Bernstein's top stocks for the second half score high on fundamental and quantitative factors

Published Wed, Jul 10 20241:01 PM EDTUpdated Wed, Jul 10 20242:49 PM EDT

As the second half of the year kicks off, Bernstein shared its latest selection of stocks that look attractive on both a quantitative and fundamental level. Bernstein's basket of stocks includes 14 names across six sectors that are highly ranked on a quantitative basis, not crowded and rated as overweight by the firm's analysts. The firm's last portfolio using this strategy returned 17.6% on a market cap-weighted basis over the six months since publication, matching the S & P 500's performance. "Quantitative and fundamental approaches to stock selection can each add value to the investment process, but an integrated and disciplined strategy combining the two methods can produce better results than either method alone," Bernstein analysts wrote. The updated basket comes as the broader market trades at record highs, making it difficult for investors to find attractively valued stocks. Here is a look at some of the names in Bernstein's latest quantitative and fundamental basket of stocks: Telecommunications giant T-Mobile made the list. Shares of T-Mobile have climbed 12% this year, and analyst Ottavio Adorisio's $190 price target implies that the stock could gain another 6%. "What makes TMUS's equity story compelling is the structural nature of its two key growth drivers: 1) strong pricing power and 2) the ability to tap significant scale synergies to boost margins," the analyst wrote. Bank of America is also bullish on the stock, with analyst David Barden raising his price target to $195 from $175 in June. The price increase was spurred by a trip to T-Mobile's headquarters. "We exited the meeting confident in TMUS's ability to execute against its current plan and to continue identifying new growth segments within a mature market," Barden wrote. Fast-casual retain chain Chipotle Mexican Grill was also included in Bernstein's basket. Analyst Danilo Gargiulo said the stock could jump 39% to $80 due to traffic growth, ongoing store openings, product innovation, automation efforts, increased personalized marketing and robust in-store execution and talent retention. "We believe that Chipotle will be able to sustain top-line growth momentum despite the increasingly promotional environment due to their strong and unique value positioning as a 'category-of-one' concept, driving traffic growth of LSD-MSD and same-store sales growth of 7% for FY24 without the need for discount," he wrote. Last month, Goldman Sachs initiated the stock at a buy rating , citing a "still-healthy spending outlook." Shares of Chipotle are up 27% on the year. Automobile manufacturer General Motors has added 30% this year. Analyst Daniel Roeska's $55 price target corresponds to another potential 19% upside from the stock's Tuesday closing price. "General Motors has responded to slowing growth prospects by re-emphasizing its core value proposition: strong cash flows, disciplined capital allocation, and consistent shareholder returns," the analyst wrote. "We expect GM's truck business to remain highly profitable given the oligopolistic nature of the market and the deceleration of the electric vehicle (EV) transition." Earlier this month, General Motors reported second-quarter sales of 696,086 , up 0.6% from this time last year. This number also represented the firm's best quarterly sales figures in more than three years, since the fourth quarter of 2020.