Evercore ISI says with drawdown nearing completion, these stocks could go from worst to first

Stock market bouncebacks like last Friday’s leave investors searching for the stocks that are the most likely to rally the most when recoveries come, however briefly. Evercore ISI tried to find such names by running a screen earlier this week looking at “Drawdown Risk Reversal” stocks in the Russell 3000 index. The bank first looked at stocks with a market value greater than $2 billion and some of the worst performance since the S & P 500 peaked in January, usually down 30% to 60% since the top. Then it narrowed the results down to companies that are already profitable and have some of the fastest 2022 estimated earnings growth. Finally, Evercore further screened for stocks with some of the worst investor sentiment, as reflected in “steep options skew,” where put options are relatively more expensive than call options. The result? Of the 19 stocks on the list, Boeing had the largest market value ($78 billion) and the best contrarian options profile, and Snowflake had the strongest estimated 2022 earnings growth (399%). Other stocks rounding out the top five, ranked by market cap: Datadog , Match Group and Cloudflare . Evercore ISI is among the firms expecting at least a mild bounce in stocks soon. The Dow Jones Industrial average is down for eight weeks straight, the longest losing streak in decades.

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