Barclays has compiled a list of stocks that have dropped sharply during the market slide, but are likely to report strong earnings and have room to rise.
The list includes drug giant Eli Lilly (LLY) and athletic shoe/apparel company Under Armour (UAA) .
“Our stock screen this week highlights a few names that have pulled back sharply during the recent sell-off, but for which our analysts see the potential for positive revisions into the upcoming print as well as significant potential upside for the shares,” Barclays wrote in a commentary cited by CNBC.
Barclays chose stocks with a relative strength index of 30 or less. That means the stocks have more negative momentum than the average stock over the past 14 days, as measured by the number of days the stock fell and by how much.
Barclays has 2022 earnings-per-share estimates for the stocks that are higher than average. And it rates all the stocks as overweight.
The list also includes payment company Affirm Holdings (AFRM), homebuilder D.R. Horton (DHI), connectivity product company Qorvo (QRVO), streaming audio company Spotify Technology (SPOT), science equipment company Thermo Fisher Scientific (TMO) and cloud communications company Twilio (TWLO).
As for Eli Lilly, Morningstar analyst Damien Conover likes it, assigning it a wide moat. “Eli Lilly's innovative culture and strong financial commitment to developing the next generation of drugs set the company apart from its peers and fuel its long-term growth,” he wrote in a December commentary.
But Conover thinks Lilly is overvalued, putting fair value at $235, compared to Lilly’s close Tuesday at $248.28, up 1%.
