The Top Stocks to Own in the Second Half, According to Btig

BTIG has released its updated list of top stock picks as we head into the second half of 2024.

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At the start of the year, many investors anticipated a broader rally, but BTIG’s chief market technician Jonathan Krinsky now questions this outcome. While the S&P 500 has risen 16.7% in 2024, the Russell 2000 small-cap index has remained mostly unchanged.

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Krinsky noted that the equity market’s leadership has been shifting among various megacap stocks. This high concentration in large-cap stocks may pose significant risks later in the year. "Mega-caps continue to play ‘whac-a-mole,’ where one name takes a breather while another picks up the slack," he observed. "The biggest risk for the second half is if those names all begin to fall together."

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Against this backdrop, BTIG has shared its top stock picks for the latter half of the year. The firm has given a buy rating to all these stocks and added 20 new names to its selection.

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One new addition to BTIG’s list is the athleisure retailer Lululemon Athletica. The stock has declined more than 41% year-to-date. However, analyst Janine Stichter’s price target of $425 suggests a potential rise of about 42% from Friday’s close. "Despite recent noise, LULU remains one of the most consistent growth stories in retail. Supported by a strong brand, the company has shown its ability to navigate various macro, fashion, and competitive cycles," Stichter wrote. She sees future growth coming from the brand’s expansion into men’s clothing and newer products like footwear, as well as increased brand awareness and continued expansion of retail space.

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Another new addition to the list is aerospace and defense firm Northrop Grumman. Analyst Andre Madrid has set a price target of $565, indicating roughly 30% upside potential for the stock. Shares of Northrop Grumman have fallen 7% this year. Nonetheless, Madrid views the company as one of the "best positioned defense primes in the current global threat environment." He expects Northrop Grumman to be one of the fastest-growing defense contractors through the rest of the decade due to its exposure to high-growth markets like space and its incumbency on critical national security programs. With strong free cash flow returned to shareholders via buybacks and dividends, Madrid considers Northrop Grumman the most attractive long-term defense stock.

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Dexcom, a maker of continuous glucose monitoring devices, is also a new addition to BTIG’s top picks. Analyst Marie Thibault believes the stock’s 8% year-to-date decline has created an appealing entry point. "We see exciting growth opportunities and catalysts in the next six months for DXCM and view the recent stock pullback on fears of salesforce disruption as an opportunity to acquire shares at a relative discount," she wrote. Thibault highlights the company’s expanding patient base, which could lead to strong recurring revenue. Her price target of $156 represents approximately 37% upside from the stock’s Friday closing price of $113.69.

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Returning to the list is cybersecurity company Okta. Analyst Gray Powell has a price target of $128 for the stock, translating to roughly 33% upside. "We are reiterating OKTA as our top pick as we believe it has the most potential to re-rate of any name in our coverage as execution improves and the company moves further past the breach headlines from October 2023," Powell wrote. Okta has gained more than 6% this year.

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Other existing names on BTIG’s top stock picks list include Steve Madden, Block, and Domino’s Pizza.

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Steve Madden, a footwear and accessories brand, continues to show strong fundamentals. Analyst Dana Telsey maintains a positive outlook on the company due to its robust brand portfolio and innovative product offerings. She believes Steve Madden is well-positioned to capitalize on consumer demand trends.

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Block, formerly known as Square, remains a top pick due to its expanding ecosystem of financial services. Analyst Mark Palmer sees significant growth potential as Block continues to integrate its various services and expand its customer base.

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Domino’s Pizza is also a key pick for BTIG. Analyst Peter Saleh highlights the company’s strong digital presence and innovative marketing strategies, which have helped it maintain a competitive edge in the fast-food industry. With a focus on expanding its delivery and carryout services, Domino’s is expected to continue delivering solid performance.

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In summary, BTIG’s updated list of top stock picks for the second half of 2024 reflects a strategic mix of new additions and existing favorites. The firm remains optimistic about the potential for these stocks to perform well despite the broader market uncertainties, emphasizing growth opportunities, strong fundamentals, and strategic positioning within their respective industries.

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