Wells Fargo's top ideas for the third quarter including a possible stock double

Published Fri, Jul 7 20239:33 AM EDT

As the third quarter kicks into high gear, Wells Fargo is offering up its top short picks for the months ahead. So far this year, stocks have bounced back from the worst year since 2008 , with the S & P 500 up 14.9%. Technology stocks have fared even better, with the tech-heavy Nasdaq Composite up 30.7% Even with these broad gains, analysts at the Wall Street firm outlined 11 of its best stock ideas across five sectors. Here are some of the names that made the cut: Wells Fargo highlighted consumer electronics stock Vizio as one of its top picks with about 126% upside potential with strong top-and-bottom line growth potential. Shares should also benefit from improving connected TV trends, said analyst Steven Cahall, despite their 12% slump this year, as of Wednesday's close. "We perceive VZIO as uniquely integrated between smart TV sets and its connected TV (CTV) operating system, implying advantages to building an installed base of monetizable active users in the fast-growing CTV marketplace," he wrote. "Our optimism is underpinned by growth in future [average revenue per user], especially from advertising, which should accelerate VZIO's profits." VZIO YTD mountain Vizio shares in 2023 Within the technology sector, Wells Fargo also highlighted Pinterest as a third-quarter pick. Analyst Ken Gawrelski projects about 23% upside ahead, driven by the company's investor day, better-than-expected third-quarter revenue guidance and its monetization partnership with Amazon. Synopsys , also made the cut. The software stock involved in the chip sector surged about 34% this year through Wednesday's close as anything tied to generative AI trends gets a lift. Wells Fargo views the latest technological whirlwind as a "once-in-a generation product cycle" for the company that could contribute to about 17% upside potential in shares. Shares should also benefit from increased management focus on optimizing operating margins and growth within its IP and software integrity business, wrote analyst Gary Mobley. "We expect licensing for AI-enabled [electronic design automation] tools to drive acceleration in company revenue and backlog," he added. Wells Fargo also included lithium producer Albemarle and J.B. Hunt Transport Services among its top third-quarter ideas. — CNBC's Michael Bloom contributed reporting