Oppenheimer sees the S&P 500 reaching 4,600 by June – Here are 2 stocks he’s using to bet on a rebound


As the saying goes, “as January goes, so goes the year”, and if this is also to play out in 2023, then the omens are good for the stock market.

According to Ari Wald, head of technical analysis at Oppenheimer, the S&P500 “reversed its 2022 downtrend last week.”

And the good news is that over the next few months, Wald expects “the strength to continue.” While Wald expects the S&P to reach 4,400 by the end of the year, he forecasts that it will first “break over” at 4,600 in 1H23.

Wald also has bad news for naysayers, who might think the rally is unsustainable. “While market bears have pointed to bullish sentiment as a counter argument against continued gains, we don’t see such foam in our work,” he explained.

Meanwhile, Wald’s fellow equity experts at Oppenheimer take inspiration from his encouraging analysis and zero in on two names they see as the “best picks” for 2023. Are other Street experts on the same wavelength ? Let’s take a closer look.

RLJ Lodging Trust (RLJ)

The first Oppenheimer pick we’ll look at is RLJ Lodging, a real estate investment trust (REIT). The company operates in the hospitality industry, particularly the high-margin luxury variety. RLJ owns 97 hotels, offering 21,400 rooms, spread across 23 states and all of them are located in markets the company considers to have “attractive long-term growth prospects.” The company’s upscale hotels include Courtyard by Marriott, Hilton Garden Inn and Embassy Suites, among others.

It’s no secret that hotels have been hit hard by the Covid-19 pandemic, and RLJ has taken a heavy hit, posting losses for the first time in over a decade in 2020. However, since the reopening, things got back on track, and that was evident in the company’s latest earnings report – for 3Q22.

Revenue rose 36% year-over-year to $318 million, beating Street’s forecast of $7.72 million. As a sign business is poised to reach pre-Covid levels, the company generated a pro forma RevPAR (revenue per available room) of $137.09 during the quarter, or 94.5 % of 2019 levels. FFO (funds from operations) hit $0.40, also beating Street’s expectations for $0.38.

Looking ahead to the year ahead, Oppenheimer analyst Tyler Batory considers RLJ his “top choice in the accommodation REIT sector for 2023.”

“We estimate the company will experience the fastest revenue growth in the space this year, at 13%,” Batory explained. “This will be driven by its exposure to urban markets and favorable comps. We believe that urban markets should perform better in 2023 given the increase in international demand, the continued recovery of business travel and strong trends in leisure/group activities. We also believe the company has a competitive advantage as its financial flexibility allows it to pursue multiple avenues of capital allocation at the same time.

These comments underpin Batory’s outperform (i.e. buy) rating, while its price target of $17 suggests the stock will climb 35% over the 12-month period. (To see Batory’s prize list, Click here)

Elsewhere on Wall Street, the stock receives 2 more buys and 1 sell, all culminating in a moderate buy consensus rating. The forecast calls for 1-year gains of around 15%, given that the average target stands at $14.50. As an added bonus, the company pays regular dividends which currently yield 1.64% per year. (To see RLJ Stock Forecast)

HashiCorp, Inc. (HPC)

The next Oppenheimer-backed name we’ll look at is HashiCorp, a company involved in the ongoing digital transformation. Operating as an infrastructure software company, HashiCorp helps other companies operate in the cloud. Automated offerings – with a focus on open source products – can help businesses large and small in all industries accelerate the time it takes to get a product ready for commercial use, reduce operating expenses, and generally improve workflow. Essentially, HashiCorp is helping its customers adopt a more cohesive operating model.

The company is relatively new to the public markets, having gone public in late 2021, and like the majority of tech stocks it has suffered badly in 2022; shares are down 62% since public debut.

That hasn’t stopped the company from posting strong growth while beating expectations, as seen in the latest financial statements – for the third quarter of fiscal year 2023 (October quarter). Revenue rose 52% year over year to $125.3 million, beating the street call by $14.16 million. Adj. EPS came in at -$0.13, a better performance than the -$0.31 forecast by analysts. The outlook was also promising; for FQ4, the company expects revenue of between $123 million and $125 million, against a consensus of $119.97 million, while WO. EPS is expected in a range between -$0.23 and -$0.21 against the street at -$0.26.

Assessing HashiCorp’s prospects, Oppenheimer analyst Ittai Kidron added the stock to his “top picks” for 2023.

Explaining his bullish stance, the 5-star analyst said, “HashiCorp has established itself as a critical partner for customers looking to transition to multi-cloud architectures. As the cloud transition continues to gain momentum and HashiCorp enjoys a dominant brand/market share position, we see a long-term growth opportunity that can support HashiCorp’s strong growth. The expansion into security and networking offers additional benefits, in our view… Coupled with an attractive valuation, we view HCP as a core long-term holding,” Kidron said.

Kidron expresses confidence with an Outperform (i.e. Buy) rating to accompany a price target of $42. Investors could pocket gains of 30.5% if Kidron’s forecast hits the target over the next 12 months. (To see Kidron’s track record, Click here)

Overall, HashiCorp recently attracted a total of 10 analyst ratings, with 7 buys and 3 taken for a Moderate Buy consensus rating. HCP shares are priced at $32.18 and have an average price target of $37.63, giving the stock about 17% upside over the one-year period. (To see HashiCorp Stock Forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.



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