Piper Sandler updated its best ideas for third-quarter stock picks, listing Apple among the names it believes have strong fundamentals and an attractive price point. The firm screens 900 equities in its coverage universe and filters for stocks with buy ratings, market value of more than $750 million and at least 10% upside based on its 12-month price target. The list of stock picks, called the Alpha Alignment Index, launched in January and has since generated a total return of 42%, outperforming the S & P 500 by about 4%. It comprises 20 companies, and is equal weighted and rebalanced quarterly. Here are some of Piper Sandler's top picks for the third quarter. Piper Sandler highlighted Apple, whose "small but interesting" product updates — like making FaceTime more user and corporate friendly — it cited as evidence of how the company pushes the performance bar higher and reinforces "brand stickiness." While there might be a short-term pause in hardware markets, the analysts said they ultimately think the pandemic-induced work-from-home dynamics are here to stay and that Apple will continue to benefit as consumers require additional computers and related accessories. Plus, the tech giant's diversification into software and services should lift its margins, the analysts said. Piper Sandler has a $160 per share price target on the stock; Apple ended Friday at $145.11. Similarly, analysts see Zoom being well positioned for a new hybrid world with opportunity for cross-selling and international expansion. It put a $464 price target on the stock, which closed on Friday at $385.08. Diamondback Energy is among its top energy picks, with a price target of $102 compared to its closing price of $89.42 Friday. "Diamondback has shown their ability to weather industry headwinds," analysts said. "The company has been one of the lowest cost operators in the industry allowing them to generate meaningful cash flows under a wide range of crude pricing scenarios." Piper Sandler also included Lululemon , noting its growth is accelerating compared to its pre-pandemic rates. Online shopping numbers are still strong despite the return to in-store shopping, analysts said. The activewear company is attracting new types of shoppers and expanding its physical footprint, they added. Among health stocks, Dexcom and LivaNova are among Piper Sandler's favorites.
A woman holding a smartphone walks past the Apple Store on January 04, 2019 in Berlin, Germany.
Sean Gallup | Getty Images News | Getty Images
Piper Sandler updated its best ideas for third-quarter stock picks, listing Apple among the names it believes have strong fundamentals and an attractive price point.