Despite the modest rally that we’ve seen since late May, volatility still rules the markets. The overall trend for the year has been down – to the tune of 14% on the S&P 500 and 23% on the NASDAQ. It’s not exactly an environment that would encourage large-scale buying.
But Marko Kolanovic, global market strategist from JPMorgan, takes the contrarian view, explaining why, in his view, current low prices represent opportunities.
“As the market got into oversold conditions, it didn’t take much to completely reverse losses—there were measured comments from the Fed (Bostic), and management of financial institutions giving hope that a policy error and recession may be avoided. Corporate buybacks kicked in post earnings… We believe that this will be a template for the whole year, in the sense that the market sold off in the first half of the year and will be followed by a gradual recovery in the second half,” Kolanovic opined.
In the meantime, Kolanovic’s colleagues among the JPMorgan stock analysts are not shy about pointing out two stocks with potential for solid gains going forward – gains on the order of 50% or better. According to TipRanks’ database, both have received plenty of love from other analysts as well, earning a ‘Strong Buy’ consensus rating. Let’s take a closer look.
Volaris (VLRS)
The first JPMorgan pick is Volaris, a discount airline and a major carrier in the Mexican air travel market. Prior to the pandemic, Volaris held a 28% market share in its home country’s domestic market, giving it a leading position. The airline offers ultra-low-cost fares to destinations across Mexico, the US, and Central and South America.
Volaris has, since the third quarter of 2021, shown a strong revenue rebound from the depressed results of the pandemic period. In the recently reported 1Q22, the company showed a top line of US$567 million, up 80% from the first quarter of 2021. Volaris’ total revenue per available seat mile (TRASM), a key industry metric, rose 18% to reach 7 cents. All of this led to quarterly cash generation of $9 million, and a…
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