Tag: Investment strategy

March 12, 2023

Top analysts are bullish on these five stocks in uncertain times

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Clifton Pemble, President and CEO, Garmin at the NYSE December 7, 2021.

Source: NYSE

Investors have no shortage of worries, be it the economy slipping into a recession due to higher interest rates or the havoc that whiplashed financial stocks last week.

Nevertheless, there are buying opportunities for those who know where to look.

Here are five stocks to weather the storm, according to Wall Street’s top professionals on TipRanks, a platform that ranks analysts based on their past performance.

Snowflake

Cloud companies are experiencing a marked slowdown in their growth rates as macro challenges affect enterprise spending. Despite the ongoing pressures, cloud-based data warehouse company Snowflake (SNOW) delivered upbeat quarterly results.

Snowflake expects its product revenue to grow by 40% in fiscal 2024, marking a deceleration from the 70% rise recorded in fiscal 2023 (ended Jan. 31, 2023). Nonetheless, Snowflake continues to be optimistic about its growth in the years ahead and expects to achieve its product revenue target of $10 billion in fiscal 2029.

Deutsche Bank analyst Brad Zelnick agrees that Snowflake is “not immune from cloud growth moderation.” (See Snowflake Blogger Opinions & Sentiment on TipRanks)

That said, Zelnick reiterated a buy rating on Snowflake with a price target of $170, saying, “We still firmly believe the long-term outlook remains intact for Snowflake, with its unique multi-cloud architecture, rich platform features, data sharing capabilities and native app development tools positioning it to capture the massive Data Cloud opportunity.”

Zelnick ranks 85th out of more than 8,000 analysts followed on TipRanks. His ratings have been profitable 69% of the time, generating a 14.9% average return.

Salesforce

Let’s move to another cloud company, Salesforce (CRM), which recently reported solid results for the fourth quarter of fiscal 2023 (ended Jan. 31, 2023). The company expects fiscal 2024 revenue to grow by about 10%. While that number indicated a slowdown compared to the 18% growth seen in fiscal 2023, it did come in ahead of analysts’ estimates.

Moreover, Wall Street experts welcomed the company’s profitability projections. Salesforce has been under pressure from several activist investors, including Elliott Management and Starboard Value, to improve its profitability. (See Salesforce Insider Trading Activity on TipRanks)

Mizuho analyst Gregg Moskowitz, who holds the 264th position among more than 8,000 analysts on TipRanks, said that he is “encouraged by the recent activism in CRM over recent months.” The analyst also highlighted the company’s restructuring efforts and its fiscal 2024 operating margin outlook of 27%, which he observed was “even well above the most bullish expectations.”

“Notwithstanding macro challenges, we reiterate that CRM remains well situated to help its vast customer base manage revenue and process optimization via digital transformation,” said Moskowitz.

Moskowitz reaffirmed a buy rating and raised his price target for CRM stock to $225 from $200. Per TipRanks, 55% of Moskowitz’s ratings have generated profits, with each rating bringing in a return of 13.1%, on average.

Hibbett

Next on our list is athletic goods retailer Hibbett (HIBB), which sells footwear, apparel and equipment from top brands like Nike and Adidas. The company’s fiscal 2023 fourth-quarter results missed expectations due to macro pressures, higher costs, supply chain issues and increased promotional activity.

Hibbett expects mid-single-digit sales growth in fiscal 2024, driven by its assortment of high-demand footwear. Also, the company is conducting a “systematic review” of its operating expense structure to improve profitability. (See Hibbett Stock Chart on TipRanks)

Williams Trading analyst Sam Poser highlighted that Hibbett’s relationships with key brands, mainly Nike, are very strong. Additionally, the analyst thinks that the retailer has “the best in class omni-channel, consumer facing operation” in his coverage, which is reflected by the 21.4% rise in digital sales in the fiscal fourth quarter.

Poser lowered his fiscal 2024 and fiscal 2025 earnings per share estimates, given that the company’s recent results lagged guidance. Nonetheless, he reiterated a buy rating on Hibbett and a price target of $82 because he is “confident that HIBB’s guidance is far more realistic, prudent, and conservative than it has been in some time.”

Poser is ranked No. 144 among more than 8,000 analysts tracked on TipRanks. His ratings have been profitable 55% of the time, with each rating delivering a return of 17.6%, on average.

Zscaler

Cybersecurity company Zscaler‘s (ZS) fiscal second-quarter results crushed the Street’s expectations, with a 52% increase in revenue.

Nevertheless, ZS stock fell as investors seemed concerned about the company’s billings guidance of about a 9% sequential decline in the fiscal third quarter, compared to the mid-single digit declines seen over the last few years. Delays in large deals due to macro woes impacted the company’s outlook.

TD Cowen analyst Shaul Eyal remains bullish about Zscaler and reiterated a buy rating with a price target of $195 following the results. “In our view, despite macro uncertainty and elevated deal scrutiny, ZS occupies a strong competitive position as it addresses a $72B market opportunity,” said Eyal.

The analyst thinks that the company is well positioned to achieve its longer-term targets, including annual recurring revenue of $5 billion, operating margin of 20% to 22%, and free cash flow margin of 22% to 25%. (See Zscaler Hedge Fund Trading Activity on TipRanks)

Eyal holds the 15th position among more than 8,000 analysts on TipRanks. Additionally, 66% of his ratings have been profitable, with an average return of 24.1%.

Garmin

Garmin (GRMN) is a leading provider of GPS-enabled-based devices and applications. Last month, the company reported a decline in its fourth-quarter revenue due to currency headwinds and lower demand for its fitness products.

Tigress Financial analyst Ivan Feinseth expects the company’s ongoing innovation and new launches, strength in aviation, and growing opportunities in wellness and automotive OEM (original equipment manufacturer) businesses to reaccelerate trends.

