Trivariate Research CEO and founder Adam Parker said some stocks are excessively cheap after this year’s market turbulence and poised for growth next year. Parker, who was previously the chief U.S. equity strategist at Morgan Stanley, wrote in a note that investors are navigating a six-month stretch of market activity that has been one of the worst in a century for stocks. Market participants are dealing with rising inflation, a hawkish Federal Reserve, excessive inventory levels, and elevated earnings estimates. Still, there are companies that “are likely to grow and have improving profits in 2023” in spite of the economic uncertainty, according to the note. Trivariate Research found stocks that are attractive compared with pre-Covid levels in 2019. The firm surfaced names that are excessively cheap even after assuming for differences in economic outlook between now and then, and assuming forward estimates are 10% to 15% too high. The firm screened growth stocks that have a lower enterprise value-to-sales ratio now than they did in 2019, are expecting revenue growth greater than 10% in 2023 with revenue above 2019 levels, trading for less than 25 times forward earnings, and have at least 4% free cash flow yield, according to the note. Here are seven names. Visa is down 11.8% this year, but it could be poised for growth in 2023 as international travel recovers from its pandemic lows. Last month, Morgan Stanley reiterated an overweight rating on Visa, saying that “market conviction in the timing of a sustainable cross-border travel return will be a key positive catalyst.” The firm noted that Visa’s international travel volume reached roughly 115% of 2019’s level in August from 94% in April, driven by strong travel recovery in the U.S. and Asia-Pacific. Qualcomm is attractive among semiconductor stocks after tumbling 35.5% in 2022. This week, HSBC initiated coverage of Qualcomm with a buy rating , saying it’s among the best positioned chip companies to deal with slowing demand for smartphones. Shares of PayPal have cratered by more than half, or 53%, this year, which could set the stock up for a boost in 2023. In a note earlier this month, Bank of America said the stock has an “attractive risk/reward,” and called PayPal its top pick. Other stocks included in this list are Booking Holdings , Lam Research and Microchip Technology . —CNBC’s Michael Bloom contributed to this report.
