RBC's top stock ideas for the rest of the year include First Solar

Published Tue, Jul 9 202411:25 AM EDTUpdated Tue, Jul 9 202412:56 PM EDT

As the third quarter kicks off, RBC Capital Markets added a solar company and oil giant to its list of Top 30 Global Ideas for 2024. RBC's list includes the firm's highest-conviction stocks offering strong, long-term upside potential that its analysts view as "well-positioned in the current environment." According to Graeme Pearson, the firm's co-head of global research, the Top 30 list of global stocks delivered a total return of 5.2% over the past quarter, just below the MSCI World Index's gains of 5.7%. The S & P 500 delivered 7.3% in the second quarter. Since the inception of RBC's quarterly list in 2019, however, the Top 30 group has returned 77.8%, surpassing the benchmark MSCI World's total return of 63.0% over the same span. For the third quarter, RBC added solar solutions provider First Solar , oil giant Shell and global logistics provider Brambles to its list. The bank also removed Mastercard and Alnylam Pharmaceuticals , which was its best-performing stock in the group last quarter. Take a look at some of RBC's latest top picks for the year ahead: According to RBC, First Solar should outperform its peers given the strong visibility of future revenue and profit margins, its domestic supply chain that allows the company to take advantage of a favorable regulatory environment with IRA credits as well as a strong product road map. RBC had initiated research coverage of First Solar in early February, saying shares should continue to outperform as rooftop and utility solar benefits from global decarbonization and as demand improves in an easing interest rate environment. Since then, several firms have spotlighted the stock as a beneficiary of artificial intelligence-related electricity demand as Big Tech companies look to use clean energy sources to power data centers. First Solar shares have advanced 31% this year, but have declined about 16% over the past month. RBC's $315 price target suggests the stock could jump 39% over the next year. CrowdStrike was the second-best performer of last quarter's Top 30 list, gaining 23.5%, according to Pearson. Shares of the cybersecurity company could gain 7.5% from its last close, based on RBC's $420 price target. This year, the stock has soared more than 51%. "We view CrowdStrike as a prime land-and-expand model benefiting from [software-as-a-service] delivery and ability to rapidly add more modules with no extra configuration or consulting needed," analyst Matthew Hedberg wrote in the note, which was released Sunday. "The long-term power of the install base should lead to strong net expansion rates as the company cross-sells additional seats (endpoints) and modules." CrowdStrike should be able to debut new products and see growth from recently introduced modules, especially its Cloud Workload Protection service, Hedberg said. It should also see accelerated customer additions and faster-than-expected profitability driven by "top-line success," he added. Digital payments stock PayPal is another RBC pick, with its price target suggesting 42% potential upside over the next year. Analyst Daniel Perlin believes PayPal's pivot to narrow its focus on branded checkout and its Venmo monetization could allow the company to reestablish itself as a leader in e-commerce and mobile payments. Shell , a new addition to the list this quarter, has a potential upside of nearly 19%, per RBC. The British oil and gas company is a "cash flow machine" that delivers superior free cash flow yield relative to its peers, RBC said. Brambles, an Australian company whose ADRs trade in the U.S. , should see strong performance ahead as sales and earnings growth are boosted by digital and supply chain investments and improved cash flow conversion, according to RBC. Correction: This story has been updated to correct a ticker symbol in the graphic.