Feinseth is particularly confident about Garmin emerging as an industry-leading automotive OEM supplier. The company’s automotive OEM revenue increased by 11% to $284 million in 2022. The analyst expects the automotive segment to see annual growth of 40%, reaching a revenue run rate of $800 million by 2025. He expects this growth to be led by the company’s industry-leading product categories of in-cabin domain controllers, infotainment systems and other in-cabin connected interfaces.

Feinseth, who ranks 189th on Tipranks, reiterated a buy rating on Garmin stock with a price target of $165. The analyst’s ratings have been profitable 62% of the time, with an average return of 12.2%. (See Garmin Financial Statements on TipRanks)

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March 9, 2023

‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

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A man dressed in a thawb walks past Dassault Falcon executive jets, Dubai, United Arab Emirates

Leonid Faerberg | Sopa Images | Lightrocket | Getty Images

The organizers of the Investopia x Salt conference in Abu Dhabi — the brainchild of American financier and one-time White House press secretary Anthony Scaramucci and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum — expected to see 1,000 guests over its two-day event in early March. Instead, it got 2,500.

“We’re a little overwhelmed, but it’s a great sign,” one of the organizers told CNBC. Some others were annoyed. “It’s too many people. Everyone is coming to the Gulf now begging for money. It’s embarrassing,” one Dubai-based fund manager said. Both sources declined to be named due to professional restrictions.

That oil-rich Gulf states have a lot of money to spend isn’t new. The region’s 10 largest sovereign wealth funds combined manage nearly $4 trillion, according to the Sovereign Wealth Fund Institute. That’s more than the gross domestic product of France or the U.K. — and it doesn’t include private money.

But the influx of foreign institutional investors — and visible interest from venture capitalists and startup founders in advanced sectors like fintech, digital transformation and renewable energy technology — shows a level of sophistication that’s being noticed now more than ever, industry players say.

“Investment used to only flow from the Gulf outward. Now it’s going both ways; institutional investors are coming and investing here,” Marc Nassim, partner and managing director at Dubai-based investment bank Awad Capital, told CNBC.

The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before.

Marc Nassim

Partner & Managing director, Awad Capital

“The Middle East feels more stable than Europe does right now,” Stephen Heller, founding partner at Germany-based AlphaQ Venture Capital, told CNBC. “Europe’s security issues, economic inequality are getting worse … meanwhile, the Gulf has its s— together.” Heller’s fund of funds, which invests in megatrends like climate technology, infrastructure, health and fintech, recently opened its first Middle Eastern office in Abu Dhabi.

“There’s an entrepreneurial energy in the UAE and Saudi Arabia today,” Heller said. “I see the potential because you have technically infinite capital, and if you have entrepreneurs coming here, you can have huge outcomes.”

Follow the capital

As oil prices made a roaring comeback in the last two years, the Gulf’s public wealth funds went on a spending spree. The top five regional funds in terms of spending in the last year — Abu Dhabi’s ADIA, ADQ and Mubadala, Saudi Arabia’s PIF and Qatar’s QIA — deployed a combined total of more than $73 billion in 2022 alone, according to sovereign wealth fund tracker Global SWF.

Meanwhile, the value of sovereign wealth funds’ assets globally dropped from $11.5 trillion to $10.6 trillion between 2021 and 2022, Global SWF reported, and those held by public pension funds also dropped amid a dramatic downturn in stock and bond markets.

“Five out of the ten most active investors hail from the Middle East,” and ADIA is currently the “world’s largest allocator to hedge funds,” Global SWF’s 2023 report wrote. It added that GCC sovereign wealth funds “played an important role in 2020 during the Covid-19 pandemic and now again in 2022 during times of financial distress.”

So it’s an understatement to say that foreign demand is high. “A lot of places in the world are low on capital – Western institutional funds are kind of hamstrung. And this region has a lot of capital. Our phones are ringing off the hook,” one manager from a UAE investment fund said, declining to be named due to professional restrictions.

No longer ‘dumb money’

But while many overseas companies have long seen the Gulf as a source of “dumb money,” some local investment managers said – referring to the stereotype of oil-rich sheikhdoms throwing cash at whoever wants it – investment from the region has become much more sophisticated, employing deeper due diligence and being more selective than in past years.

“The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before,” Awad Capital’s Nassim said. “They are much more diligent than before in terms of who they write the check to.”

“Before it was much easier to come and say, ‘I’m a fund manager from San Francisco, please give me a couple million’. Now, not only are they more sophisticated but there are far more funds from all over the world – the U.S., Latin America, from Europe, Southeast Asia – coming here to raise capital. I think that a very small minority of them will be able to take money from the region – they are much more selective than before.”

In the UAE in particular, liberalizing reforms, a much-praised handling of the Covid-19 pandemic and a willingness to do business with anyone — including countries like Israel and Russia – have enhanced its image to foreign investors. In Saudi Arabia, financiers are attracted to historic reforms and a massive growth market of nearly 40 million people, some 70% of whom are below the age of 34.

The money from the GCC funds still overwhelmingly goes to developed markets, in particular the U.S. and Europe. Priority sectors include energy, renewables, climate technology, biotech, agri-tech and digital transformation, fund managers say.

Like any commodity-related economic boom, however, fortunes are subject to change – it was not so long ago that the pandemic pushed oil prices to multi-decade lows, forcing Gulf governments to reign in spending and introduce new taxes. Saudi Arabia and the UAE in particular are investing heavily in diversification, with a view to the long term.

“The music would stop if [the price of] oil goes down in a way that some SWFs are forced to use their reserves to help governments shore up their fiscal positions – very unlikely – or geopolitical risk” such as war or uprisings, Nassim said.

“If oil goes down, the surplus generated and which is usually allocated to the SWFs would obviously reduce, and that would force them to reduce their investments and limit them to assets that generate higher returns,” he added, though noted that not all SWFs have the same mandate when it comes to investment strategy.

