RBC Capital Markets anticipates that the next quarter could be choppy for stocks, but the firm shared its list of high-conviction names to navigate the volatility. While many investors believe the worst of the recent banking crisis has passed, several macro overhangs remain. “2023 will be a year of very modest gains as part of a messy post-crisis normalization similar to 2002-2003 and 2010-2011, with choppy conditions over the next few quarters amidst cuts to earnings forecasts, a bumpy moderation in inflation, and uncertainty regarding a transition in Fed policy and the onset of a challenging economy,” global head of research Graeme Pearson wrote in a Monday note. With these concerns in mind, RBC shared a list of high-conviction stocks that it says are well-positioned to offer upside this quarter. Below are 10 of the names: Alnylam Pharmaceuticals and biotech engineering stock Boston Scientific are new additions to RBC’s list of high-conviction names. Shares of Alnylam, which specializes in RNA interference therapeutics, have gained about 32% during the past 12 months. Analyst Luca Issi foresees “a rich calendar ahead with multiple catalysts,” including the company’s expansion into treatment for transthyretin amyloidosis with cardiomyopathy through its drug Onpattro. The U.S. Food and Drug Administration is expected to decide on the drug by Oct. 8. An approval would further propel shares, the analyst said. RBC analyst Shagun Singh said Boston Scientific is “positioned to drive consistent double-digit EPS growth,” with upcoming device launches and trial data readouts to act as catalysts. The medical device company’s shares are up 8.3% year to date. On the energy front, RBC named oil company Diamondback Energy as one of its top picks for the quarter. “The company is one of a few that have amassed a combination of quality assets, strong economic growth, minerals ownership, and a water business, which collectively help to provide a competitive advantage,” wrote analyst Scott Hanold. “We believe FANG has one of the lowest cost structures in the [Permian] Basin and a corporate cash flow break-even (including dividend) that is among the best in the industry.” Shares are up more than 3% in 2023. Technology stocks have had a strong 2023, with the S & P 500’s Technology Select Sector SPDR Fund (XLK) up more than 19% year to date. Meta shares have soared nearly 80% in 2023. “In possessing both the largest user base as well as the deepest amount of knowledge of that user base, we believe Meta can compound 15-20% earnings growth once it gest through its currently elevated investment cycle around AI,” wrote analyst Brad Erickson. —CNBC’s Michael Bloom contributed to this report.
