Welcome to the bull market! The S&P 500 officially entered the bull-market last week. Some argue it started in October, after stocks hit their lows. My December prediction of a new bull market beginning in Q1 2023 now seems accurate. With this bull market, it’s time to hunt for home run stocks to buy.
Two reasons support this. Firstly, entering the bull market tends to make Wall Street bullish towards stocks. Goldman Sachs (NYSE:GS) predicted on June 12 that more stocks would rally. They forecast the S&P 500 reaching 4,500 by year’s end.
Secondly, the 2022 bear market relied on a misconception. Many believed the Fed’s rate hikes would devastate the economy and growth stocks. I disagree. Therefore, I believe numerous undervalued, high-return stocks are ripe for purchase.
Super Micro Systems (SMCI)
Super Micro Systems (NASDAQ:SMCI) sells server and storage systems. The company’s servers boast improved thermal capacity, supporting high-performing CPUs and GPUs – vital for AI.
Their Universal GPU servers work well with multiple industry-standard GPUs. Their X13 PCIe offering supports up to 10 next-gen accelerators, perfect for AI and HPC workloads. Accelerators are crucial in building AI systems.
On June 6, Rosenblatt initiated SMCI stock coverage with a Buy rating and a $300 price target, according to The Fly. Rosenblatt praises SMCI’s strong business model, aligning with success factors in an AI-driven world.
SMCI has rocketed up nearly 220% this year. Yet, with a forward price-earnings ratio of 24, it still seems undervalued given its massive potential. Therefore, I consider SMCI a promising stock to buy no
Stem (STEM)
Street analysts are starting to warm up to Stem (NYSE:STEM), whose systems utilize AI to manage companies’ electricity usage and utilization of renewable energy.
Investment bank Janney Montgomery launched its coverage of STEM with a $12 price target and a “buy” rating. Noting that Stem has forecast that its adjusted EBITDA will turn positive in the second half of this year, the bank believes that the shares can rally if the company just meets that goal.
Another investment bank, Evercore ISI, launched coverage of Stem on May 24 with an “outperform.” The firm expects the company to expand into new sectors, including ” electric-vehicle charging, wind power and hydrogen fuel, ” Seeking Alpha reported. Evercore placed an $11 price target on the shares.
Stem’s shares are poised to surge as Wall Street gains a greater appreciation of the company’s huge potential due to its use of powerful AI and its very high leverage to the EV and energy revolutions.
ServiceNow (NOW)
As I’ve pointed out in past columns, ServiceNow’s (NYSE:NOW) systems are very attractive to companies because the products save them a great deal of money by automating some of their IT functions. Further, the firm allows companies to build new IT systems very easily.
Moreover, the company’s intensive utilization of the cloud makes its products very easy to use, and it has greatly intensified its utilization of AI. Discussing the latter point, Seeking Alpha columnist Zen Analyst noted that the company had launched ” proprietary generative AI capabilities, and a strategic integration with OpenAI.” Additionally, it’s offering ” Now Assist for Search,” which provides companies with AI-based customer service capabilities.
Showing the strength of the company’s products, it was named “a Leader in the 2023 Gartner Magic Quadrant for Enterprise Low-Code Application Platform.” Gartner is a very prestigious IT research firm.
NOW explained that its “low-code platform allows for people of all skill levels to build enterprise-grade applications that meet the immediate needs of organizations.”
NOW’s competitive advantages and the very high value of its products make it one of the best home run stocks in which to invest. This makes it one of those home run stocks to buy.
As of the date of publication, Larry Ramer owned shares of SMCI, STEM, and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
