Betting on bullish action here is a consensus view. Indeed, Wall Street analysts have hiked their year-end targets. On May 15, BMO Capital’s Brian Belski hiked his S&P 500 target to a street-high 5,600. Other analysts have followed, including permabull Tom Lee, who expects the index to hit 5,500 by the end of June.
With more than $6 trillion on the sidelines, we might be due for an explosive second half. That’s why you need some stocks to ride this momentum. Notably, several catalysts could push these stocks to buy higher. Earnings will recover further in the second half. Furthermore, they will flex their earnings power due to idiosyncratic factors highlighted below.
First Solar (FSLR)
This photovoltaic cell maker is in the right spot to benefit from several tailwinds. First Solar (NASDAQ:FSLR) will benefit from the continued shift from fossils to renewable energy. In the U.S. alone, solar power generation will increase by 75% from 163 billion kilowatt-hours (kWh) in 2023 to 286 billion kWh next year. As the largest U.S. solar manufacturer, this company will benefit.
Another big tailwind for FSLR stock is Biden’s administration’s imposition of tariffs on solar imports. Under the new measures, tariffs on solar modules will increase from 25% to 50%. The U.S. government’s actions are meant to shield U.S. solar manufacturing from Chinese competition.
No American company is as well positioned as First Solar to capitalize on these tariffs. It produces 50% more panels than the next competitor in the U.S. Thus, it will profit from the robust demand from industrial-scale or commercial installations.
Considering these tailwinds, First Solar is one of the best stocks to buy. At the end of Q1, its total contracted backlog was 78.3 gigawatts, with orders stretching through 2030. UBS Jon Windham expects EPS to quadruple from $7.78 in 2023 to more than $36 in 2027. With this acceleration, FSLR stock will soar higher.
Prologis (PLD)
After dropping more than 20% from its highs, Prologis (NYSE:PLD), the world’s largest industrial REIT, is a buy. This owner of top-tier warehouses manages over 1.2 billion square feet worldwide. It leases these facilities to logistic firms, e-commerce players and other businesses.
Prologis is at the intersection of two long-term trends that will drive secular demand for its warehouses. First, e-commerce growth will be a revenue tailwind. According to Prologis CEO Hamid Moghadam, e-commerce requires three times as much space as normal brick-and-mortar stores.
The second tailwind is the onshoring trend, in which multinationals are relocating their supply chains to the U.S. Furthermore, companies are seeking more warehouse space for more inventory in an effort to boost supply chain resiliency. This bodes well for its long-term demand.
Last quarter, Prologis reduced guidance by 1%, resulting in a 20% drop in the stock. In my opinion, the stock has been unfairly punished. Luckily, this is an opportunity to buy a high-quality REIT with reliable multinational tenants. Its top tenants include Amazon (NASDAQ:AMZN), Home Depot (NYSE:HD), FedEx (NYSE:FDX), United Parcel Service (NYSE:UPS) and Walmart (NYSE:WMT).
Due to e-commerce and onshoring tailwinds, this industrial warehouse is one of the top stocks to buy. It is a multi-year cash-flow growth story that will prove the doubters wrong.
Waste Management (WM)
Sometimes, trash can be turned into treasure. Indeed, that has been the Waste Management (NYSE:WM) playbook as it has grown into the largest waste collector and recycler in the U.S.
On June 3, the company announced the acquisition of Stericycle (NASDAQ:SRCL) in a $7.2 billion deal. The stock dropped lower after the announcement. However, given the complementary business this deal brings, Waste Management is among the stocks to buy.
Stericycle’s medical waste and secure information destruction portfolio will broaden Waste Management’s service offerings. This will enable Waste Management to offer clients a comprehensive suite of environmental solutions, positioning the company to win business against competitors who lack a broad range of services.
Furthermore, the deal has synergies to boost the combined entities’ earnings and cash flow. Management projects $125 million in annual synergies from cost optimizations.
The Stericycle deal is a game changer for Waste Management due to the market opportunity to deliver diversified services. Moreover, WM stock is a bargain that will work in all environments. In expansions, waste collection tracks economic growth – the more economic activity, the more waste is generated. And in contractions, it is resilient since garbage services are a necessary utility.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.