research recommends some consumer-focused names that investors should buy during the summer’s choppiness. Wolfe Chief Investment Strategist Chris Senyek advised clients to lean into the momentum amid what’s expected to be a rockier trading environment this summer. With that in mind, he screened the Russell 1000 for consumer staple and discretionary stocks in the top quintile of Bloomberg’s Growth and Momentum factor that have also had earnings revised upward since the end of March. “We expect Momentum to remain the dominant theme over the summer into a combination of weakening economic surprise trends, somewhat ‘sticky’ inflation readings, and choppier trading,” he told clients. Here are 10 that made the Wolfe screen: Amazon was the only megacap technology name on the list. The dominant e-commerce platform has a momentum score, measuring 12-month and one-month relative strength, of 53%, and its earnings estimates have risen 17% since the end of March. Shares have climbed more than 23% so far in 2024, through Monday, part of a group of big tech stocks credited with helping drive the broader market to new highs. Wall Street sees more upside ahead: The average analyst polled by LSEG gives Amazon a buy rating, with a consensus price target implying shares can advance more than 20% over the next year. Footwear maker Deckers also made the cut, with a 73% momentum score and a 6% swing in upward earnings revisions. It’s already been a strong year for the Hoka and Ugg parent, with shares surging about 58%. While most analysts polled by LSEG have a buy rating, the average price target suggests less than 2% upside over the next 12 months after Deckers’ latest rally. Truist Securities upgraded Deckers, based in southern California, to buy from hold in late May, citing its “best-in-class momentum” and “ample” growth opportunities. “We believe HOKA and UGG are firing on all cylinders and see meaningful upside [opportunities] ahead,” analyst Joseph Civello wrote to clients. Sports betting stock DraftKings also appeared on the Wolfe screen, with a 73% momentum score and a 270% increase in earnings estimates since the end of March. Shares are up around 8% for the year thus far but have soared 53% over the past 12 months. The majority of analysts polled by LSEG have a buy rating with a price target suggesting shares can surge more than 38%. One of those bullish analysts is Morgan Stanley’s Stephen Grambling, who reinstated his top-pick designation on Monday. Grambling had previously been concerned about legislation that would tax sports betting in Illinois. But he called those worries “overdone” while pointing to earnings upside as a catalyst for shares to continue rallying. Shares rose more than 3% Monday following Grambling’s call, which also included a reiteration of his overweight rating.
