These stocks have the most upside and solid momentum heading into earnings, analysts say

Published Sat, Apr 23 20227:04 AM EDT

With earnings season underway, Wall Street analysts named some of their top picks heading into the quarterly reports. Analysts said these companies are well-positioned and firing on all cylinders. CNBC Pro combed through the top Wall Street research to find stocks with the most upside heading into earnings. They include Chevron , Bunge , Cisco Systems , Alphabet and Arista Networks. Cisco The fundamentals are starting to improve for the tech conglomerate, JPMorgan analyst Samik Chatterjee said in a recent earnings preview note. "We expect to see double-digit order growth continuing for companies like Cisco and HPE, which should serve to trounce the bear thesis around a slowdown in spending," he said. Chatterjee predicts heavy demand for the company's enterprise networking service when it reports earnings in late May. The firm admitted that its thesis is out of consensus, but said investor fears are overblown. "The increasing investor pessimism around this customer vertical runs contrary to our channel checks," he wrote. Cisco is "positioned for strong order growth rather than material moderation," the firm added. Cisco shares are down more than 18% for the year, and Chatterjee said they are well-positioned for a recovery. "We see a much more solid setup for Cisco heading into this quarter relative to the prior two with supply lead times finally starting to moderate along with order growth continuing at a robust pace," Chatterjee noted. Arista Networks "Arista looks well positioned to deliver upside to Mar-qtr expectations and potentially raise its full year guide," Evercore ISI analyst Amit Daryanani said ahead of the computer networker's earnings report on May 2. The firm added a tactical outperform on Arista last week, saying "clear skies" are ahead for the stock. Daryanani said cloud demand should be a "key driver of upside" along with Arista's rapidly growing campus business. "Gross margin is another area where we could see some upside as we go through the year given price increases should start to have a more notable impact in the back half of the year," he added. Supply chain commentary should also be closely monitored and will a key point of interest for investors, according to Evercore. "Visibility into potential supply chain improvements remains very limited, but Arista's very high volume of purchase commitments should help them secure some preferential allocations," he wrote. Despite that uncertainty, Daryanani said patient shareholders should stick with the stock. "Supply remains the key wildcard, but we think Arista is well positioned to deliver upside assuming no further deterioration in the supply chain," he said. Shares are down more than 18% for 2022. Alphabet It's gearing up to be another big quarter for the internet search giant, according to Canaccord analyst Maria Ripps. The firm said it's expecting "healthy digital advertising demand despite [the] near-term macro uncertainty." The company has been a beneficiary of the acceleration in e-commerce, as businesses continue to advertise and build out a robust digital presence. "GOOGL's momentum appears poised to persist as Search is a core channel for eCommerce advertising and integrations within Search are driving an enhanced user experience," Ripps wrote. Ripps said the company continues to have success integrating the use of artificial intelligence and automation, bolstering the firm's bullish thesis on the stock. Shares of the company, which reports earnings on April 26, are down 17% this year. Another key contributor of revenue growth is Alphabet's rapidly growing Google Cloud and it shows no signs of slowing, Ripps said. "These dynamics, coupled with continued momentum in verticals like retail, media & entertainment, and travel, should drive another quarter of robust results for Search, and Google is also leaning into AI investments to enhance the user experience," she said. Bunge- Goldman Sachs, Buy rating "Goldman Sachs Agribusiness analyst Adam Samuelson sees 23% upside to Buy rated BG shares driven by his positive view on the multi-year turnaround under current management now pivoting to a more offensive growth & investment phase while cyclical conditions remain attractive. He believes the current volatility in grain & oilseed markets resulting from events in the Ukraine present incremental opportunities across BG's global footprint." Cisco- JPMorgan, Overweight rating "The increasing investor pessimism around this customer vertical runs contrary to our channel checks. ... Positioned for strong order growth rather than material moderation. ... We expect to see double-digit order growth continuing for companies like Cisco and HPE, which should serve to trounce the bear thesis around a slowdown in spending. ... We see a much more solid setup for Cisco heading into this quarter relative to the prior two with supply lead times finally starting to moderate along with order growth continuing at a robust pace." Alphabet- Canaccord, Buy rating "Healthy digital advertising demand despite near-term macro uncertainty. ... GOOGL's momentum appears poised to persist as Search is a core channel for eCommerce advertising and integrations within Search are driving an enhanced user experience. ... These dynamics, coupled with continued momentum in verticals like retail, media & entertainment, and travel, should drive another quarter of robust results for Search, and Google is also leaning into AI investments to enhance the user experience." Chevron- Raymond James, Outperform rating "Solid Momentum Continues. ... With the strongest financial base of the majors, coupled with an attractive relative asset portfolio, Chevron offers the most straightforwardly positive risk/reward in our view. Efficiency drivers have pushed profitability higher on a unit basis compared to past cycles, while a 'block and tackle' capital program over the next few years should further improve competitiveness, even without more help from the macro environment." Arista Networks- Evercore ISI, Outperform rating "Clear skies ahead. ... Arista looks well positioned to deliver upside to Mar-qtr expectations and potentially raise its full year guide. ... Cloud demand should be a key driver of upside with FB capex expected to grow > 50% in each quarter this year. ... Gross margin is another area where we could see some upside as we go through the year given price increases should start to have a more notable impact in the backhalf of the year. ... Supply remains the key wildcard, but we think Arista is well positioned to deliver upside assuming no further deterioration in the supply chain."

Michael Wirth, CEO of Chevron.

Adam Jeffery | CNBC

With earnings season underway, Wall Street analysts named some of their top picks heading into the quarterly reports.