For those companies seeking investment from the deep pockets of the Middle East, they are wise to do so while the music is playing.

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March 5, 2023

Top Wall Street analysts pick these stocks for attractive returns

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NVIDIA President and CEO Jen-Hsun Huang

Robert Galbraith | Reuters

Recession risk is on the minds of investors, particularly as the Federal Reserve remains resolute in hiking interest rates.

In these tough times, investors would be well advised to find stocks that are positioned to navigate a potential economic downturn.

related investing news

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To help with the process, here are five stocks chosen by Wall Street’s top professionals, according to TipRanks, a platform that ranks analysts based on their past performance.

Nvidia

Chip giant Nvidia (NVDA) has been under pressure due to the slump in the PC gaming market. Revenue and earnings declined in the fiscal fourth quarter compared to the prior year, but the company managed to beat Wall Street’s expectations due to the year-over-year rise in data center revenues.

Investors cheered Nvidia’s first-quarter revenue guidance and CEO Jensen Huang’s commentary about how the company is well-positioned to benefit from the heightened interest in generative artificial intelligence (AI).

Jefferies analyst Mark Lipacis expects Nvidia’s data center revenues to reaccelerate year-over-year beyond the first quarter and grow 28% in 2023 and 30% in 2024, supported by higher AI spend. (See Nvidia Stock Chart on TipRanks)

Lipacis said, “In contrast to INTC/AMD noting cloud inventory builds, NVDA discussed a positive H100 ramp (already crossing over A100 in just second quarter after launch), accelerating DC [data center] revs YY beyond C1Q23, and alluded to better visibility and more optimism for the year due to increasing activity around AI infrastructure, LLMs [large language models], and generative AI.”

The analyst views Nvidia as a “top pick” following the recent results, and reiterated a buy rating. He raised the price target for NVDA stock to $300 from $275.

Lipacis is ranked No. 2 among more than 8,300 analysts on TipRanks. His ratings have been profitable 73% of the time, with each rating delivering a return of 27.6%, on average.

Ross Stores

Ross Stores (ROST) delivered upbeat results for the fourth quarter of fiscal 2022, as the off-price retailer’s value offerings continued to attract customers. However, the company issued conservative guidance for fiscal 2023 due to the impact of high inflation on its low-to-moderate income customers.

Following the results, Guggenheim analyst Robert Drbul, who is ranked 306th among the analysts on TipRanks, lowered his fiscal 2023 earnings per share estimate for Ross Stores to reflect the impact of persistent macro headwinds.

Nonetheless, he expects Ross Stores’ earnings to return to double-digit growth in fiscal 2023, driven by a higher operating margin, the accelerated opening of new stores and the company’s share buyback program.

Drbul reiterated a buy rating for Ross Stores and a price target of $125, citing “the favorable environment for the company given greater supply of branded goods in the marketplace, stronger value proposition, and broader assortment compared to pandemic levels.”

Drbul has delivered profitable ratings 63% of the time, and his ratings have generated an average return of 9.1%. (See Ross Stores Hedge Fund Trading Activity on TipRanks)

Kontoor Brands

Next on our list is another consumer discretionary company – Kontoor Brands (KTB), which owns the iconic Wrangler and Lee Brands. Shares of the clothing company rallied on the day it reported solid fourth-quarter results and issued a strong outlook for 2023.

Williams Trading analyst Sam Poser noted that the demand for Wrangler and Lee continues to improve, fueled by the company’s brand-enhancing initiatives. Further, he thinks that Kontoor’s fiscal 2023 outlook “will likely prove conservative.” He expects the company’s revenue growth in China to turn positive in the second quarter and sequentially accelerate thereafter.

Poser raised his fiscal 2023 and 2024 earnings per share estimates, reiterated his buy rating for Kontoor Brands and increased the price target to $60 from $53. (See Kontoor Brands Insider Trading Activity on TipRanks)

“The combination of better than expected 4Q22 results, led by a 20% increase in U.S. DTC [direct-to-consumer] revenue, ongoing improvements in the positioning of both the Wrangler & Lee brands, and reasonable guidance, are indicative of ongoing improvements in KTB’s consumer facing capabilities and its overall operations,” said Poser.

Poser is ranked 134th among the analysts tracked by TipRanks. Further, 55% of his ratings have been successful, generating a return of 17.7%, on average.

Fiserv

Fiserv (FISV), a provider of payments and financial services technology solutions, is also on our list this week. Last month, the company announced its fourth-quarter results and assured investors about being well-poised to deliver its 38th consecutive year of double-digit adjusted earnings per share growth, supported by recent client additions, solid recurring revenue and productivity efforts.

Tigress Financial analyst Ivan Feinseth noted that Fiserv continues to experience strong business momentum, thanks to the performance of its payments product portfolio and the strength in Clover, the company’s cloud-based point-of-sale and business management platform. (See Fiserv Financial Statements on TipRanks)

“FISV’s diversified product portfolio and industry-leading technology position it at the forefront of the ongoing secular shift to electronic payments and the growing use of connected devices to deliver payment processing services and financial data access,” said Feinseth. The analyst reiterated a buy rating for FISV stock and raised the price target to $154 from $152.

Feinseth holds the 176th position among more than 8,300 analysts tracked on the site. Moreover, 62% of his ratings have been profitable, his ratings generating an average return of 12.3%.

Workday

Workday (WDAY), a provider of cloud-based finance and human resources applications, issued a subdued outlook for fiscal 2024, which overshadowed better-than-anticipated results for the fourth quarter of fiscal 2023.

Baird analyst Mark Marcon noted that Workday continues to gain market share in human capital management and financial management solutions in the enterprise space, though its pace of growth ahead is “slightly tempered by macro uncertainty.”

