Post-election rally stalls, but these 3 stocks may continue to rise
Following the recent presidential election in the United States, markets reacted positively, leading to short-term gains across almost all asset classes. This phenomenon, informally referred to as the "general rally", may be gradually cooling, but traces of this optimistic period still remain.
More specifically, the manufacturing sector, particularly the US basic materials sector, is showing signs of potential long-term growth. Added to this is Wall Street's growing interest in the energy sector and international high-margin technology stocks.
Caterpillar: the world leader in construction and mining equipment
Caterpillar $CAT is a global manufacturer of construction, mining and agricultural equipment, diesel engines and industrial equipment. Its products are used in a wide range of industries.
Caterpillar, a giant with a market capitalization of $187 billion, is up as much as 54% over the past 12 months. Yet Wall Street analysts still believe in the possibility of further double-digit growth, thanks to the expected weakening of the U.S. dollar. A weaker dollar will make US exports cheaper for foreign buyers, which could stimulate US manufacturing and employment.
Analysts say Caterpillar has the potential to reach as high as $500 a share, representing potential growth of tens of percent from current prices. Moreover, its strong international presence gives it an advantage over competitors that rely primarily on domestic markets.
Exxon Mobil: One of the world's largest oil and gas players
Exxon Mobil $XOM is a leading global energy company focused on the production, refining and marketing of oil and natural gas. It also conducts research into renewable energy and advanced technologies.
The energy sector should benefit from higher inflation and a weakening dollar. That is why Warren Buffett decided to invest in Occidental Petroleum while supporting the growth of energy giant Exxon Mobil. Exxon's shares have risen 16% in the past year, and further growth could be driven by a steady rise in oil prices.
Analysts at Jefferies Financial Group have set a target price for Exxon at $145 per share, which would imply a potential upside of as much as 20%. Moreover, big player names such as Geode Capital Management continue to add to their positions, signaling long-term confidence in the sector.
Adobe: Leading player in software
Adobe $ADBE is a technology company best known for its graphic design, video editing and digital marketing tools such as Photoshop, Illustrator and Adobe Premiere. It also offers cloud services for businesses.
Companies that can generate high profits due to the scalability of their services are gaining ground in the technology sector. Adobe is a shining example. Its move to a subscription-based business model has led to increased revenue predictability and revenue stability, which is key in uncertain economic conditions.
Adobe has a gross margin of up to 88.7%, allowing its management to reinvest heavily in growth. Analysts at Bank of America recently raised their target estimate to $640 per share, which would represent a 27.1% increase. Moreover, thanks to its strategy and innovative products, Adobe has a chance to reach a new 52-week high.
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Source: Marketbeat
