As investors approach year-end, Wells Fargo is offering its top high-conviction and catalyst-driven trade ideas for the fourth quarter of 2023. Although uncertainty around rising interest rates has sent stocks lower since their recent peak in late July, the S & P 500 is still up 10.8% this year. The Nasdaq Composite is higher by more than 26%. Question marks notwithstanding, analysts at Wells Fargo recently shared their top 10 tactical ideas for the next three months. Here are five of the stocks that made the list: The bank highlighted Apellis as one of its top picks, saying it offers about 62% upside potential. Shares of the biopharmaceuticals firm have sold off nearly 20% so far this year, as a series of safety concerns have arisen regarding its newly approved Syfovre eye injections. But the worst could now be over, wrote analyst Derek Archila. “We like the risk/reward for the stock over the next 6-9 months as we expect stabilizing retinal vasculitis cases at the update in mid-October to alleviate concerns about Syfovre’s safety,” he said. “It also looks on track to beat consensus sales estimates in 3Q23 which we think is underappreciated by the Street.” APLS YTD mountain APLS YTD chart Within technology, Wells Fargo highlighted Microsoft as a top pick. Analyst Michael Turrin projects about 25% upside ahead, citing double-digit earnings growth in 2024, improving sentiment toward the Azure cloud computing platform and further investments in artificial intelligence services as key catalysts. Aerospace and defense technology firm L3Harris Technologies also made the cut, with analyst Matt Akers forecasting 30% upside. “We expect LHX to work through macro issues (supply chain/ labor/inflation) faster than its peers given its shorter-cycle business, and we see significant upside to earnings once this occurs,” he wrote. Akers added, “LHX trades at a ~20% discount to its defense peers despite growth that we think is at least in line, and we see catalysts to help close this gap including numbers moving higher for its Aerojet deal, December investor day and likely asset divestitures.” Wells Fargo also included hotel and casino company Caesars Entertainment and discount retailer Ollie’s Bargain Outlet among its top trade ideas for the fourth quarter. — CNBC’s Michael Bloom contributed to this report.