Marcon also noted that despite elongated enterprise sales cycles due to macro pressures, Workday gained seven new Fortune 500 and 11 new Global 2000 customers in the fiscal fourth quarter. The analyst said that the new co-CEO Carl Eschenbach is “quickly making a mark on WDAY” and that the company is expected to reaccelerate subscription revenue growth to the 20% level once the macro backdrop is normalized.

“While our near-term expectations are more muted, we believe the valuation relative to the long-term potential continues to be attractive considering WDAY’s high net revenue retention (over 100%), high GAAP gross margins, strong FCF [free cash flow] and strong growth potential given financials moving to the cloud,” said Marcon.

The analyst slightly lowered his price target for Workday stock to $220 from $223 to reflect near-term pressures. He reiterated a buy rating, given the company’s long-term growth potential.

Marcon ranks 444th out of the analysts followed on TipRanks. His ratings have been profitable 60% of the time, generating a 13.5% average return. (See Workday Blogger Opinions & Sentiment on TipRanks)

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February 26, 2023

Top Wall Street analysts expect these stocks to thrive despite macro pressures

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An EV600 all-electric light commercial vehicle purpose-built for the delivery of goods and services, built by GM’s electric commercial vehicle business, BrightDrop, is seen in Detroit, Michigan, in this undated photograph.

Brightdrop | Handout | via Reuters

Layoff announcements and warnings of an economic downturn from multiple CEOs during the earnings season have made it difficult to look beyond the ongoing turmoil and pick good stocks for the long term.

To help with the process, here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their track records.

Walmart

Walmart (WMT) topped analysts’ expectations for the fiscal fourth quarter as budget-conscious customers preferred to shop at the big-box retailer due to its lower-price offerings. However, it issued a subdued sales outlook, as stubbornly high inflation continues to impact spending on discretionary items.

Nonetheless, Guggenheim analyst Robert Drbul noted that Walmart is starting the new fiscal year on “solid competitive and operational footing.” The analyst also highlighted the retailer’s market share gains in grocery, growth in private brands and the improvement in inventory levels.

“We continue to believe Walmart is well positioned in an uncertain macro environment, with its price and value proposition and with increased convenience and assortment, despite persistent indicators of pressure on the consumer, including stubborn food inflation,” Drbul said.

The analyst also thinks Walmart can gain more business from higher income families “because the company has made strides in pickup, delivery, and membership.” Drbul reiterated a buy rating on Walmart and a price target of $165.

Drbul ranks 247th among over 8,300 analysts on TipRanks. Moreover, 65% of his ratings have been successful, with each generating a 9.8% average return. (See Walmart Hedge Fund Trading Activity on TipRanks.)

Crocs

Casual footwear maker Crocs (CROX) is seeing robust demand for its products despite difficult macro conditions. Its fourth-quarter revenue surged 61%, reflecting organic growth and the momentum of the Heydude brand, which the company acquired in 2022.

While Crocs acknowledges the macro headwinds affecting it, it is confident about achieving a record 2023, fueled by demand for its sandals, international growth potential of the Crocs brand and higher market penetration of the Heydude brand in the U.S.

Reacting to the results, Baird analyst Jonathan Komp commented, “The Q4 update included multiple positive developments, including stronger-than-expected Q4 EBIT margin performance, continued robust brand momentum, and reassuring 2023E EPS guidance which is front-weighted and includes multiple areas of conservatism.”

Komp raised his 2023 and 2024 earnings per share estimates, stating that Crocs remains a “favorite idea” at current valuations, given the company’s multiyear growth potential. He reiterated a buy rating and increased his price target to $175 from $155.

Komp holds the 386th position out of more than 8,300 analysts followed on TipRanks. His ratings have been profitable 54% of the time, with each rating generating a 13.8% average return. (See Crocs Blogger Opinions & Sentiment on TipRanks)

The Chefs’ Warehouse

Another company that has displayed strength amid difficult conditions is Chefs’ Warehouse (CHEF), a distributor of specialty food products. It distributes over 55,000 products to more than 40,000 locations in the U.S. and Canada.

Chefs’ Warehouse’s fourth-quarter adjusted earnings per share surged nearly 85% year over year, driven by robust sales and improved margins. The company has been boosting its business through organic growth and key acquisitions. In the fourth quarter, the company acquired Chef Middle East, which helped it expand into new markets like United Arab Emirates, Qatar and Oman.

Following the fourth-quarter results, BTIG analyst Peter Saleh reiterated a buy rating and “Top Pick” designation on CHEF, with a price target of $48. Saleh, who ranks 346 out of 8,341 analysts tracked by TipRanks, thinks that “continued sales and earnings progression builds out the company’s favorable long-term potential.”

Saleh noted that the company is “still undervalued given the consistent growth it is achieving.” He also pointed out that investors misunderstood the recent convertible notes issuance, stating, “We believe investors missed the technical details in the filing that place the dilution overhang much higher than the stated conversion price. In our view, this could act as a tailwind for the shares in the near-term.”

Saleh’s ratings have been profitable 65% of the time and each rating has generated a 12.5% return, on average. (See Chef’s Warehouse Stock Chart on TipRanks)

Datadog

Next on our list is cloud-based software company Datadog (DDOG), which recently reported market-beating fourth-quarter results. That said, investors were spooked by its revenue outlook for the first quarter and full year 2023. Macro uncertainties are impacting the cloud spending of Datadog’s larger customers, thus affecting its expansion rate.

Baird analyst William Power lowered his 2023 revenue estimate based on the company’s outlook. He also reduced his operating income forecast to reflect continued growth investments made by the company. (See Datadog Insider Trading Activity on TipRanks)

Nevertheless, Power remains bullish about the long-term prospects of Datadog, as the company has “one of the broadest platforms and a strong R&D engine.” The analyst also noted “strong enterprise trends,” with the company ending the fourth quarter with nearly 2,780 customers contributing annual recurring revenue of $100,000 or more, up from 2,010 customers last year.

