Do sales and share price move in tandem for Alphabet, Alaska Air, Micron Tech

It was the best of times and it was the worst of times. The year 2020 rocked some companies while others just simply rocked it. The likes of Tesla [TSLA], Amazon [AMZN] and Moderna [MRNA] couldn’t have had it better. That said, as things stabilize post-pandemic perhaps investors should be looking at rebound opportunities. CNBC compiled sales data for some of the top S&P 500 stocks that expect a boom in 2021 and 2022.

Topping the charts were Alaska Air Groups [ALK] likely to benefit from the return of travel, Google’s parent company Alphabet [GOOGL] and Micron Technology’s [MU] both continuing to a changed work environment post-pandemic.

 

Travel shows signs of recovery

COVID-19 was devastating for airlines and their stock prices. On 20 March 2020, Alaska Air Groups’ [ALK] share price had fallen 65.23% since the start of the year to close at $23.56, its lowest value since 2013. Unlike its peers, however, the share bounced back to reach its highest value since November 2018 when it closed at $73.74 on 6 April 2021. At close on 19 August, the share price still remains 3.81% up year-to-date at $53.98.

Analysts see an upside for the stock given estimated sales growth for 2021 is pegged at 74.6% and 2022 at 37.1%.

In its second-quarter earnings, released 22 July, Alaska Air posted a loss of $0.30 per share, which beat the Zacks Consensus Estimate by 3.23% and was a significant improvement from $3.54 loss per share a year ago. Revenues reached $1.53bn for the quarter, lower than Zacks Consensus Estimate by 0.32%. Still, it was 263.42% higher than $421m in 2020’s second quarter.

“Its strong cash flow this year has reduced its net debt and lease liabilities to less than $1 billion: better than pre-pandemic levels” - Adam Levine-Weinberg

 

“As we put the worst of last year's downturn behind us, Alaska is back on the path to profitability,” said Alaska Air Group CEO Ben Minicucci. The company’s cash flow sets it apart from competitors, wrote Adam Levine-Weinberg for The Motley Fool. "Its strong cash flow this year has reduced its net debt and lease liabilities to less than $1 billion: better than pre-pandemic levels.”

Of 16 analysts polled by CNN, 15 have a 'buy’ rating on the stock. There are 15 analysts on CNN that have a 12-month price forecast for the stock ranging from $94 to $68. Their median target of $80 represents a 48% increase from Thursday’s close.

 

Alphabet spells success

Credit Suisse analyst Stephen Ju believes Google's second-quarter results showed clear signs that the pandemic has increased urgency among retailers (particularly smaller businesses) to conduct more business online, reported The Fly. This spells good news for Google’s parent company Alphabet [GOOGL].

The stock gained nearly 40% in the first six months of the year. The gradual uptick continues. Alphabet’s share price closed at $2,738.27 on 19 August — up 56.3% year-to-date.

Credit Suisse has an ‘outperform’ rating on the stock with a price target of $3,400.

According to CNBC, sales are expected to grow by 35.8% for 2021 and 16.5% in 2022. In its second-quarter earnings report, Alphabet announced earnings of $27.26 per share up 169.1% year-over-year, beating the Zacks consensus estimate by 37.1%. Revenues grew, by 62% year-over-year and 11.9% from the previous quarter. The market so far has shrugged these stellar numbers.

“In Q2, there was a rising tide of online activity in many parts of the world. Our long-term investments in AI and Google Cloud are helping us” - Sundar Pichai, CEO of Alphabet

 

“In Q2, there was a rising tide of online activity in many parts of the world,” said Sundar Pichai, CEO of Google and Alphabet. “Our long-term investments in AI and Google Cloud are helping us.”

Out of 45 analysts polled by CNN 37 have a ‘buy’ rating on Alphabet. The price is forecast to be between $2700 and $3,600 according to 38 analysts on the news website. Their median would be 15.4% higher than Thursday’s closing price.

 

Micron Technology Inc.

The work-from-home phenomenon that boomed during the pandemic is expected to hold even after things settle. Computer memory and data storage chip manufacturer Micron Technology’s [MU] is likely to ride the wave.

Micron Technology’s share price so far this year has been choppy. It fell to a low of $68.81 on 12 August, before closing at $70.28 on 19 August — down 6.5% year-to-date. Its highest close of 2021 was on 12 April at $95.59. The share could trudge back to those levels if Micron’s sales continue to mount. Analysts estimate 2021 sales to grow by 29% and 2022 sales to grow by 34.5%.

When Micron reported its third-quarter results on 30 June earnings were $1.88 per share up an impressive 129% year-on-year and ahead of Zacks consensus estimate of $1.71. Quarterly revenues of $7.42bn up 36% also beat the Zacks consensus estimate of $7.24bn.

“Micron achieved the largest sequential earnings improvement in our history” - Micron Technology President and CEO Sanjay Mehrotra

 

“Micron achieved the largest sequential earnings improvement in our history,” said Micron Technology President and CEO Sanjay Mehrotra.

However, as the semiconductor shortage rolls on, some analysts are wary. Evercore ISI analyst  CJ Muse lowered his price target from $135 to $100 and removed the stock from his Top Picks list, as per The Motley Fool. 

Of the 33 analysts polled by CNN, 27 have a ‘buy’ rating on Micron, 29 analysts offer 12-month price targets ranging from $172 to $75. The median of $115 is 63.6% higher than close on 19 August.