Following our list of 50 Companies to Watch in January, we're back with 10 specifically for the second quarter based on scenarios from Bloomberg Intelligence analysts. The companies in the spotlight span sectors and regions and are part of a larger group of high-confidence Focus Ideas that BI analysts identify on an ongoing basis. Each scenario outlines important catalysts coming in the next few months that support our case.

For more information on Bloomberg Intelligence please visit www.bloomberg.com/bi

AIA

Outlook ☀️
As one of Asia’s leading life insurance companies, AIA is poised for a significant recovery in new policy sales with China’s reversal of its Covid Zero policies. Purchases of life insurance by mainland Chinese visitors to Hong Kong seeking to diversify their investments all but evaporated over the past three years; BI’s scenario analysis points to about a 40% resurgence in 2023, almost double the consensus estimate. —Steven Lam
Data Sheet
Market cap $124B
Sales, last 12 months $36.3B
Expected 2023 revenue growth, consensus 30%
President/CEO/Executive Director Lee Yuan Siong
Legal name AIA Group Ltd.
Triggers
  • May’s weeklong Labor Day holiday in China should propel a jump in tourist traffic to Hong Kong and provide a hint about renewed spending and investment.
  • Airline and rail passenger data in the second quarter will provide further evidence of recovery in Chinese visits to Hong Kong.

BBVA

Outlook ☀️
Spain and Mexico are the core of the Spanish bank’s business, and BI’s analysis suggests the consensus expectations underestimate the benefits to its net interest margin in the former and loan growth in the latter. At the same time, the market appears to be overly concerned about risks for BBVA’s Turkish operations, which account for just 7% of its net profit. —Lento Tang
Data Sheet
Market cap $42.3B
Sales, last 12 months $26.2B
Expected 2023 revenue growth, consensus 10%
CEO Onur Genç
Legal name Banco Bilbao Vizcaya Argentaria SA
Triggers
  • First-quarter results scheduled to be released in April appear likely to demonstrate further expansion in profitability and little risk related to recent volatility in the banking sector.
  • The Turkish election, expected in the second quarter, will provide greater visibility on the country’s economic and central bank policy.

Capgemini

Outlook ☀️
Europe’s biggest IT services provider is well positioned to help companies navigate strategic transformations in areas such as the cloud and digital, and it has less exposure to more cyclically exposed segments like telecom, media and technology (TMT), or finance. Its record order backlog in the fourth quarter informed BI’s expectation of a 2023 revenue boost exceeding 10%, far better than the consensus view of 5% and management’s guidance for 4% to 7%. —Tamlin Bason
Data Sheet
Market cap $31.1B
Sales, last 12 months $23.2B
Expected 2023 revenue growth, consensus 5%
CEO Aiman Ezzat
Legal name Capgemini SE
Triggers
  • First-quarter sales released in May should show robust growth, spurring management to raise the full-year guidance.

Casey’s

Outlook ☁️
Expectations for the US convenience-store operator appear too optimistic, particularly for its grocery and prepared-foods segment. The economic backdrop of high inflation and constrained real incomes makes it more likely that consumers will trade down to lower-priced products. And as Casey’s expands beyond its core markets in Iowa, Kansas, Missouri and Nebraska, it risks suffering from low brand recognition. —Diana Rosero-Pena
Data Sheet
Market cap $8B
Sales, last 12 months $15.1B
Expected 2023 revenue growth, consensus -4%
President/CEO Darren Rebelez
Legal name Casey’s General Stores Inc.
Triggers
  • Fiscal fourth-quarter results expected in June could miss analyst consensus estimates, which have been relatively stable so far this year.

GFL

Outlook ☁️
This Canadian waste company has become North America’s fourth-largest environmental-services provider through multiple acquisitions. BI believes growth will slow, however, and estimates that cash flow will disappoint by 7% or more this year. Higher interest rates, a leveraged balance sheet and low prices for recycled materials (down 70% year-on-year) will likely crimp acquisitions and the profitability of existing operations. —Scott Levine
Data Sheet
Market cap $11.4B
Sales, last 12 months $5.2B
Expected 2023 revenue growth, consensus 13%
Chairman/President/CEO/Founder Patrick Dovigi
Legal name GFL Environmental Inc.
Triggers
  • First-quarter results in April should provide an update on any new deals and shifting trends in cash flow.
  • Monthly recycled-paper pricing trends look likely to remain depressed, given economic uncertainties.

