Bank of America analysts this week named a slew of companies they believe are gaining market share in this tough economic environment and therefore stocks have more room to maneuver. It was a common theme in recent research from Bank of America, with the company naming a number of stocks positioned to gain market share. They include: Analog Devices, TJX Companies, Zeta Global, Costco and Union Pacific. TJX Companies analyst Lorraine Hutchinson says the discount retailer has room to grow, especially as shoppers look to save money by trading down. Shares of the company are up 18% over the past year. “Our buy rating reflects our view that TJX will continue to drive prices higher domestically as it attracts new customers through strong inventory management and excellent execution,” she said. . Hutchinson highlighted TJX’s leadership, noting its track record of delivering to consumers and shareholders. “We see potential for upside competition and margins if traffic momentum continues,” she said. TJX also just released a rather mixed quarterly report, but the analyst said investors should stay calm and look past the results. Perhaps more importantly, Hutchinson still sees room for long-term growth. “We are maintaining our Buy rating as we view TJX as a market share gainer that is well positioned to benefit from declining trading and high levels of inventory availability,” she said. Costco The big box retailer is firing on all cylinders, the company said after Costco released its fiscal second quarter earnings report. “COST drives continued traffic growth into the second quarter and into February,” said analyst Robert Ohmes. The company finds that “consumable strength and adhesion trends drive compositions,” he added. Indeed, Jim Cramer’s Investment Club said it was the “best run retailer” in the United States. Shares are up more than 4% this year, but Ohmes said the stock’s valuation is still attractive. Costco is also on the company’s prestigious Top Picks list. Bank of America also likes Costco’s robust sourcing model to go hand-in-hand with “stable and growing EBITDA margins.” Ohmes said that gives the retailer a competitive edge over its peers. For these reasons, investors should buy the shares, he said. “We reiterate our buy and continue to view Costco as a well-positioned LT given: market share gains driven by COST’s strong value proposition and price positioning,” he wrote. Zeta Global analyst Koji Ikeda recently highlighted Zeta Global’s latest quarterly report, noting that the results showcase the strength of the software marketing solutions company. “In an environment where many marketing and advertising technology companies are seeing moderation in customer spending, Zeta’s fourth-quarter performance suggests the platform offers a strong value proposition,” Ikeda said. The analyst cited the benefits of revenue growth due to healthy customer additions. “We believe the 4Q results support our view that the business is differentiated, which should translate to continued good execution and potential for upside estimates,” Ikeda added. The company said that increasing traffic on the platform over time leads to greater profitability and additional revenue. “We believe Zeta Global has the potential to gain share in digital marketing and advertising spend budgets,” Ikeda said. The shares are up almost 35% this year. Analog Devices “Best-in-class share gainer + FCF leader. Reiterate Buy, increase PO to $230 (from $215) after another strong quarter highlighting resilience in automotive demand and industrial diversity. …We rate ADI Buy on plans for growth in communications, automotive and industrial markets as well as best free cash flow growth We rate ADI at the high end of competitors due to growth potential of ADI and free cash flow generation Union Pacific “Raise to Buy; CEO Fritz steps down with an activist call for operational expertise. … On Sunday, the UNP issued a statement announcing that Chairman and CEO Lance Fritz would step down in 2023 just hours after activist investor Soroban Capital called for his departure. … We are increasing our PO to $241 from $218 on 20x our 2024 EPS of $12.05, given increased confidence in the path to operational improvement and potential for earnings acceleration. Costco “COST Drives Continued Traffic Growth Through Q2 and Through February…Consumables Strength and Membership Trends Drive Comps…We Reiterate Our Purchase (and Addition to the US 1 List of BofA) and continue to view Costco as a well-positioned LT given: 1) Market share gains driven by COST’s strong value proposition and price positioning, 2) potential store acceleration given excess demand , 3) competitive advantages offered by COST’s sourcing model, 4) stable and rising EBITDA margin, and 5) attractive valuation against record ROIC.” TJX Companies “We are maintaining our Buy rating as we view TJX as a market share gainer that is well positioned to benefit from lower trading and high levels of inventory availability. …. We see potential for increased competition and margins if traffic momentum continues.” Zeta Global “In an environment where many marketing and advertising technology companies are seeing moderation in customer spending, Zeta’s fourth quarter performance suggests that the platform offers a solid value proposition. … We believe 4Q’s results support our view that the business is differentiated, which should lead to continued good execution and potential for upside estimates. …We believe that Zeta Global has the potential to be a winner in terms of digital marketing and advertising spend budgets…”
Stocks like TJX and COST have more leeway