Bank of America reveals the winning market share gainers with more room to run

Published Sat, Mar 4 20238:26 AM EST

Analysts at Bank of America named a slew of companies this week that they believe are winning market share in this tough economic environment and so the stocks have more room to run. This was a common theme in the latest Bank of America research, with the firm naming a number of stocks positioned for market share gains. They include: Analog Devices , TJX Companies, Zeta Global , Costco and Union Pacific. TJX Companies The discount retailer has room to grow, especially as shoppers look to save money by trading down, according to analyst Lorraine Hutchinson. Shares of the company are up 18% over the past year. "Our Buy rating reflects our view that TJX will continue to drive comps higher domestically as it captures new customers with strong inventory management and excellent execution," she said. Hutchinson highlighted TJX's management, noting their track record of delivering for consumers and shareholders. "We see potential upside to comp and margins if traffic momentum continues," she said. TJX is also coming off a mostly mixed quarterly report, but the analyst said investors should remain calm and look past the results. Perhaps more importantly, Hutchinson still sees room for long-term growth. "We maintain our Buy rating, as we view TJX as a market share gainer that is well positioned to benefit from trade-down and the high level of inventory availability," she said. Costco The big-box retailer is firing on all cylinders, the firm said after Costco issued its fiscal second-quarter earnings report. "COST drives continued traffic growth in F2Q & thru Feb," analyst Robert Ohmes said. The company is seeing "consumables strength & membership trends drive comps," he added. Indeed, Jim Cramer's Investing Club said it's the "best-run retailer" in the U.S. Shares are up more than 4% this year, but Ohmes said the stock's valuation is still attractive. Costco also sits on the firm's prestigious top picks list. Bank of America also likes Costco's robust sourcing model to go along with "stable and rising EBITDA margins." Ohmes said this gives the retailer a competitive advantage over peers. For these reasons, investors should buy the stock, he said. "We reiterate our Buy and continue to view Costco as well-positioned LT given: Share gains driven by COST's strong value proposition and price positioning," he wrote. Zeta Global Analyst Koji Ikeda recently highlighted Zeta Global's latest quarterly report, noting the results showcase the software marketing solutions company's strength. "In an environment where many marketing and advertising tech companies are seeing moderating customer spend, Zeta's Q4 performance suggest the platform is delivering a strong value proposition," Ikeda said. The analyst cited upside to revenue growth due to healthy customer additions. "We believe 4Q's results lend support to our view that the business is differentiated, which should result in ongoing good execution and upside potential to estimates," Ikeda added. The firm said traffic increasing on the platform over time is leading to greater profitability and further revenue. "We believe Zeta Global has the potential to be a share gainer of digital marketing and advertising spending budgets," Ikeda said. Shares are up nearly 35% this year. Analog Devices "Best-in-class share gainer + FCF leader. Reiterate Buy, raise PO to $230 (from $215) after another strong quarter highlighting resilience from auto demand and industrial diversity. … We rate ADI Buy on its growth projects in communications, automotive and industrial markets along with best in class free cash flow growth. We value ADI at the higher end of peer comps due to ADI's growth potential and free cash flow generation." Union Pacific "Raise to Buy; CEO Fritz steps aside with activist call for ops expertise. … On Sunday, UNP issued a release announcing that Chairman & CEO Lance Fritz would step down in 2023 just a couple of hours after activist investor Soroban Capital called for his departure. … We increase our PO to $241 from $218 on 20x our 2024 EPS of $12.05, given increased confidence in a path to operational improvement, & potential for accelerating gains." Costco "COST drives continued traffic growth in F2Q & thru Feb. … consumables strength & membership trends drive comps. … We reiterate our Buy (and addition to BofA's US 1 List) and continue to view Costco as well-positioned LT given: 1) Share gains driven by COST's strong value proposition and price positioning, 2) potential store acceleration given excess demand, 3) competitive advantages afforded by COST's sourcing model, 4) stable & rising EBITDA margin, and 5) attractive valuation vs. all-time high ROIC." TJX Companies "We maintain our Buy rating. as we view TJX as a market share gainer that is well positioned to benefit from trade-down and the high level of inventory availability. …. We see potential upside to comp and margins if traffic momentum continues. …. Our Buy rating reflects our view that TJX will continue to drive comps higher domestically as it captures new customers with strong inventory management and excellent execution." Zeta Global "In an environment where many marketing & advertising tech companies are seeing moderating customer spend, Zeta's Q4 performance suggest the platform is delivering a strong value proposition. … We believe 4Q's results lend support to our view that the business is differentiated, which should result in ongoing good execution & upside potential to estimates. … We believe Zeta Global has the potential to be a share gainer of digital marketing & advertising spending budgets..."