Bank of America’s Bold Prediction: 2 Stocks Set to Skyrocket with Double-Digit Gains

Bank of America Sees Double-Digit Upside in These 2 Stocks

The S&P 500, a widely followed benchmark index of the U.S. stock market, currently sits 14% below its all-time high of 4,793, which was reached at the end of 2021. However, there is growing optimism that new highs could be attained early next year. In this article, we delve into the Bank of America’s bullish prediction and explore the potential implications for investors. Join us as we analyze the factors driving this positive outlook and discuss two stocks, Cogent Communications and InterDigital, that are well positioned to take advantage of the anticipated rally.

Bullish Prediction

According to Bank of America’s technical research strategist, Stephen Suttmeier, there are specific bullish indicators suggesting that the S&P 500 could climb to 4,900 by next March. This represents a potential uptick of approximately 19% from current levels. Suttmeier’s analysis revolves around breadth, which refers to the level of involvement in upward swings among the underlying stocks that make up the markets. He points to upside breakouts for the weekly global advance-decline line of 73 country indices as a bullish trend continuation signal for US and global equity markets. Recent examples back his case, indicating the potential for renewed upward momentum in the S&P 500.

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Stocks to Watch: Cogent Communications and InterDigital:

Bank of America analysts have identified certain stocks that are well positioned to capitalize on the anticipated rally in the S&P 500. In this section, we examine two of their recent recommendations through the lens of the TipRanks platform.

  1. Cogent Communications (CCOI):

Despite missing analyst revenue and earnings estimates for the first quarter of this year, Cogent remains confident in its growth prospects. The company even increased its quarterly dividend, marking the 43rd consecutive increase to the dividend payment. With a current dividend annualizing to $3.74 and a high yield of 5.7%, Cogent offers an attractive opportunity for income-focused investors.

Bank of America analyst David Barden supports the Sprint acquisition, highlighting the potential for new free cash flow generation, an increase in earnings before interest, taxes, depreciation, and amortization (EBITDA), and the emergence of new sales growth vectors. Barden believes these factors represent an underrepresented opportunity for the stock. He gives CCOI shares a Buy rating with an optimistic price target of $85, implying a potential one-year gain of approximately 33%.

  1. InterDigital (IDCC)

InterDigital is a technology company specializing in research and development of wireless and video connected technologies. The company focuses on solving technical challenges in the network industry, aiming to enhance broadband efficiency, deliver superior video quality, and improve the multimedia user experience. Inter-Digital has established license agreements with leading wireless and tech companies globally, occasionally resulting in legal disputes. Notably, the company recently secured favorable rulings in cases involving Lenovo and Samsung.

In the Lenovo case, a UK court ordered Lenovo to pay $138.7 million in license fees to InterDigital, along with full payment for past sales dating back to 2007. The resolution of the Samsung case through an agreement further strengthened Inter-Digital’s financial position. These recent legal victories significantly contributed to Inter-Digital’s impressive first-quarter revenues of over $200 million, surpassing expectations by more than $101 million.

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InterDigital’s solid financial performance reflects its commitment to innovation and addressing the evolving needs of the network industry. The company’s recurring revenue for the quarter reached $101.6 million, a 2% year-over-year increase. Furthermore, Inter-Digital utilized its Q1 windfall to accelerate its capital return/share repurchase program, repurchasing 2.7 million shares.

Their analyst Tal Liani is bullish on Inter-Digital’s medium-term outlook, highlighting the company’s strong management team and the potential revenue contributions from the Samsung and Lenovo cases. Liani expects Inter-Digital to benefit from continued growth beyond wireless into consumer electronics, the Internet of Things (IoT), and the automotive industry. He notes that the company’s robust share buybacks enhance its overall attractiveness to investors.

Liani’s recent double upgrade on Inter-Digital, from Underperform to Buy, reflects his confidence in the stock’s potential. With a revised price target of $105, up from $55, Liani suggests a 23% upside over the next year.

While Inter-Digital may have flown under the radar for many analysts, the stock’s Moderate Buy consensus rating is based on two recent Buy ratings. With shares currently trading at $82.87, the average price target of $109.50 indicates a potential 32% upside.

In conclusion, the S&P 500’s potential for new highs in 2023 has garnered attention, with America’s Bank bullish prediction pointing toward a climb to 4,900 by next March. As investors anticipate this rally, stocks like Cogent Communications and Inter-Digital have emerged as promising opportunities. Cogent’s strategic acquisition and strong presence in the internet service provider industry position it for growth, while Inter-Digital’s focus on innovative wireless and video technologies and recent legal victories contribute to its positive outlook. Investors seeking exposure to the anticipated market rally should carefully consider these stocks and evaluate their potential for capitalizing on the upward momentum.