Credit Suisse gives its top stock picks for the second half

Published Tue, Jul 11 202311:36 AM EDTUpdated Wed, Jul 12 20235:50 AM EDT

After a strong first half for the stock market, Credit Suisse has an idea to keep the gains going. Stocks recorded a strong first six months of 2023 as investors rebounded off 2022's sell-off and bought into the buzz around artificial intelligence. It was the best first half of the year for the S & P 500 since 2019 and for the Nasdaq Composite since 1983. Now, questions swirl around if the market can continue its ascent as the second half of 2023 kicks into high gear. Credit Suisse asked every one of its U.S. research analysts to name their top stock picks when looking at the next six to 12 months. Here are some of their choices. Aluminum producer Alcoa made the list, with analyst Curt Woodworth expecting shares to mount a comeback after its nearly 25% tumble so far this year. The stock should be helped as LME aluminum prices come back from lows, Woodworth said in a note, upgrading the stock to outperform from neutral in May. "Aluminum has compelling secular demand growth driven by increased consumer preference for sustainable materials as aluminum is infinitely recyclable (packaging) and leverage from the EV / energy transition is greatly underappreciated versus copper, in our view," he said. Woodworth is in the majority on Wall Street, with the average analyst holding a buy rating, according to Refinitiv. His price target implies shares could rally nearly 35% over the next year. International Game Technology also made the list, with analyst Ben Chaiken expecting big upside ahead even after a strong first half. He anticipates the stock could more than double its share price in the next year following a nearly 40% rally so far in 2023. The gaming stock could be helped by improving sentiment in the broader space, the potential for a re-rating, the generation of significant free cash flow and the possibility for estimates to come in higher, Chaiken said. Reaching investment grade metrics could also help with the restricted payment basket removed and potential for unlimited capital return through initiatives such as increased stock buybacks. Biopharmaceutical stock Insmed , meanwhile, could outperform after seeing relatively modest gains this far in the year. Analyst Judah Frommer has forecast shares will skyrocket more than 125% within the next 12 months after adding just 2.1% so far this year, which means the stock has underperformed the broader market year to date. Every analyst with a rating on the stock considers it a buy, according to Refinitiv. INSM.SPXYTDmountainInsmed vs, the S & P 500, year to date Frommer said Insmed's drugs in development may not be fully appreciated by investors as focus moves away from quarterly revenue changes toward the long-term investment opportunity in the pipeline. "We believe INSM's pipeline remains undervalued and think the name offers perhaps the most compelling multi-year risk/reward within our coverage universe," Frommer said. But not every top stock has huge gains expected on the horizon. Infrastructure construction company MasTec has just 1.5% upside anticipated, meaning its rally of more than 35% so far this year may be losing steam. Still, analyst Jamie Cook said the company is trading at a discount to its peers and is well-positioned to capitalize on long-term growth opportunities as focus moves away from the oil and gas business. — CNBC's Michael Bloom contributed to this report.