Domino’s och sex andra otippade AI-vinnare
AI-rallyt har fått techaktiers värderingar att springa iväg. Det är ett problem för investerare som söker exponering, men det finns billigare alternativ för den som blickar bortom teknikbolag, skriver Barron’s.
Strateger på finansbolaget Evercore har screenat 3 000 bolag och vaskat fram de som nämnt AI i sina rapportpresentationer, handlas till lägre multiplar än femårsgenomsnittet och väntas uppvisa tillväxt. Körningen mynnar ut i en brokig skara aktier, med bland andra pizzakedjan Domino’s och bankgiganten JP Morgan Chase.
Barron'sDomino’s and 6 Other Unlikely Stocks That Should Benefit From AI
The market is hopeful that artificial intelligence can lift companies’ profits—and not just for Big Tech.
To find stocks that can still benefit, though, one must look for those that remain cheap enough. The problem is that many have already rallied.
The Invesco S&P 500 Equal Weight exchange-traded fund, which weights each stock in the index equally, is up just over 7% this year. The higher valuations reflect the expectation of growing earnings, partly as a result of companies’ use of AI. For the next two years, aggregate sales for the ETF are expected to grow about 4.3% annually, according to FactSet, as the economy remains growing, especially as the Federal Reserve is now more likely to cut interest rates than lift them.
EPS forecasts call for annual growth over the next two years of 10.5%, driven by rising operating profit margins. Much of that is because analysts expect firms to keep the increase in operating expenses limited as they use AI to target sales opportunities in place of new hires.
Strategists at Evercore screened the Russell 3000 for stocks that are trading at multiples of 2024 expected EPS below their five-year averages, are expecting bottom-line growth, have mentioned AI on their earnings calls, and have market values of above $3 billion.
Some names in the screen include JPMorgan Chase, T-Mobile US, Boston Properties, and Emerson Electric.
Another is Domino’s Pizza. The stock trades at 25 times earnings, below its five-year average of 28 times. Analysts are expecting almost 9% EPS growth in 2024, to $15.70.
That would come from expected sales growth of almost 7% to $4.8 billion as the company adds store locations. Same-store sales are expected to nudge slightly higher from higher prices. One of the keys analysts hope can help Domino’s execute these initiatives is digital sales, as it uses Uber Eats and its own app to drive purchases.
That’s where artificial intelligence comes in. The company said on its October earnings call that it’s using AI to personalize the user experience on food-ordering apps, which could keep customers loyal. Management also cited “streamlined operations” as a result of AI.
Then there’s Eaton, the $95 billion manufacturer of products that enable the production of energy-efficient power in various industries. The stock trades at about 23 times earnings, a few points below its five-year average. Analysts expect EPS to grow about 11% to $9.95 in 2024.
Driving that would partly be sales growth. Eaton also expects its end markets to continue growing as its customers increasingly build out AI-powered equipment. To prepare for the demand, the company doesn’t have to drastically increase salary expenses, with Wall Street looking for general and administrative expenses to drop a few hundred million dollars to $576 million next year, lifting operating profit margins.