Wall Street analysts say these are some of the most 'underappreciated' stocks coming out of earnings

Published Sat, Nov 13 20218:35 AM EST

There's a bunch of companies that just reported earnings that are not getting enough love from investors, according to Wall Street analysts. These stocks still have more room to run based on the fundamentals and analysts are telling clients to buy them now. 459 S & P 500 Companies have reported earnings thus far and more than 80% delivered a better-than- expected profit, according to Refinitiv. CNBC Pro combed through the top Wall Street research to find some of the top overlooked buying opportunities. They include: Capri Holdings, SSC Technologies , Uber , Caterpillar and Parker-Hannifan. Uber Shares of Uber have struggled this year down 11.5%, but the company is beginning to reap the rewards of the economy reopening, according to investment firm KeyBanc. Uber reported it's first ever adjusted profit last week and while the earnings report was mixed overall, things are looking up for the ride sharer, analyst Edward Yruma said. "UBER's 3Q results underscore our thesis that the rideshare industry is well positioned for both accelerating results and structurally higher levels of profitability," he wrote. In addition, the firm says it continues to see signs of travel normalizing which means the company's mobility business is a key beneficiary. "Airports trips are rapidly returning, reverting to pre-COVID mix levels of 12-13% of Mobility Gross Bookings, with business airport trips up 60% over the past two months," he said. Yruma also said the company sees significant upside in the Uber Eats business as well Uber Freight and Uber Pass which continues to grow in membership. "We remain confident that delivery profitability will continue to improve, and we think that UBER has a number of underappreciated assets that can help drive both value and long-term growth," the firm said. Caterpillar Shares of Caterpillar are up just over 3% since the company reported a mostly mixed third-quarter report in late October. The stock has also underperformed the S & P 500 this year, but now investment firm Baird is doubling down on the stock naming it to the firm's fresh pick list, analyst Mircea Dobre wrote earlier this week. "We view CAT as one of the most underappreciated stocks in our coverage given 2022/2023 earnings potential...," she said. Dobre admitted that the dealer channel backdrop is lean at the moment, however, signs are emerging that Caterpillar is well-positioned heading into next year. "As CAT raises production in 2022 the market seems more than able to absorb the incremental volume," she added. Further, while China demand has weakened, Dobre see other positive levers for Caterpillar including lingering global stimulus and a push to decarbonization. The newly passed infrastructure bill also makes the machinery company one of the top names for investors to own, the firm wrote. "The stock has reacted well to a better than feared 3Q21, the visibility provided by the Infrastructure bill should further catalyze upside," Dobre said. Capri Holdings Shares of red-hot Capri Holdings are up 127% over the last 12 months and poised to go higher, BTIG analyst Camilo Lyon said in a note recently. The fashion holding company and owner of brands like Michael Kors is also coming off what Lyon calls a a "stellar" second-quarter earnings report earlier this month. Lyon said a big reason for that is Capri continues to have success managing its supply chain. The firm wrote that while wait times have increased, "we believe CPRI is well positioned heading into 2H/F23 as it continues to work through inventory issues to meet strong consumer demand." "What's more, CPRI is focused on maintaining price integrity and staying away from promotional activity, which bodes well for long term margin expansion and what should be ensuing multiple expansion," he went on to say. Lyon added that Capri is a solid recovery play, but says it's also executing well and the stock has an attractive risk/reward. "We see significant equity value that is dramatically underappreciated, from both an earnings recovery and valuation perspective," the firm said. Parker-Hannifin- Wells Fargo, Overweight rating "[Stock] deserves more respect, proving it with earnings. Strong demand is a common theme this quarter and Parker clearly participated. Orders were up 26% y/y on strength across segments. The strength is broad based across markets and regions. ... .We view PH's ~20% relative valuation discount to EEMI (electrical equipment & multi industry) peers as attractive, and we believe this valuation discount outweighs potential cycle risk. Self-help margin initiatives appear underappreciated by the market and should support the durability of high-single digit earnings growth over the next five years." SS & C Technologies- UBS, Buy rating "That said, we think investors underappreciate the limited direct exposure to hedge fund performance, given SSNC's diversified customer base, competitive position, & expansion into new end markets & geographies. We believe the market is underappreciating the potential for SSNC to sustain healthy organic growth rates, which we think is the primary focus for the stock right now. While the growth profile of SSNC may not look as exciting relative to other information services peers, we think the return to organic growth in 2021 is still not reflected in the shares & we remain constructive." Uber- KeyBanc, Overweight rating "UBER's 3Q results underscore our thesis that the rideshare industry is well positioned for both accelerating results and structurally higher levels of profitability. We remain confident that delivery profitability will continue to improve, and we think that UBER has a number of underappreciated assets that can help drive both value and long-term growth. ... .Airports trips are rapidly returning, reverting to pre-COVID mix levels of 12-13% of Mobility Gross Bookings, with business airport trips up 60% over the past two months." Caterpillar- Baird, Outperform rating "We view CAT as one of the most underappreciated stocks in our coverage given 2022/2023 earnings potential - YTD the stock underperformed the S & P 500 by 1200 bps despite broad-based demand acceleration, backlog rising to near decade highs and good execution on supply chain and margin despite a challenging operating backdrop. The stock has reacted well to a better than feared 3Q21, the visibility provided by the Infrastructure bill should further catalyze upside. ... .As CAT raises production in 2022 the market seems more than able to absorb the incremental volume." Capri Holdings- BTIG, Buy rating "While transit times have increased by 45-60 days due to container shortages, port congestion & truck/worker shortages in addition to unanticipated Vietnam factory shutdowns, we believe CPRI is well positioned heading into 2H/F23 as it continues to work through inventory issues to meet strong consumer demand. CPRI is focused on maintaining price integrity & staying away from promotional activity, which bodes well for long term margin expansion & what should be ensuing multiple expansion. ... .We see significant equity value that is dramatically underappreciated, from both an earnings recovery & valuation perspective."

Traffic is diverted on Foothill Road as workers place K-rail barricades along burn areas during a winter rain storm in Ventura, California, January 9, 2018.

Monica Almeida | Reuters

There's a bunch of companies that just reported earnings that are not getting enough love from investors, according to Wall Street analysts.