June 14, 2022- CME Group Inc.(NASDAQ:CME) and SciPlay Corporation (NASDAQ:SCPL)

These 2022 outperformers received recent analyst upgrades, and are poised to weather the storm as the best stocks to buy now.

Two of the best stocks to buy now are CME Group Inc.(NASDAQ:CME) and SciPlay Corporation (NASDAQ:SCPL), as investors brace for a potential 75 bps rate hike.

Don’t fight The Fed; look at these stocks as strategic vehicles flying under your nose. Both have been outperformers in 2022 and received recent analyst upgrades.

graph 14 june

CME Group Inc., formerly called Chicago Mercantile Exchange, is a prominent player in the capital markets industry. While the broader market has been a volatile bloodbath, this stock is poised to benefit. For instance, it’s actually slightly positive for the week.

graph 14 june 2

What gives? Perhaps a Friday (June 10, 2022) analyst upgrade from Atlantic Securities tacking the stock with a potential 15.77% upside. Comments saying to BUY the exchange operator as it benefits from rising rates don’t hurt either.

Then there’s SciPlay Corporation, a social casino game producer for mobile and web platforms worldwide. Gaming stocks may not currently be the sexiest picks in the world, but SCPL has outperformed year-to-date. It touched a 2022 high on Friday (June 10, 2022) despite the broader market’s sell-off and received an upgrade from Wedbush the same day.

Things got ugly Monday (June 13, 2022) as the Dow declined over 800 points for the second consecutive day. The S&P 500 plunged 3.9% and re-entered a bear market. The Nasdaq put the final matchstick on the dumpster fire and cratered 4.68%.

But, of course, the more the market declines, the more buying opportunities appear.

It’s possible that more downside risk remains, but never time the market. CME and SCPL sit as the best stocks to buy now because they have the potential to continue gaining in this environment.

Here are several reasons why.

CME Group Inc.(NASDAQ:CME)

The world’s largest futures exchange has several tailwinds, positioning to benefit from rising rates, a recent analyst upgrade, and an average upside of 20.30%.

CME Group is the largest futures exchange in the world, with about a 90% market share in the global futures trading and clearing services industry. Beyond its market share, based on trading volume and notional value traded, no other competitor comes close.

It’s about as close as you could get to a monopoly as it serves everyone, from professional traders to financial institutions to governments and central banks.

There are several reasons Atlantic Equities is so high on this stock and why you should be too. Especially during this period of rising rates and volatility.

Volatility is a business tailwind for CME.

Volatility is why CME is one of the best stocks to buy now. The more volatile the market, the higher its clearing and transaction fees are. Furthermore, increasing electronic trading volume adds scalability and leverage to CME’s business model.

Pay attention to CME’s moves with the VIX surging year-to-date and currently sitting over 34.

graph 14 june 3

CME is a habitual earnings beater with mouth-watering growth projections.

CME Group has beaten earnings estimates for six quarters in a row.

For Q1 2022, it reported $2.11 EPS, which beat consensus estimates of $2.00. EPS also surged 17.9% year-over-year from higher clearing and transaction fees and demand for market data and information services.

Moreover, CME’s average daily volume increased in five of its six product lines. Year-over-year, revenue also increased 5%, operating income increased 18.5%, and total expenses decreased 7.7%.

You couldn’t paint a prettier picture in a drearier environment.

According to Zacks, full-year 2022 earnings could be $7.87, which indicates an 18% year-over-year improvement on 7.1% higher revenues. Analysts are also hiking their EPS projections for 2022 and 2023 by 1.3% and 0.1%, respectively.

Furthermore, Finbox sees revenue growing at a 5.4% 5-year CAGR and forecasts net income to grow by 8.1%.

A solid dividend history, cash position, and profitability.

CME has a solid balance of cash and marketable securities that can sufficiently cover interest payments and supports a strong capital position, lending financial flexibility.

These fundamentals, in turn, support CME’s growth initiatives, such as organic market data, new product extensions, and cutting-edge offerings.

CME’s cash flow also supports consistent dividend payments. The Company has increased dividends at a five-year CAGR (2018-2022) of 8.7% and currently boasts a 3.6% dividend yield. Better, its dividends could grow another 18.9% at a 5-year CAGR of 3.9%.

CME is also immensely profitable and efficiently run with a 100% gross margin and 57.4% operating margin. As if you needed more reasons for this player to look like one of the best stocks to buy now.

Not only Atlantic Securities believes in CME.

Beyond the recent upgrade from Atlantic Securities, 15 analysts in total gave CME a 12-month price target in the last 3 months. CME has an average price target of roughly $244.20, representing a 20.30% upside from June 13, 2022’s $202.99 closing price. Its street-high price currently sits at $280.00, while its low sits at $205.00.

CME’s year-to-date low and high are $186.19 and $256.94, respectively.

SciPlay Corporation (NASDAQ:SCPL)

Despite the recent market carnage, this gaming stock just touched a YTD high and has a potential 26+% upside.

Gaming stocks have been crushed in 2022, but SciPlay Corporation is an outlier. It touched its year-to-day high days ago and has substantial potential upside.

With a plethora of social casino games, SciPlay is raking in money and tapping into a market of people worldwide who can’t stay off their phones or computers.

Perhaps you’ve heard of some of their best-known offerings.

  • Jackpot Party Casino
  • Gold Fish Casino
  • Quick Hit Slots
  • 88 Fortunes Slots
  • MONOPOLY Slots
  • Hot Shot Casino

SciPlay is undervalued despite outperforming with strong margins.

Since touching its 2022 low of $10.75 on January 24, SciPlay is remarkably up over 25%.

graph 14 june 4

Yet, it’s trading with only an 18.3x trailing P/E and 15.1x forward P/E.

What makes these discounted multiples even more puzzling are SCPL’s strong fundamental margins.

SCPL holds more cash than debt on its balance sheet. Its games are also addictive and print cash for the Company. Just look at its strong fundamental margins as evidence, including its

  • 7% ROA
  • 7% unlevered ROA
  • 8% ROCE
  • 8% gross margin
  • 0% operating margin

Finbox undoubtedly is bullish on the future potential for SCPL’s games to generate a high net income near-term and long-term. It projects SciPlay’s net income growth forecast to be 19.2% and an average of 79.4% over the next five fiscal years.

Several technical BUY signals.

Another reason why SCPL is one of the best stocks to buy now are its technical indicators. Barchart, for one, spots several bullish signals.

It first notes several moving averages as BUY signals, such as its 50-day and 100-day.

It also sees almost all of its MACD Oscillators as BUY signals, including its 20 – 50 Day,             20 – 100 Day, and 50 – 100 Day.

Analysts see continued upside for SCPL.

SciPlay was just upgraded by analysts at Wedbush from NEUTRAL to OUTPERFORM. Wedbush also hiked its price target from $14.50 to $17.00, representing a 26.21% upside from June 13, 2022’s $13.47 closing price.

In total, 6 Wall Street analysts offered 12-month price targets for Sciplay in the last 3 months. SciPlay has an average price target of $16.17, a street-high of $20.00, and a low estimate of $13.50. Its average price target represents a 20.04% upside from June 13, 2022’s close.

SCPL’s year-to-date low and high are $10.75 and $14.79, respectively.