Citi just added these names to its ‘high-conviction’ list of stocks — giving one over 50% upside
Citi has updated its list of its top “high-conviction” stock picks from global markets including the United States, Europe and Asia-Pacific. Those are the “high conviction, differentiated stock recommendations to generate alpha” that its analysts have selected. “We identify catalysts that will trigger outperformance and chose liquid names in which investors can build positions,” Citi said in its Feb. 1 report. The bank says it sees more gains for global stocks, giving the MSCI AC World a potential upside of 5% by end of this year. “This year, all major regions (ex-Australia) should see positive [earnings per share] growth, with most sectors contributing positively. We think this environment will ultimately favor Cyclical markets and sectors. Regions outside of the US should have more leverage to this theme,” Citi analysts wrote. Here are four new buy-rated additions in Citi’s list for the next 12 months. Mineral Resources Citi is bullish on Australian mining services company Mineral Resources , saying it offers diversified exposure to steady income streams, with earnings coming from lithium, iron ore and more. Positive factors supporting the company include earnings diversification and “clearly articulated” strategies. Citi’s target price for Mineral Resources: 71 Australian dollars ($46.8), implying nearly 20% upside. Stockland Australian property development firm Stockland has a diversified business model with rental earnings from retail, industrial, office and landlease assets, Citi noted. “We believe the residential market may be bottoming near term, with house prices likely to recover later this year, which is typically a positive for the residential landlords,” it said. The bank believes Stockland is trading at a “significant discount” to the sector and other listed residential REIT peers. Citi’s target price for Stockland: AU$5.10, or around 12% potential upside. Intuitive Surgical U.S.-listed Intuitive Surgical , which develops robotic products for minimally invasive surgery, should benefit as Covid headwinds subside and the number of procedures return to more normal levels, said Citi. “General Surgery was the largest incremental driver of procedure growth prepandemic and we expect this to continue over the next several years, which combined with international expansion, should drive the next leg of revenue growth for Intuitive,” the bank wrote. Citi’s target price for Intuitive Surgical: $428, or around 11.5% potential upside. Prosus Citi says Amsterdam-listed investment group Prosus is one of the European stocks most exposed to China and is set to be a “beneficiary of improving sentiment” to China. “We believe Prosus will take a more active approach to portfolio management and disciplined approach to capital allocation going forward,” said the bank. “Increased transparency here suggests the company will take more decisive actions to focus on (and improve) returns,” it added. Citi’s target price for Prosus: 42.50 euros ($46.2), implying 52.5% upside. — CNBC’s Michael Bloom contributed to this report.
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