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These stocks are seeing falling valuations but improving fundamentals, Credit Suisse says


Stocks are down significantly this year, but certain names have seen earnings increase and look attractive at current levels, according to Credit Suisse. The stock market is struggling this year as investors eye inflation, the Federal Reserve’s rate-hiking cycle, the war in Ukraine and other headwinds. The S & P 500 is off about 14% from its high, and the Nasdaq Composite is off by 25.2%. As of Tuesday, the median S & P 500 company has seen its stock price fall 24.4% from its high, while the median price-to-earnings multiple fell 27.5%, Credit Suisse chief U.S. equity strategist Jonathan Golub said in a note to clients. “Given the severe and uneven decline in stock prices in recent months, sectors and portfolio characteristics (factors) have experienced dramatic shifts in their valuations, with some moving from extremes back to normal, and others still exhibiting substantial discounts or premiums relative to the market,” Credit Suisse’s Patrick Palfrey said in a research note May 11. “Bottom-line, market disruptions realign opportunities,” Palfrey added. Credit Suisse found the top 50 companies with the biggest drawdowns from their peaks and better earnings-per-share figures. Take a look at 10 names on the firm’s list. (Source: Credit Suisse. As of May 24, 2022.) Communications, discretionary and technology are the sectors that have seen the biggest drawdowns from their peaks, according to Credit Suisse. One name to make the list is Twitter . The social media platform has been a fixture in headlines recently after billionaire Elon Musk made a bid to acquire Twitter . Twitter is down more than 52% from its peak but the company has seen its earnings per share grow by about 53%. Semiconductor stock Nvidia has also seen a share price pullback even as its fundamentals improve. Nvidia shares are down roughly 52% from their peak, but the chip maker’s earnings per share have risen 19.2%. Walt Disney is another laggard this year with improving valuations. The stock is down more than 50% from its high, while EPS has jumped 46.3%. Other names on Credit Suisse’s list include Salesforce, Expedia and Nike . –CNBC’s Michael Bloom contributed to this report.

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