Power maintained a buy rating on Datadog and a $100 price target. He ranks 268 among more than 8,000 analysts tracked on TipRanks. Moreover, 55% of his ratings have been profitable, with each rating generating a return of 15.5%, on average.

Applied Materials

Applied Materials (AMAT) provides manufacturing equipment and software to makers of semiconductors, electronic devices and related industries. Despite the ongoing challenges in the semiconductor space, the company delivered better-than-expected fiscal first-quarter earnings.

Cheering the results, CEO Gary Dickerson stated that the company’s resilience is backed by its “strong positions with leading customers at key technology inflections, large backlog of differentiated products and growing service business.”

Needham analyst Quinn Bolton increased his price target for Applied Materials to $135 from $120 and reiterated a buy rating following the recent results. Bolton noted that ICAPS (chips for IoT, Communications, Auto, Power and Sensors) “stole the show” in the report. (See Applied Materials Financial Statements on TipRanks)

“ICAPS was the main focus on the call as it was mentioned 56 times and rightfully so. AMAT has become incrementally more positive on ICAPS than it was last Q, as it is set to grow Y/Y in 2023 even in the face of China export restrictions,” Bolton said.

He further explained that the market growth of ICAPS is way higher than the leading edge chips this year due to “end market strength, higher capital intensity, and government incentives.”

Bolton’s convictions can be trusted, given that he is ranked number 1 among more than 8,300 analysts in the TipRanks database. Additionally, his track record of 70% profitable ratings, with each rating delivering an average return of 39.8%, is laudable.

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February 19, 2023

Top Wall Street analysts are bullish on these 5 stocks

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Exterior of a redesigned Chipotle restaurant

Source: Chipotle Mexican Grill

With market conditions as uncertain as they are now, it may be prudent to have a long-term approach and turn to the experts for guidance.

Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances.

Wynn Resorts

Wynn Resorts (WYNN) reported a higher-than-anticipated adjusted loss per share for the fourth quarter. Nonetheless, investors were pleased with the management’s commentary about better times ahead, backed by continued strength in Las Vegas and the reopening of Macao following China’s stringent Covid lockdowns.

Deutsche Bank analyst Carlo Santarelli thinks that the future margin profile of Wynn Macau is “underappreciated.” Moreover, he expects the company’s financial leverage reduction to be “swift and screen well throughout 2023.”

“Given the resurgence of Macau, the continued strength and near term visibility in Las Vegas, and what we view as stability at Encore Boston Harbor, our estimates for 2023 and 2024 are higher across each of the 3 geographies,” Santarelli said.

Santarelli also noted that the stock’s valuation is reasonable, as the company is still in the early stages of the Macao recovery cycle. Santarelli reiterated a buy rating and raised his price target for Wynn to $128 from $106. (See Wynn Blogger Opinions & Sentiment on TipRanks)

Santarelli’s recommendation is worthy of consideration as he ranks 26th among more than 8,000 analysts tracked by TipRanks. Moreover, 67% of his ratings have been successful, generating a 21.7% average return per rating.

Chipotle Mexican Grill

Burrito chain Chipotle Mexican Grill’s (CMG) lower-than-anticipated fourth-quarter results reflected the impact of inflation on consumer spending. However, the company assured investors that transaction trends turned positive in 2023, setting its comparable sales growth estimate in the high-single-digit range for the first quarter.

Chipotle plans to further expand its footprint, which stood at 3,187 restaurant locations at the end of 2022. It aims to open 255 to 285 new locations in 2023.     

Baird analyst David Tarantino, who ranks 320 out of 8,346 analysts on TipRanks, lowered his 2023 earnings per share estimate following the lackluster fourth-quarter results and a lower-than-projected margin outlook for the first quarter. Nevertheless, Tarantino remains bullish on Chipotle.

“We came away with a view that management is taking the appropriate operational steps to drive structural improvements in traffic as 2023 unfolds, and we expect signs of progress on this front to help resolve the pricing/traffic debate and return the focus toward the significant economic value CMG can create via high-ROIC unit expansion,” Tarantino said

The analyst reiterated a buy rating on Chipotle stock and raised the price target to $1,900 from $1,800. Sixty-six percent of Tarantino’s ratings have generated profits, with each one bringing in a 10.6% average return. (See CMG Insider Trading Activity on TipRanks)

Meta Platforms

Social media behemoth Meta Platforms (META) is next on our list. Meta has rebounded this year after a disastrous run in 2022. Its problems last year were due to a slowdown in online advertising spend and the mounting losses of the company’s Reality Labs division — which includes its metaverse projects.

Despite weak earnings, the stock spiked in reaction to recent results, as investors cheered Meta’s cost control measures and a $40 billion increase in its share repurchase authorization. Meta already had nearly $11 billion remaining under its existing buyback plan.

Tigress Financial Partners analyst Ivan Feinseth highlighted that Meta’s “most valuable asset” is its huge and growing user base. Daily Active People or DAP (the number of people using at least one of the company’s core products — Facebook, WhatsApp, Instagram, or Messenger, every day) rose 5% to 2.96 billion in the fourth quarter.

Furthermore, Feinseth projects that Meta’s performance will be fueled by a “new, more cost-efficient data center structure” that is competent in supporting artificial intelligence (AI) and non-AI workloads.

Feinseth increased his price target for Meta to $285 from $260 and reiterated a buy rating as he believes it can outperform rivals due to its massive user base and the ability to generate significantly higher returns for advertisers.

Feinseth currently stands at #126 among over 8,300 analysts on TipRanks. Moreover, 65% of his ratings have been successful, with each generating a 13.5% average return. (See Meta Platforms Hedge Fund Trading Activity on TipRanks)

CyberArk Software

Digital transformation, the accelerated shift to the cloud and geopolitical tensions have triggered an increase in cyber threats, driving demand for cybersecurity companies like CyberArk (CYBR).

