Need to Know: An investor shopping list: 20 high-conviction stocks with average upside of 25%

Banking


Like POTUS’s chances for a Nobel Peace Prize, investor enthusiasm for stocks may not be such a sure thing at the moment.

News that North Korea may bail on that historic summit could adding to the market’s recent worries. That’s after a jumping 10-year yield and dollar strength helped put a halt to the Dow’s eight-session advance yesterday.

If this market has truly turned a corner, investors may want a little more proof. Still, a bump in the road may not deter those who love the thrill of the hunt for good stocks.

That brings us to our call of the day from HSBC global equity strategist Ben Laider and his team. They offer up 20 stock picks from around the world, saying they have the potential to gain 25% on average from here.

Investors are looking at “more normalized and lower equity-market returns” so stock picking is even more important, Laider says. And rising volatility opens up “great opportunities for potential market dislocations and mispricing,” he writes in a note to clients.

First pick, Mosaic

MOS, +1.47%

 , which HSBC rates a buy with a $35 price target — making for 32% upside. Why buy? Short supplies seen for phosphate — vital to plant growth — as well as strong earnings and an attractive valuation.

Next, Baker Hughes

BHGE, +1.09%

 , buy rated and with the potential to climb 23%. It’s on track to score $700 million in synergies this year, as well as achieve $7.8 billion in free cash flow over the next three years, says HSBC.

And a little blue box of luxury: Tiffany

TIF, -1.08%

 , which HSBC likes thanks to its thriving jewelry segment, a management shake-up and a return to growth. They’ve got a $125 price target, implying 21% upside.

Take a look at the following chart, which lays out the rest of Laider & Co.’s picks across Europe and emerging markets:




Looking for conviction?Here’s a PDF of that chart
Key market gauges

Dow

YMM8, -0.12%

 , S&P 500

ESM8, -0.10%

 and Nasdaq-100 futures

NQM8, -0.04%

 are wobbling after Tuesday’s downbeat session, which left the Dow

DJIA, -0.78%

with its biggest loss in three weeks, and the S&P 500

SPX, -0.68%

 and Nasdaq

COMP, -0.81%

 also bruised.

The 10-year Treasury yield

TMUBMUSD10Y, -0.48%

is hovering near a 2011 high.

Asian stocks struggled amid jitters over North Korea. New Zealand stocks

NZ50GR, -1.76%

 slumped 1.8%. Europe stocks are mostly lower, with Italian stocks

I945, -2.27%

 down over 2% on worries about radical plans by antiestablishment parties to change the country’s relationship with the EU.

The dollar

DXY, +0.35%

is up again, oil

CLM8, -0.52%

is soft, and gold

GCM8, -0.26%

is little changed.

See the latest in Market Snapshot

The buzz

Macy’s

M, +1.01%

reports this morning, with Cisco

CSCO, -0.48%

 and Take-Two

TTWO, -0.81%

 coming after the close. Walmart

WMT, +0.15%

 posts results Thursday.

Plus: Why buy Walmart? Because it can live in harmony with Amazon

Amazon

AMZN, -1.59%

 is rolling out Whole Foods discounts for Prime members in Florida, with those price cuts going nationwide this summer.

First-quarterly filings for big investment funds may put some stocks in play: Warren Buffett’s Berkshire Hathaway

BRK.A, -0.67%

BRK.B, -0.91%

added to Teva

TEVA, -0.39%

 and Monsanto

MON, +0.27%

 . Dan Loeb’s Third Point took stakes in Wynn Resorts

WYNN, -0.37%

 , United Tech

UTX, -0.34%

 and upped a Facebook

FB, -1.24%

 holding. Soros Fund Management upped its Aetna

AET, -0.40%

  and Baxter

BAX, -1.05%

  stakes.

David Einhorn’s Greenlight Capital added to its Brighthouse Financial

BHF, -0.78%

 stake and trimmed Apple

AAPL, -0.91%

 and GE

GE, +0.00%

 holdings. Stanley Druckenmiller put his money on chip stocks like Intel

INTC, -1.79%

 , Micron

MU, +1.91%

  and Qualcomm

QCOM, -1.94%

Twitter is planning to crack down on trolls with software that automatically demotes their tweets.

Ireland-based bookie Paddy Power

PPB, +7.15%

 is in merger talks with FanDuel over a U.S. business. That’s as the U.S. Supreme Court opens the door to widespread sports betting. Fun fact: Americans lost $107 billion last year on state-sanctioned gambling.

Milk lovers were crying in New Zealand. That index slumped about 1.8% after A2 Milk

ATM, -13.74%

 got crushed 13% over disappointing results.

On the economic beat, housing starts, industrial production and capacity utilization are all rolling out. Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard are both speaking today.

The chart

It was notable yesterday that some safety plays like gold or the yen didn’t get much of a look-in even as stocks were slumping. Another such play, the Swiss franc

USDCHF, -0.1398%

 , hasn’t had a great time of it either.



Market#Watch

True Contrarian scribe Steven Jon Kaplan says investors should consider taking a bullish position on the Swiss currency. He tells his subscribers that the franc has had some bouts of dropping below parity against the dollar, which goes against history and “isn’t justified.”

The quote


Ed Jones/AFP/Getty Images

North Korea’s leader Kim Jong-Un looks out toward a military parade in Pyongyang.

“It is absolutely absurd to dare compare the DPRK, a nuclear weapon state, to Libya which had been at the initial stage of nuclear development. We shed light on the quality of Bolton already in the past, and we do not hide our feeling of repugnance towards him.” — North Korean Deputy Foreign Minister Kim Kye-gwan

That nugget came in the isolated nation’s warning that it could pull out of a summit with U.S. President Donald Trump. Pyongyang is highlighting its unhappiness with demands from American national security adviser John Bolton. Here’s the full statement from Kye-gwan.

Random reads

The ‘Yanny’ or ‘Laurel’ debate is still dividing friends and families.

Study shows an alarming rise in number of kids at risk for suicide

“Father of A.I.” says humans need to chill

Google has doodled glamorous deco-era painter Tamara de Lempicka

Baltimore’s police commissioner stepped down after failing to file three years of taxes

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