Analysts are anticipating significant upside in these stocks as earnings season gets set to kick off

Published Sat, Oct 9 20218:56 AM EDT

Third-quarter earnings season kicks off next week and analysts are naming some of their best buying opportunities ahead of the reports, specifically those where they see "significant upside." S & P 500 companies are expected to grow earnings by nearly 30% in the third quarter, according to Refinitiv estimates. CNBC Pro looked through the most recent Wall Street research to find stocks that look uniquely compelling heading into earnings. They include: Southwest , Five9 , Hewlett Packard Enterprise, Prologis and Dish. Five9 The deal for Zoom to acquire Five9 is off after Five9 shareholders rejected a deal for Zoom to acquire the the cloud software company earlier this week. That still makes shares of Five9 attractive, according to BTIG analyst Matt VanVliet. "We view the FIVN story as one of the most bullish in our SaaS (service-as-a software) universe and believe there remains significant upside to current levels now that FIVN will remain independent," he said. Shares of the company are down over 12% since last week's termination announcement but VanVliet is standing by the stock. The firm's recent checks continue to show strong demand for Five9 products and services with no signs of slowdown. VanVliet said the next catalyst for the stock is likely to be the company's third-quarter earnings in early November. The firm believes it could be even better than Five9's blowout second-quarter report back in July. "We remain positive on the value of FIVN's technology and the company's ability to continue capturing market share in the massive and growing contact center space, and believe investors will be rewarded for that view," he wrote. Southwest Airlines Wall Street analysts are warming up to aviation again. The low fare discount airline received its second upgrade of the week when investment firm Barclays upgraded the stock. "The recovery has taken longer than expected, but we see bluer skies ahead for airlines and upgrade our Industry View to Positive as well as the venerable Southwest Airlines to Overweight," analyst Brandon Oglenski wrote. The formula for Southwest shares to work is simple, according to the firm. "Southwest affords long-term investors a fortress balance sheet, favorable orderbook with Boeing and a historically profitable business model," he said. Additionally, the stock is attractively priced with shares up just over 15% this year. "Slowing revenue growth & margin degredation could lead to downside in the stock, but we expect most scenarios to yield significant upside," Oglenski added. Southwest will report its third-quarter earnings on October 21. Prologis The supply chain bottleneck is expected to wreak havoc for the foreseeable future and Prologis could be a key beneficiary, according to investment firm UBS. The supply chain logistics and real estate investment trust is a top pick heading into the company's earnings report on October 15, analyst Brent Dilts wrote recently. The firm said Prologis is particularly well positioned to continue "capitalizing on the robust environment for industrial real estate," especially as unprecedented port congestion continues. Dilts added that "scarcity and entitlement/ permitting challenges" in many of Prologis' key markets should "drive further rent growth and lower vacancies." The holiday season is expected to bring added demand for warehouse space which benefits Prologis, Dilts said. "Given this confluence of headwinds in moving goods through the supply chain and inventory to sales ratios at historic lows, we believe there is still significant upside..." the firm went on to say. Shares of the company finished the week up over 2% Hewlett Packard Enterprise- JPMorgan, Overweight rating "HPE's transformation has been led by its strategic focus on acquisitions since split from HP Inc. The investor perception of HPE as an independent company has largely been of a business in commoditized end markets with a tough landscape for the management team to navigate in relation to balancing both margins and growth. HPE's strategy has been unsurprisingly to transform the company and position it in higher value-add areas of the Enterprise ... .See significant upside even with modest re-rating." Five9- BTIG, Buy rating "Our take — positive implications for FIVN as standalone to unlock value of major market opportunity, We view the FIVN story as one of the most bullish in our SaaS universe and believe there remains significant upside to current levels now that FIVN will remain independent. ... .We remain positive on the value of FIVN's technology and the company's ability to continue capturing market share in the massive and growing contact center space, and believe investors will be rewarded for that view. Southwest Airlines- Barclays, Overweight rating "The recovery has taken longer than expected, but we see bluer skies ahead for airlines and upgrade our Industry View to Positive as well as the venerable Southwest Airlines to Overweight. ... .Southwest affords long-term investors a fortress balance sheet, favorable orderbook with Boeing and a historically profitable business model. ... .Slowing revenue growth & margin degredation could lead to downside in the stock, but we expect most scenarios to yield significant upside." Dish- Pivotal, Buy rating We continue to see significant upside potential (potentially materially above our $65 YE'22 target price) in the DISH greenfield 5G wireless opportunity and also to a much lesser extent from the likely inevitable merger with DIRECTV. ... .The bottom line is that DISH, in our opinion, is the best positioned wireless operator to actually fulfill the promise of 5G which in our view is not even close to being priced in the current valuation." Prologis- UBS, Buy rating Our top pick in industrial remains PLD given its larger development pipeline relative to its market cap but we believe both PLD & DRE are well positioned to continue capitalizing on the robust environment for indust. real estate. Despite the strong run in both stocks since the start of the pandemic, we believe land scarcity & entitlement/ permitting challenges in many of their key markets should drive further rent growth & lower vacancies. ... .Given this confluence of headwinds in moving goods through the supply chain & inventory to sales ratios at historic lows, we believe there is still significant upside..."

A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California, March 26, 2019.

Mike Blake | Reuters

Third-quarter earnings season kicks off next week and analysts are naming some of their best buying opportunities ahead of the reports, specifically those where they see "significant upside."