CyberArk, a leading cybersecurity company, has successfully transitioned from perpetual licenses to a subscription model — which has led to more reliable and predictable revenues.

Mizuho analyst Gregg Moskowitz noted the impressive 45% growth in CyberArk’s annual recurring revenue (ARR) as of 2022’s end and ARR growth outlook in the range of 28% to 30% by the end of 2023. The analyst also pointed out that CyberArk ended 2022 with more than 1,300 customers generating over $100,000 in ARR, up 40% compared to the prior year.

Moskowitz reiterated a buy rating on CyberArk stock and a $175 price target, saying, “We continue to view CYBR as a primary beneficiary of a heightened threat landscape that has amplified the need for privileged access and identity management.” He is also optimistic that CyberArk’s transition to a recurring revenue model will drive better financials.

Moskowitz holds the 236th position among more than 8,000 analysts on TipRanks. His ratings have a 58% success rate, with each delivering an average return of 13.8%. (See CyberArk Stock Chart on TipRanks)

Micron Technology

Semiconductor company Micron (MU) has been under pressure in recent quarters due to lower demand in several end-markets, particularly PCs. In the first quarter of fiscal 2023 (ended Dec. 1), the company’s revenue plunged 47% due to lower shipments and a steep decline in prices.

In response to tough business conditions, Micron has slashed its capital expenditure and has been taking initiatives to reduce costs. In December, the company announced that it would cut its workforce by nearly 10% in 2023 and suspend bonuses for the year. It has also suspended share repurchases for now.

Despite the ongoing challenges, Mizuho analyst Vijay Rakesh upgraded Micron to buy from hold and raised his price target to $72 from $48. Rakesh acknowledged that near-term headwinds remain due to high inventories, lower demand for PCs, handsets, servers and lower memory pricing. Nonetheless, he thinks that we are approaching a “cyclical bottom.”

Rakesh explained, “We believe memory sets up better for 2H23/2024E with supply/capex cuts, inventory correction behind, and a better pricing environment.”

Rakesh ranks 73 out of more than 8,300 analysts on TipRanks, with a success rate of 61%. Each of his ratings has delivered a 19.7% average return. (See Micron Financial Statements on TipRanks)

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February 15, 2023

SEC proposes rules that would change which crypto firms can custody customer assets

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The Securities and Exchange Commission voted 4-1 on Wednesday to propose sweeping changes to federal regulations that would expand custody rules to include assets like crypto and require companies to gain or maintain registration in order to hold those customer assets.

The proposed amendments to federal custody rules would “expand the scope” to include any client assets under the custody of an investment advisor. Current federal regulations only include assets like funds or securities, and require investment advisors, like Fidelity or Merrill Lynch, to hold those assets with a federal- or state-chartered bank, with a few highly specific exceptions.

It would be the SEC’s most overt effort to rein in even regulated crypto exchanges that have substantial institutional custody programs serving high-net-worth individuals and entities which custody investor assets, like hedge funds or retirement investment managers.

The move poses a fresh threat to crypto exchange custody programs, as other federal regulators actively discourage custodians like banks from holding customer crypto assets. The amendments also come as the SEC aggressively accelerates enforcement attempts.

While the amendment doesn’t specify crypto companies, Gensler said in a separate statement that “though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians.”

Under the new rules, in order to custody any client asset — including and specifically crypto — an institution would have to hold the charters, or qualify as a registered broker-dealer, futures commission merchant, or be a certain kind of trust or foreign financial institution.

SEC officials said that the proposal would not alter the requirements to be a qualified custodian and that there was nothing precluding state-chartered trust companies, including Coinbase or Gemini, from serving as qualified custodians.

The officials emphasized that the proposed amendments did not make a decision on which cryptocurrencies the SEC considered securities.

The amended regulation would also require a written agreement between custodians and advisors, expand the “surprise examination” requirements, and enhance recordkeeping rules.

The SEC had previously sought public feedback on whether crypto-friendly state-chartered trusts, like those in Wyoming, were “qualified custodians.”

“Make no mistake: Today’s rule, the 2009 rule, covers a significant amount of crypto assets,” Gensler said in a statement. “As the release states, ‘most crypto assets are likely to be funds or crypto asset securities covered by the current rule.’ Further, though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians.”

But Gensler’s proposal seemed to undercut comments from SEC officials, who insisted the moves were designed with “all assets” in mind. The SEC chair alluded to several high-profile crypto bankruptcies in recent months, including those of Celsius, Voyager, and FTX.

“When these platforms go bankrupt—something we’ve seen time and again recently—investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court,” Gensler said.

The proposed changes by the SEC are also intended to “ensure client assets are properly segregated and held in accounts designed to protect the assets in the event of a qualified custodian bankruptcy or other insolvency,” according to material released by the agency on Wednesday.

Coinbase already has a similar arrangement in place. In its most recent earnings report, the exchange specified that it keeps customer crypto assets “bankruptcy remote” from hypothetical general creditors, but noted that the “novelty” of crypto assets meant it was uncertain how courts would treat them.

The SEC has already begun to target other lucrative revenue streams for crypto institutions like Coinbase, which is the only publicly traded pure crypto exchange in the U.S. Last week, the SEC announced a settlement with crypto exchange Kraken over its staking program, alleging it constituted an unregistered offering and sale of securities.

At the time, Coinbase CEO Brian Armstrong said a potential move against staking would be a “terrible path” for consumers.

Coinbase reported $19.8 million in institutional transaction revenue and $14.5 million in custodial fee revenue for the three months ending Sept. 30, 2022. Together, that institutional revenue represented about 5.8% of Coinbase’s $590.3 million in revenue for that same time period. But that percentage does not include any revenue from blockchain rewards or interest income from institutional custody clients.

