Wall Street analysts are pounding the table for these stocks with 'significant upside'

Published Sat, Dec 18 20217:51 AM EST

Analysts this week highlighted key stocks they believe investors should own in their portfolios as 2021 wraps up. These companies have some of the biggest upside on Wall Street and tremendous potential heading into 2022 and beyond, according to analysts. CNBC Pro combed through the most recent Wall Street research to find some of the top best-in-class buying opportunities. Those notable names include Cerence , Coty , Nvidia , Pfizer , and Medtronic . Cerence Investors should buy the weakness in shares of Cerence, investment firm Baird said of the company, which makes voice software for auto manufacturers like General Motors and Ford. Shares of the company are down about 15% since its earnings report back on Nov. 22 when it beat estimates for its fiscal fourth quarter but issued a weaker-than-expected forecast. The company has undoubtedly been affected by the worldwide semiconductor shortage, however, Baird analyst Luke Junk is sticking with the stock. "CRNC offers significant upside potential following the stock's sell-off post 4QF21 earnings, with the recent tech selloff and company-specific factors both seemingly playing major roles in the stock's behavior as of late," he wrote. Cerence has a "leading market share" and a wide lead well ahead of its second largest U.S. competitor, according to the firm. In addition, Junk wrote that Cerence's long-term growth possibilities are "open-ended" and that shares still have plenty of room to run. The stock is also relatively inexpensive, the analyst noted. It's the right time for investors to "take a fresh look" at this "leading in-vehicle technology franchise," Junk said. Coty A turnaround at Coty is underway, but the company has a lot to prove, Jefferies analyst Stephanie Wissink said earlier this week. Still, she urged clients to take advantage of the "opportunity for significant upside." After attending the company's recent analyst day, Wissink said she has "stronger conviction that COTY has the team in place, portfolio of brands, and priority of action steps needed to participate in growth pockets of the beauty market — skincare, premium fragrance, premium cosmetics, digital/e-commerce, and China." Execution remains key, she wrote, especially after "years of disappointments." Wissink praised the company's new CEO noting that Coty is finally focusing on sales growth, building out its digital channels and taking share in markets like China. "We are constructive on COTY's prospects to self-correct its historic growth gap to the industry and to unlock real value from peer-proven categories, channels, & markets, driving a potential doubling of stock value in 24 months," she said. Shares of Coty fell 4.1% this past week. Nvidia Nvidia continues to "execute across all segments," JPMorgan analyst Harlan Sur said in a recent note to clients. The stock is up 112% this year. Nvidia's third-quarter was so impressive in mid-November that CNBC's Jim Cramer predicted it would be the next trillion-dollar company . "NVIDIA delivered F3Q22 revenue/EPS above consensus on broad-based demand strength led by Data Center, enterprise, and Gaming segments," Sur wrote. Equally impressive, according to the analyst, is that demand continues to outstrip supply across all of the company's businesses with indications that should continue well into 2022, if not beyond. "With solid product cycles in Gaming, sustainable strong demand from Data Center customers, combined with new emerging revenue streams, we see a strong runway of growth and an upward bias in earnings estimates," Sur said. He recommended investors take a wait-and-see approach to Nvidia's family of autonomous driving products, but otherwise he suggested that clients buy the stock. "We anticipate significant upside in shares, driving our Overweight rating," Sur said. Nvidia - JPMorgan, Overweight rating "NVIDIA delivered F3Q22 revenue/EPS above consensus on broad-based demand strength led by Data Center, enterprise, and Gaming segments. ... With solid product cycles in Gaming, sustainable strong demand from Data Center customers, combined with new emerging revenue streams, we see a strong runway of growth and an upward bias in earnings estimates. ... We anticipate significant upside in shares, driving our Overweight rating." Cerence - Baird, Outperform rating "CRNC offers significant upside potential following the stock's sell-off post 4QF21 earnings, with the recent tech selloff and company-specific factors both seemingly playing major roles in the stock's behavior as of late. With a bottom now potentially in place after the stock caught a competitor upgrade [last] week, we too believe investors should take a fresh look at this leading in-vehicle technology franchise. … Key positive attributes of CRNC include leading market share, a wide lead vs. their second-largest US competitor, and what we see as an open ended growth opportunity longer-term." Pfizer - UBS, Buy rating "PFE is dominating COVID in prevention and treatment. We are upgrading PFE to a Buy rating and increasing our PT to $60 (from $52) on the expectation that significant upward revisions of estimates for 2022/2023 are coming in the near-term. … Based on our model, we believe the stock's current trading range is currently pricing in ~$40bn in COVID franchise sales in 2022, and so we see meaningful upside potential to these numbers." Medtronic - Guggenheim, Buy rating "MDT reported mixed 2Q results, with EPS beating by $0.03 despite a $118M top-line miss. … Based on our recent conversations with investors, we think this performance and updated outlook actually compare favorably to what many were expecting heading into the print. … With significant upside potential to our revised target from current levels, we maintain our BUY rating." Coty - Jefferies, Buy rating "We are constructive on COTY's prospects to self-correct its historic growth gap to the industry & to unlock real value from peer-proven categories, channels, & markets, driving a potential doubling of stock value in 24 months. … We have stronger conviction that COTY has the team in place, portfolio of brands & priority of action steps needed to participate in growth pockets of the beauty market — skincare, premium fragrance, premium cosmetics, digital/e-commerce, and China. … Execution is key as investors remain generally skeptical — not a reflection of overt disbelief, but rather years of disappointments. … Opportunity for significant upside."

A person walks past the Pfizer Headquarters building in New York, November 9, 2020.

Carlo Allegri | Reuters

Analysts this week highlighted key stocks they believe investors should own in their portfolios as 2021 wraps up.