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Microsoft, Amazon Make J.P. Morgan's Top Idea Stock List

The list includes J.P. Morgan analysts' top picks related to near-term factors, growth, value or potential as a short.
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With the S&P 500 having slumped 12% so far this year, you may be thinking now is a good time to dive back into the market.

If so, you might consider stocks from J.P. Morgan’s monthly top ideas stock list. Its equity analysts provide one to three of their top picks related to one of the following strategies: near-term factors, growth, value or potential as a short.

Here are some of the selections, with the strategy in parentheses.

· Honeywell  (HON) - Get Honeywell International Inc. Report (growth), which manufactures an array of industrial products;

· McDonald’s  (MCD) - Get McDonald's Corporation Report (value), the giant fast-food restaurant chain;

· Entergy  (ETR) - Get Entergy Corporation Report (value), a utility;

· Bank of America  (BAC) - Get Bank of America Corporation Report (near-term), the bank titan;

· Eli Lilly  (LLY) - Get Eli Lilly and Company Report (growth), the big pharmaceutical company;

· Celanese  (CE) - Get Celanese Corporation Report (value), a chemical company;

· Amazon  (AMZN) - Get Amazon.com Inc. Report (growth), the online retail/technology company;

· Microsoft  (MSFT) - Get Microsoft Corporation Report (growth), the software stalwart.

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Morningstar’s Take on Honeywell

Morningstar analyst Joshua Aguilar assigns the company a wide moat and puts fair value for the stock at $231, compared to a recent quote of $196.

“Honeywell had a solid first quarter,” he wrote in a May commentary.

“It’s one of the strongest multi-industry firms in operation today. We think the firm has successfully pivoted to capture multiple ESG [environmental, social, governance] trends, including the need to drive energy efficiency, reduce emissions, and e-commerce.”

“Over the next five years, we think Honeywell is capable of mid-single-digit-plus top-line growth … [and] low-double-digit adjusted earnings per share growth,” Aguilar said.

Honeywell can accomplish that through “a combination of portfolio refreshes, powerful new product introductions, breakthrough initiatives and strategic partnerships in areas where the firm has domain expertise,” among other factors, he said.

Morningstar’s Take on Entergy

Morningstar analyst Travis Miller gives the company a narrow moat and puts fair value for the stock at $112, compared to a recent quote of $120.

“We expect earnings for the rest of 2022 to show year-over-year growth,” he wrote in an April commentary.

In its first-quarter earnings report, management reaffirmed its 5% to 7% annual earnings growth target and its 2022 earnings per share guidance, “in line with our forecast,” Miller said. “We expect dividend growth to follow earnings growth.”

“Entergy has nearly completed its transformation into a fully regulated utility like many of its peers,” he said. “Now we think it can benefit from several advantages it has relative to other U.S. utilities.”

That includes “a growing, energy-hungry Southeast U.S. service territory, constructive state regulatory frameworks and a long runway of clean energy growth opportunities,” Miller said.

The author of this story owns shares of Honeywell, McDonald’s, Eli Lilly, Amazon and Microsoft.