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Investing.com -- As investors position their portfolios for the final quarter of the year, HSBC analysts have identified several compelling opportunities across different sectors.
Their latest research highlights companies with strong fundamentals, growth potential, and attractive valuations that could outperform in the coming months. Here are the top 5:
1. 3M (MMM)
HSBC maintains a Buy rating on 3M with a target price of $175.00, representing potential upside from the current price of $155.93. Analysts expect continued improvement in organic growth and margins driven by operational efficiency initiatives and innovation.
The company’s exposure to short-cycle manufacturing recovery in the US could benefit from the beginning rate easing cycle. With a 2026 P/E of 18x, representing a 14% discount to peers, 3M offers rerating potential. Catalysts include accelerating organic growth, margin improvements, and a potential resolution to PFAS litigation.
In recent developments, 3M is reportedly exploring the sale of certain industrial assets as part of a strategic review. The company also announced a secondary offering of 8.8 million shares of its former healthcare unit, Solventum Corp.
With a Buy rating and $400.00 target price against the current $335.49, HSBC sees Broadcom as a major beneficiary of ASIC market expansion. The firm expects Broadcom’s CoWoS capacity allocation to increase 81% year-over-year by FY26, supporting strong growth in ASIC revenue.
While consensus estimates align with HSBC’s projection of $30 billion in FY26 ASIC revenue, their bull case scenario suggests potential for $38.5 billion. Analysts believe the ASIC ramp-up will begin in Q1 FY26, potentially providing upside surprise to current expectations.
Several analyst firms, including KeyBanc and Mizuho, have reiterated positive ratings on Broadcom, citing strong demand in artificial intelligence. Mizuho noted a significant deal for "AI Racks" with a customer believed to be OpenAI.
HSBC rates Booking Holdings a Buy with a substantial target price of $7,218.00 versus the current $5,419.87. The company’s diversified portfolio across travel segments and broad geographical footprint (87% of employees outside the US) provides multiple growth drivers and mitigates regional volatility.
Strong relationships with independent properties and growing direct customer engagement (mid-60% excluding B2B) reduce reliance on costly acquisition channels. HSBC expects EBITDA margins to expand from 35.0% in 2024 to 37.8% by 2027, with high cash conversion averaging 95% from 2025-2027.
Booking Holdings has expanded its offerings by making Southwest Airlines flights available for booking on its platforms, including Priceline and Booking.com. Additionally, Erste Group upgraded its rating on the company’s stock to Buy from Hold.
With a Buy rating and $211.00 target price compared to the current $195.18, HSBC views Hershey as their preferred name in Packaged Foods. Despite recent challenges from high cocoa prices, the company has demonstrated pricing power and maintained market share even after 26 consecutive quarters of price increases.
With cocoa prices declining approximately 45% from their December 2024 peak and the inclusion of cocoa in government tariff exemptions, HSBC sees potential for earnings momentum ahead.
The Hershey Company reported second-quarter 2025 earnings and revenue that surpassed analyst expectations. Following the results, Goldman Sachs upgraded its rating on the company to Buy from Sell.
HSBC maintains a Buy rating on Johnson & Johnson with a target price of $210.00 versus the current $188.16. The company’s strong pipeline execution has improved medium-term growth visibility, with three new blockbuster drugs (IMAAVY, Inlexzo, and likely Icotrokinra) expected to add 1.2% to company growth.
The upcoming OTTAVA robotic surgery program, with filing targeted for early 2025, represents additional upside not fully reflected in market estimates. Analysts believe current guidance looks conservative despite the Q2 raise.
More recently, Johnson & Johnson was ordered by a jury to pay $966 million in a baby powder-related case. On the clinical front, the company announced positive 48-week data for its ulcerative colitis treatment TREMFYA and promising Phase 2b results for its investigational drug icotrokinra.
Other names on HSBC’s list of the top stock ideas heading into the quarter included Meta Platforms, On Holding, Oracle, US Bancorp and United Airlines.
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