SUPERNEWS

Macro

Disney, Super Micro Set for 20% Rebound Amid Market Wins

Dow, S&P 500, and Nasdaq up 3-4% in May; select stocks with strong financials poised for rebound despite recent declines.

By Bill Bullington

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5/8, 15:38 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Bio-Rad Laboratories, Inc.
Walt Disney Company
Shopify Inc.
Schlumberger N.V.
Ulta Beauty, Inc.
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Key Takeaway

  • Stocks like Disney and Super Micro Computer, down over 10% in the past month, show strong rebound potential with analysts forecasting over 20% upside.
  • Despite recent market gains, companies with solid balance sheets like Bio-Rad Laboratories and Ulta Beauty are poised for recovery.
  • The selected stocks have a debt-to-equity ratio of 60% or less, indicating financial stability amidst their potential for significant price appreciation.

Market Resilience Amid Selective Rally

The Dow Jones Industrial Average is on track for its sixth consecutive winning session, showcasing the resilience of the U.S. stock market. As of Wednesday afternoon, May has been a fruitful month for major averages, with the Dow and the S&P 500 each up approximately 3%, and the Nasdaq Composite adding 4%. This uptrend underscores a broader market recovery, yet it has notably bypassed certain stocks with robust financial health. A CNBC Pro Stock Screener Tool analysis highlights companies that, despite a recent downturn, are poised for a rebound, thanks to their strong balance sheets and favorable analyst ratings.

Spotlight on Underperformers with Potential

Among the stocks identified for potential rebounds are Bio-Rad Laboratories, Walt Disney Co, Prologis Inc, SLB, Super Micro Computer Inc, Ulta Beauty, and Weyerhaeuser Co. These companies have seen their share prices decline by more than 10% in the past month but are backed by a consensus buy rating and have an upside to the average price target of at least 20%. Their debt-to-equity ratios stand at 60% or less, indicating financial stability. Notably, Disney and Super Micro Computer have experienced significant share price movements. Disney's shares have declined over 10% following a disappointing fiscal second-quarter earnings report, primarily due to weaker-than-expected forward guidance for its experiences segment. Conversely, Super Micro Computer has seen a nearly 12% pullback in its share price after missing revenue estimates, despite issuing higher-than-anticipated full-year revenue guidance.

Earnings Anticipation and Analyst Optimism

The market is also closely watching Shopify Inc., which has recently attracted attention from Wall Street bulls despite a 15% drop from its February peak. Analysts from BNP Paribas SA, Citigroup SA, and Morgan Stanley have upgraded their ratings to buy-equivalent, citing a compelling entry point ahead of the company's earnings release. Shopify's performance has been mixed, with shares roughly flat in 2024 but lagging behind the Nasdaq 100 Index. However, analysts remain optimistic, highlighting cost cuts and the sale of most of its logistics business as factors that could surprise to the upside.