Bank of America has named four stocks it sees with upside heading into September: Madison Square Garden Entertainment, Church & Dwight, ASML and Tapestry. Analysts point to concert revenue, brand turnarounds and margin expansion as the drivers, even as they flag limited room left in one name.
Madison Square Garden Entertainment leads the list
Bank of America says Madison Square Garden Entertainment is firing on all cylinders after its latest quarterly report, one of several buy-rated names in CNBC Pro's screen of the stock market heading into September. Analyst Peter Henderson pointed to robust Garden concert activity, with revenue benefiting from more shows and higher per-concert economics, plus a lift from the Knicks' championship run and higher sponsorship, signage and suite revenue.
Henderson also cited a robust coming schedule of bookings for the venue. According to Bank of America analyst Peter Henderson: "Healthy operating leverage should drive margin expansion, leading to strong [adjusted operating income] growth." Madison Square Garden Entertainment shares are up 45% this year.
Church & Dwight's turnaround gains traction
Analyst Anna Lizzul said Church & Dwight management is pulling the right levers in its turnaround, with the maker of Arm & Hammer baking soda, toothpaste and shampoo now balancing value and premium products. She pointed to tailwinds from growing power brands through innovation and benefits from portfolio reshaping.
Lizzul also noted the company's history of outperforming in a tough macroeconomic environment. Church & Dwight shares are up 21% this year, and the bank still calls the stock a top idea.
ASML and Tapestry round out the picks
Analyst Didier Scemama urged buying the dip in ASML, calling the chip-equipment maker's recent stock performance an unjustified de-rating. He said the simultaneous de-rating of ASML against a re-rating of peers largely explains its underperformance over the past 12 months, even as capacity constraints and rising competition weigh on the name. ASML shares are up 58% this year, and Bank of America still rates it a top pick.
Tapestry is a different case. Bank of America expects consistent strong earnings growth at the owner of Coach, driven by strength at the Coach brand and stabilization at Kate Spade, and sees the company continuing to return capital to shareholders given its strong free cash flow generation. However, the bank said solid fundamentals have already driven Tapestry's valuation multiple up near peak levels, leaving limited additional upside from current levels.
Source: US Top News and Analysis
Trading involves risk.
Risk Disclaimer
