These beaten-up stocks show signs of bottoming as rest of market falls to new lows

Published Fri, Sep 30 20221:11 PM EDT

As investors digest the disappointing week, month and quarter end, they may be looking for stocks poised to rise through the end of the year. One way to gauge if a stock is set to gain is to look at its performance thus far: If it has lost a lot of value since the start of the year but gained in recent weeks, that may be a good sign that it's on the upswing and is in a solid buying spot. To determine a group of stocks that may have bottomed, CNBC Pro used FactSet data to screen for companies whose shares were cut in half in the first six months of 2022. Of those, CNBC Pro selected stocks that have rallied back and beaten the broader market by more than 10% during the third quarter and still have solid upside based on Wall Street's consensus price target. The result is a basket of seven stocks that may have hit a nadir earlier this year and could be ready to climb higher in the coming weeks. Of the seven stocks, three are technology names, two are consumer non-cyclical companies, one is a consumer services pick and one is a finance company. Here's a breakdown of the top stocks that look like they've bottomed this year. PayPal Payment company PayPal slumped 63% in the first half of the year but rebounded about 27% in the third quarter. The consensus price target from analysts covering the company bets that it can surge another 34%. In September, Raymond James upgraded PayPal to outperform from market perform and boosted its price target, seeing a nearly 30% upside to shares of the company. The firm cited the stock's movement year to date and said that after a few challenging quarters, the company should move higher as forecasts rebound. "In our view, PYPL is exactly the type of stock you want to own in this tape – defensive growth driven by secular tailwinds, significant FCF generation, clean balance sheet, FY23 estimates biased higher not lower -- all at a reasonable valuation (5.6% FCF yield)," wrote analyst John Davis. "As such, we recommend investors initiate or add to positions at current levels." Netflix Streamers have overall had a tough year, but Netflix is a top pick in the space for many Wall Street analysts. This week, analysts at Atlantic Equities upgraded shares of Netflix to overweight and boosted its price target, seeing shares surging another 26% due to the potential from the streamer's ad-supported business. Evercore ISI also sees the ad-supported subscriber tier adding value – earlier in September, the firm upgraded Netflix to outperform as well and said it could jump 30%. The streaming service is also Citi's top pick in the subscription video on demand sector, beating out Disney, analyst Jason Bazinet wrote in a note earlier this month. Netflix plunged 71% in the first half of the year but added back 37% in the third quarter. The consensus analyst price target sees a nearly 4% upside from where shares currently trade. Etsy Shares of Etsy fell more than 66% in the first half of the year but rebounded 38% in the third quarter, the strongest gain in the basket of stocks. The consensus analyst target price estimates shares can surge another 14% from current levels. In June, JMP Securities said Etsy could surge 54% as it had become a top-of-mind destination during the pandemic. Shares of the online retail platform jumped after it reported quarterly earnings in July that beat Wall Street's expectations. Rounding out the group Technology stocks Ceridian and EPAM Systems both slipped about 55% in the first half of the year and rebounded about 20% and 22% in the third quarter, respectively. Analysts see Ceridian gaining another 26% and EPAM Systems jumping 33%. Consumer names Royal Caribbean and Bath & Body Works round out the list. Though shares of all the cruise lines have been volatile during the pandemic and its aftermath, Royal Caribbean has been called out as a leader in the industry. Analysts see it gaining nearly 40% going forward. Bath & Body Works fell after it cut its profit outlook, but analysts see the stock surging after its underperformance. Piper Sandler in June noted the stock could double after a major slump , and in July Raymond James said the company was oversold and could surge 70%.