“Coinbase Custody Trust Co. is already a qualified custodian, and after listening to today’s SEC meeting, we are confident that we will remain a qualified custodian even if this proposed rule is enacted as proposed,” Coinbase chief legal officer Paul Grewal said. “We agree with the need for consumer protections — as a reminder, our client assets are segregated and protected in any eventuality.”

Grayscale Bitcoin Trust (GBTC), for example, custodies billions of dollars worth of bitcoin using Coinbase Custody, holding roughly 3.4% of the world’s bitcoin in May 2022.

In the aftermath of the SEC’s approval vote, comments from commissioners made it unclear what the full extent of the SEC’s proposed rulemaking would be, and how it could impact existing partnerships. Grayscale is not a registered investment advisor, and so under the proposed amendments would not apparently face any material impact to their custody arrangement.

A person familiar with the matter did not expect the relationship would be adversely affected, noting Coinbase Custody’s qualified custodian status as a New York state-chartered trust, and observing that investment advisors might even transition from directly holding bitcoin to owning GBTC shares as a result of the proposed amendments.

Within the commissioner’s ranks, there was dissent and questions over the nature of the proposed rules. “The proposing release takes great pains to paint a “no-win” scenario for crypto assets,” SEC commissioner Mark Uyeda said. “In other words, an adviser may custody crypto assets at a bank, but banks are cautioned by their regulators not to custody crypto assets.”

But Uyeda also noted that the proposal was a move towards rulemaking, rather than what he called a historic use of “enforcement actions to introduce novel legal and regulatory theories.’

It was a sentiment echoed by Coinbase’s chief legal officer, who emphasized a need for clarity, a clarion call that has been echoed throughout the industry. “We encourage the SEC to begin the rulemaking process on what should or should not be considered a crypto security, especially given that today’s proposal acknowledges that not all crypto assets are securities. Rulemaking on that topic could offer needed clarity to consumers, investors, and the industry,” Grewal said.

— CNBC’s Kate Rooney contributed to this report.

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February 12, 2023

Top Wall Street analysts like these stocks for the long haul

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A Peloton exercise bike is seen after the ringing of the opening bell for the company’s IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019.

Shannon Stapleton | Reuters

Investors are trying to make sense of big corporate earnings, seeking clues about what lies ahead as macro headwinds persist. It’s prudent for investors to choose stocks with an optimistic longer-term view in these uncertain times.

Here are five stocks picked by Wall Street’s top analysts, according to TipRanks, a service that ranks analysts based on their past performance.

Costco

Wholesaler Costco (COST) is known for its resilient business model that has helped it navigate several economic downturns. Moreover, the membership-only warehouse club has a loyal customer base and generally enjoys renewal rates that are at or above 90%.

Costco recently reported better-than-anticipated net sales growth of 6.9% and comparable sales growth of 5.6% for the four weeks ended Jan. 29. The company delivered upbeat numbers despite continued weakness in its e-commerce sales and the shift in the timing of the Chinese New Year to earlier in the year.

Following the sales report, Baird analyst Peter Benedict reaffirmed a buy rating on Costco and a $575 price target. Benedict stated, “With a defensive/staples-heavy sales mix and loyal member base, we believe shares continue to hold fundamental appeal as a rare megacap “growth staple” – particularly in the face of a difficult consumer spending backdrop.”

Benedict’s convictions can be trusted, given his 55th position out of more than 8,300 analysts in the TipRanks database. Apart from that, he has a solid track of 71% profitable ratings, with each rating delivering 16.3% average return. (See Costco Hedge Fund Trading Activity on TipRanks)​

Amazon

2022 was a challenging year for e-commerce giant Amazon (AMZN) as macro pressures hurt its retail business and the cloud computing Amazon Web Services division.

Amazon’s first-quarter sales growth outlook of 4% to 8% reflects further deceleration compared with the 9% growth in the fourth quarter. Amazon is streamlining costs as it faces slowing top-line growth, higher expenses and continued economic turmoil.

Nonetheless, several Amazon bulls, including Mizuho Securities’ Vijay Rakesh, continue to believe in the company’s long-term prospects. Rakesh sees a “modest downside” to Wall Street’s consensus expectation for the 2023 revenue growth for Amazon’s retail business. (See Amazon Website Traffic on TipRanks)

However, he sees more downside risks to the Street’s consensus estimate of a 20% cloud revenue growth in 2023 compared to his revised estimate of 16%. Rakesh noted that Amazon’s cloud business was hit by lower demand from verticals like mortgage, advertising and crypto in the fourth quarter and that revenue growth has slowed down to the mid-teens so far in the first quarter.

Consequently, Rakesh said that AMZN stock could be “volatile near-term given potential downside revision risks.” Nonetheless, he reiterated a buy rating on AMZN with a price target of $135 due to “positive long-term fundamentals.”

Rakesh stands at #84 among more than 8,300 analysts tracked by TipRanks. Moreover, 61% of his ratings have been profitable, with each generating a 19.3% average return.

Peloton

Fitness equipment maker Peloton (PTON), once a pandemic darling, fell out of favor following the reopening of the economy as people returned to gyms and competition increased. Peloton shares crashed last year due to its deteriorating sales and mounting losses.

Nevertheless, investor sentiment has improved for PTON stock, thanks to the company’s turnaround efforts under CEO Barry McCarthy. Investors cheered the company’s fiscal second-quarter results due to higher subscription revenue even as the overall sales dropped 30% year-over-year. While its loss per share narrowed from the prior-year quarter, it was worse than what Wall Street projected.

Like investors, JPMorgan analyst Doug Anmuth was also “incrementally positive” on Peloton following the latest results, citing its cost control measures, improving free cash flow loss and better-than-anticipated connected fitness subscriptions. Anmuth highlighted that the company’s restructuring to a more variable cost structure is essentially complete and it seems focused on achieving its goal of breakeven free cash flow by the end of fiscal 2023.

