Phil Rogers

February Pick: HSBC (LSE:HSBA)

The global bank has seen the share price bounce over 18% during January. This has been driven mostly from the pricing in of higher interest rates around the world. We flagged up the potential for the Bank of England to hike rates at the February meeting. Across the pond, we are seeing markets price in between 4-5 hikes from the US Fed in 2022 as well.

This should help HSBC to increase the net interest margin, a key measure of profitability for a traditional bank. It looks at the difference between the rates charged on loans and other liabilities versus the rates given on deposits. Higher base rates allows the net interest margin to rise, boosting revenue for the company.

In terms of risk, the behemoth is still not finished with its transformation in slimming down to become more efficient. As a product of this, the bank will likely still have sprawling costs that will impact profit margins.

Jesse Williamson

February Pick: Upstart Holdings (NASDAQ:UPST)

Upstart Holdings has been a popular growth name for some time. When they released strong earnings and forecasts in August of last year, the share price rallied nearly 200%. However, growth names sold off during the end of 2021. Down 75% from highs and 32% year-to-date, Upstart may seem like a risky pick for this month.

Growth has seen a small flash of hope in the past days. The S&P500 and Nasdaq have both risen over the past three days as buyers step back into the market. The UPST share price climbed up to the 20-day EMA, closing above it for the first time since November.

There is still a risky downside for UPST. Tides could quickly change again if the market fails to hold this recent move and head lower. But if growth stocks were to get a move, UPST has a nice reward. I’d be looking for a move towards the 200-day MA at $186. Prices will likely open today sub $1 A risk off lows of 75 offer a risk to reward of 3.4:1. Play with smaller size as the risk is still present.

Robert Henrik

February Pick: Vodafone (LSE:VOD)

During this period of market volatility with growth stocks losing favor rapidly, I look for solid large caps with the resilience and value to weather the storm. Vodafone fits the mold perfectly. Despite the market turmoil, the VOD stock price has increased by 19% year to date.

Dividend Yield – as indicated in our weekly data update, VOD is one of the highest yielding dividend stocks in the UK, currently paying 5.8%. This means that we can count on a consistent income source, regardless of any under performance by the stock or the wider market. At the same time, if the stock does perform well, you then obtain a significant total return of price action + dividend.

Analyst Recommendations – VOD is an institutional favorite, as the latest Bloomberg survey of Equity Research Analysts showed that 92% have a “BUY” rating on the stock, with 4% on “HOLD” and another 4% on “SELL”. The consensus 12 month target price is 165 pence, which at current levels implies a potential return of ~24%.

AlphaPicks owns shares in Upstart Holdings. To buy crypto and shares, register here with our preferred partner, EToro.

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