Hong Kong Exchanges

Outlook ☀️
As one of Asia’s leading exchanges, HKEX is poised to benefit from tailwinds the analyst consensus doesn’t seem to fully appreciate. It operates with significant fund balances that are sensitive to rising interest rates, and BI’s analysis points to a positive surprise in investment income. China’s economic reopening should also propel a recovery this year in Hong Kong initial public offerings—a high-margin business for HKEX. —Sharnie Wong
Data Sheet
Market cap $55.5B
Sales, last 12 months $2.4B
Expected 2023 revenue growth, consensus 19%
CEO/Executive Director Alejandro Nicolas Aguzin
Legal name Hong Kong Exchanges & Clearing Ltd.
Triggers
  • In April, first-quarter results will likely showcase better investment income and a growing pipeline of IPOs.
  • Alibaba’s planned spinoff of business units could create listing opportunities for HKEX, with additional details likely in coming months.

Skechers

Outlook ☀️
The maker of comfy sneakers is poised to deliver strong sales growth that exceeds analysts’ expectations. Its investments in technology, including an e-commerce platform and loyalty program, and distribution success during the past few years are key to its bright outlook, according to BI. Its two-pronged in-store and digital sales approach and an expansion into new markets are poised to drive growth of more than 10% in BI’s scenario for 2023. —Abigail Gilmartin
Data Sheet
Market cap $7.1B
Sales, last 12 months $7.4B
Expected 2023 revenue growth, consensus 7%
Chairman/CEO/Founder Robert Greenberg
Legal name Skechers USA Inc.
Triggers
  • First-quarter results expected in late April will provide more insight into the outlook for improving sales trends through the year.
  • New distribution centers in India and Canada should come online by midyear, supporting further international growth.

Gap

Outlook ☀️
The clothing retailer is poised for a more significant recovery in sales and earnings in 2023 than the consensus is expecting. BI believes a new CEO—to be announced soon—will likely accelerate important changes in key brands. Old Navy, which accounts for about half of the company’s sales, has made significant changes in its lineup and cleared out old inventory, setting the stage for a recovery. And a successful reinvention of Banana Republic offers a blueprint for reenergizing the Gap brand. —Mary Ross Gilbert
Data Sheet
Market cap $3.3B
Sales, last 12 months $15.7B
Expected 2023 revenue growth, consensus -4%
Chairman/Interim CEO Bobby Martin
Legal name Gap Inc.
Triggers
  • A new CEO is likely to be named in the second quarter, a critical step in Gap’s transformation.
  • First-quarter earnings expected in May will likely show progress on merchandising changes after the restructuring taken in the fourth quarter.

Ulta

Outlook ☀️
Beauty routines are proving to be a priority for consumers as the effects of the pandemic wane and the return to office gains pace, and Ulta’s chain of US beauty stores is sitting pretty as a result. BI’s consumer survey suggests management’s guidance of 4% to 5% same-store sales growth in 2023 is far too low. And Ulta is extending its revenue-generating opportunities with more stand-alone stores and the expansion of a partnership with Target. —Lindsay Dutch
Data Sheet
Market cap $26.7B
Sales, last 12 months $10B
Expected 2023 revenue growth, consensus 9%
CEO David Kimbell
Legal name Ulta Beauty Inc.
Triggers
  • First-quarter results expected in May are poised to show continued strong demand and provide an opportunity for management to boost its conservative guidance.
  • Around midyear, second-quarter results should provide the best year-over-year comparison for 2023 (last year’s period was still depressed from the pandemic) and demonstrate better-than-expected sales over the first half.

Vestas

Outlook ☀️
As a global leader in wind turbines, the Danish company is poised to benefit from increased funding for greener energy projects on both sides of the Atlantic. And steel prices, a key cost, have fallen, improving Vestas’s profit margin. As a result, BI’s scenario analysis points to about a 25% better operating profit in 2024 than the consensus expectation. —Rob Barnett
Data Sheet
Market cap $27.3B
Sales, last 12 months $15.3B
Expected 2023 revenue growth, consensus 3%
President/CEO Henrik Andersen
Legal name Vestas Wind Systems A/S
Triggers
  • First-quarter results due in May should showcase accelerating investment on wind farms in Europe, with the European Union’s RePowerEU program, and in the US with the Inflation Reduction Act.
  • Monthly steel price trends during the second quarter are likely to remain lower than they were a year ago.

Illustrations by Charlit Floriano.

Market value as of March 29, 2023.

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