JPMorgan's May Picks: Caterpillar, BoA, TJX with High Ratings

Key Takeaway

• JPMorgan highlights top stock picks for May, including Caterpillar, Bank of America, and TJX Companies, all with an overweight rating.
• United Airlines projected a 90% price increase; Amazon and TJX Companies show strong growth in tech and retail sectors.
• Adjustments made to the focus list by removing CMS Energy and Prologis due to market performance and economic indicators.

JPMorgan's May Stock Highlights

JPMorgan has updated its focus list for May, spotlighting a selection of stocks that include Caterpillar, Bank of America, and TJX Companies among others. Nicholas Rosato, the head of JPMorgan’s North American Equity Research, emphasized that all stocks on the list carry an overweight rating, indicating the firm's confidence in their potential for growth, income, value, and short strategies. The list showcases a diverse range of sectors from financial services to retail and technology.

United Airlines' Promising Outlook

United Airlines has seen a notable increase of about 25% in its shares in 2024, driven by a strong second-quarter earnings forecast. The airline anticipates earnings between $3.75 and $4.25 per share for the quarter, surpassing analysts' expectations. Despite challenges such as delivery delays from Boeing affecting aircraft delivery expectations, JPMorgan projects a significant potential upside for United Airlines, with a price target suggesting a 90% increase from its current valuation. Morgan Stanley analyst Ravi Shanker also expressed a positive stance on United, highlighting the stock as a "relative safe haven" amidst uncertain consumer trends.

Tech and Retail Stocks on the Rise

Amazon, e.l.f. Beauty, and TJX Companies are among the tech and retail stocks JPMorgan expects to perform well in the coming year. Amazon's recent earnings report, showing a 24% growth in advertising revenue, has bolstered investor confidence, contributing to a 21% increase in its shares year-to-date. Similarly, TJX Companies received an upgrade to buy from neutral by UBS, with analyst Jay Sole citing the company's strong value proposition and potential for market share gains. These selections reflect JPMorgan's optimism about the recovery and growth prospects in the tech and retail sectors.

Adjustments and Outlook

JPMorgan has made adjustments to its focus list, removing CMS Energy and Prologis, though both still maintain an overweight rating. The firm continues to recognize CMS Energy's strong growth outlook but notes that its stock price has narrowed the gap with its premium peers. For Prologis, macroeconomic uncertainties have tempered near-term demand expectations. These changes underscore JPMorgan's dynamic approach to portfolio recommendations, taking into account both market performance and broader economic indicators.

Street Views

• Nicholas Rosato, JPMorgan (Bullish on Caterpillar, Bank of America, TJX Companies):

  "All the stocks on the list have an overweight rating."

• Morgan Stanley Analyst for United Airlines (Bullish on United Airlines):

  "United Airlines... a 'relative safe haven in a world of uncertain consumer trends.'"

• UBS Analyst Jay Sole (Bullish on TJX Companies):

  "TJX’s value proposition is durable and likely leads to sustained market share gains. Consumers associate ‘Good value for money’ with TJX’s banners more than other retailer's banners."