There’s still time to buy these red-hot stocks before they report earnings, analysts say

Published Sat, Feb 12 20228:48 AM EST

There's still a handful of high quality stocks to buy ahead of earnings, Wall Street analysts said this week. These companies represent tremendous value, analysts say, and investors should take advantage of the buying opportunity. CNBC Pro combed through the best Wall Street research to find these compelling buying opportunities. They include Sunrun , Advance Auto Parts , Snowflake , BJ's Wholesale Club and Upstart Holdings. Advance Auto Parts "We believe AAP has a favorable set-up into its 4Q print," UBS analyst Michael Lasser said in a recent note ahead of the company's earnings report next week. Shares are up 44% over the last 12 months, and Lasser believes the auto parts retailer is primed for a big 2022. "We believe that a solid industry backdrop and rising inflation supported steady top-line growth at AAP in its fourth quarter," he said. Lasser is also impressed by recent industry-wide demand and management transformation initiatives. Meanwhile, even as competitors in the industry continue to suffer from margin pressure, Advanced Auto Parts is poised to thrive, according to the firm. "Further, AAP has several idiosyncratic levers to drive margin expansion in 2022," Lasser wrote. The stock is also quite compelling and the "long-term story growth story remains attractive," he added. BJ's Wholesale Club Deutsche Bank upgraded the big-box retailer to buy from hold. "We think warehouse clubs' offensive and defensive characteristics position the sector well for the long haul," analyst Krisztina Katai said ahead of the company's earnings report in March. Katai said that along with inflation, the pandemic has accelerated consumers' move to what she calls "value-centric retailers." BJ's Wholesale also has numerous levers to pull that leave it well positioned in 2022 and beyond, according to the firm. The company has continued to make investments in gasoline, pricing and merchandising, as well as its private-label brands, she wrote. The firm said it also likes the retailer's upgraded balanced sheet and membership fee revenue which could rise in 2023. In addition, the stock has a very favorable risk/reward and an attractive entry point. The stock ended the week up 6.5%. Upstart Holdings Shares of the online lending platform are down almost 34% in 2022, but investors should hurry in and buy the dip, Atlantic Equities analyst Simon Clinch said recently. The company is due to report fourth-quarter earnings on Tuesday amid increased concerns about rising loan delinquency rates. Clinch, however, said those fears are overdone and that investors should stick with the stock. The firm said it sees "auto upside optionality" and that auto loans are a "key part of the near-term upside thesis" for the stock. "In our recent meetings with UPST's management, the CEO stated that he expects UPST to have double-digit market share of the US auto loan market by the end of FY23," he wrote. Clinch acknowledged that the target is bullish, but he isn't counting the company out, even as a challenging environment for growth stocks continues. "Despite this, we see significant upside potential from current levels and continue to believe that UPST has one of the most attractive long-term growth opportunities in our coverage," he said. BJ's Wholesale Club - Deutsche Bank, Buy rating "We believe that the warehouse club channel will continue to benefit from a shift in consumer shopping habits in favor of more value-centric retailers, a trend that has been amplified by the COVID-19 pandemic, & now high inflation eating into wage growth. … We think warehouse clubs' offensive & defensive characteristics position the sector well for the long haul. … While the shares of BJ advanced 80% in 2021, we believe recent underperformance presents an attractive entry point." Upstart Holdings - Atlantic Equities, Overweight rating "Auto upside optionality could be significant... In our recent meetings with UPST's management, the CEO stated that he expects UPST to have double-digit market share of the US auto loan market by the end of FY23. … Auto loan opportunity which is a key part of the near-term upside thesis for the shares. … Despite this, we see significant upside potential from current levels and continue to believe that UPST has one of the most attractive long-term growth opportunities in our coverage." Sunrun - Needham, Buy rating "We believe Buy-rated solar names in our coverage are pricing in a worst-case scenario outlook for government and regulatory actions. In our opinion, this represents a unique buying opportunity into a still very fast growing industry. … RUN stock already appears to be discounting the worst case for NEM (net energy metering), which provides an attractive entry point." Snowflake - Morgan Stanley, Buy rating "Working to the Rule of 80 – With Snowflake Executing Ahead of Plan, Pullback. Creates an Attractive Opportunity. Leveraging the elasticity, scalability and performance of the public cloud, Snowflake's cloud data platform enables its customers to eliminate data silos, while reducing overhead, complexity and infrastructure management costs, thereby allowing them to focus on driving and sharing insights from their data." Read more about this call here. Advance Auto Parts - UBS, Buy rating "We believe AAP has a favorable set-up into its 4Q print. … We believe that a solid industry backdrop and rising inflation supported steady top-line growth at AAP in its fourth quarter. … Further, AAP has several idiosyncratic levers to drive margin expansion in 2022. … The long-term story growth story remains attractive."

Source: Sunrun

There's still a handful of high quality stocks to buy ahead of earnings, Wall Street analysts said this week.