Anmuth reiterated a buy rating and raised the price target to $19 from $13, given the company’s focus on restoring its revenue growth. (See PTON Stock Chart on TipRanks)

Anmuth ranks 192 out of more than 8,300 analysts on TipRanks, with a success rate of 58%. Each of his ratings has delivered a 15.1% return on average.

Microsoft

Microsoft’s (MSFT) artificial intelligence-driven growth plans have triggered positive sentiment about the tech behemoth recently. The company plans to power its search engine Bing and internet browser Edge with ChatGPT-like technology.

On the downside, the company’s December quarter revenue growth and subdued guidance reflected near-term headwinds, due to continued weakness in the PC market and a slowdown in its Azure cloud business as enterprises are tightening their spending. That said, Azure’s long-term growth potential seems attractive.

Tigress Financial analyst Ivan Feinseth, who ranks 137 out of 8,328 analysts tracked by TipRanks, opines that while near-term headwinds could slow cloud growth and the “more personal computing” segment, Microsoft’s investments in AI will drive its future.

Feinseth reiterated a buy rating on Microsoft and maintained a price target of $411, saying, “Strength in its Azure Cloud platform combined with increasing AI integration across its product lines continues to drive the global digital transformation and highlights its long-term investment opportunity.”

Remarkably, 64% of Feinseth’s ratings have generated profits, with each rating bringing in a 13.4% average return. (See MSFT Insider Trading Activity on TipRanks)

Mobileye Global

Ivan Feinseth is also optimistic about Mobileye (MBLY), a rapidly growing provider of technology that powers advanced driver-assistance systems (ADAS) and self-driving systems. Chip giant Intel still owns a majority of Mobileye shares.

Feinseth noted that Mobileye continues to see solid demand for its industry-leading technology. He expects the company to “increasingly benefit” from the growing adoption of ADAS technology by original equipment manufacturers.

The company is also at an advantage due to the rising demand in the auto industry for sophisticated camera systems and sensors used in ADAS and safe-driving systems. Furthermore, Feinseth sees opportunities for the company in the autonomous mobility as a service, or AMaaS, space.

Feinseth said there is potential for Mobileye’s revenue to grow to over $17 billion by 2030, backed by the company’s “significant R&D investments, first-mover advantage, and industry-leading product portfolio, combined with significant OEM relationships.” He projects a potential total addressable market of nearly $500 billion by the end of the decade.

Given Mobileye’s numerous strengths, Feinseth raised his price target to $52 from $44 and reiterated a buy rating. (See Mobileye Blogger Opinions & Sentiment on TipRanks)

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February 11, 2023

What investors need to know about ‘staking,’ the passive income opportunity at the center of crypto’s latest regulation scare

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Not six months ago, ether led a recovery in cryptocurrency prices ahead of a big tech upgrade that would make something called “staking” available to crypto investors.

Most people have hardly wrapped their heads around the concept, but now, the price of ether is falling amid mounting fears that the Securities and Exchange Commission could crack down on it.

On Thursday, Kraken, one of the largest crypto exchanges in the world, closed its staking program in a $30 million settlement with the SEC, which said the company failed to register the offer and sale of its crypto staking-as-a-service program.

The night before, Coinbase CEO Brian Armstrong warned his Twitter followers that the securities regulator may want more broadly to end staking for U.S. retail customers.

“This should put everyone on notice in this marketplace,” SEC Chair Gary Gensler told CNBC’s “Squawk Box” Friday morning. “Whether you call it lend, earn, yield, whether you offer an annual percentage yield – that doesn’t matter. If someone is taking [customer] tokens and transferring to their platform, the platform controls it.”

Staking has widely been seen as a catalyst for mainstream adoption of crypto and a big revenue opportunity for exchanges like Coinbase. A clampdown on staking, and staking services, could have damaging consequences not just for those exchanges, but also Ethereum and other proof-of-stake blockchain networks. To understand why, it helps to have a basic understanding of the activity in question.

Here’s what you need to know:

What is staking?

Staking is a way for investors to earn passive yield on their cryptocurrency holdings by locking tokens up on the network for a period of time. For example, if you decide you want to stake your ether holdings, you would do so on the Ethereum network. The bottom line is it allows investors to put their crypto to work if they’re not planning to sell it anytime soon.

How does staking work?

Staking is sometimes referred to as the crypto version of a high-interest savings account, but there’s a major flaw in that comparison: crypto networks are decentralized, and banking institutions are not.

Earning interest through staking is not the same thing as earning interest from a high annual percentage yield offered by a centralized platform like those that ran into trouble last year, like BlockFi and Celsius, or Gemini just last month. Those offerings really were more akin to a savings account: people would deposit their crypto with centralized entities that lent those funds out and promised rewards to the depositors in interest (of up to 20% in some cases). Rewards vary by network but generally, the more you stake, the more you earn.

By contrast, when you stake your crypto, you are contributing to the proof-of-stake system that keeps decentralized networks like Ethereum running and secure; you become a “validator” on the blockchain, meaning you verify and process the transactions as they come through, if chosen by the algorithm. The selection is semi-random – the more crypto you stake, the more likely you’ll be chosen as a validator.

The lock-up of your funds serves as a sort of collateral that can be destroyed if you as a validator act dishonestly or insincerely.

This is true only for proof-of-stake networks like Ethereum, Solana, Polkadot and Cardano. A proof-of-work network like Bitcoin uses a different process to confirm transactions.

Staking as a service

In most cases, investors won’t be staking themselves – the process of validating network transactions is just impractical on both the retail and institutional levels.

That’s where crypto service providers like Coinbase, and formerly Kraken, come in. Investors can give their crypto to the staking service and the service does the staking on the investors’ behalf. When using a staking service, the lock-up period is determined by the networks (like Ethereum or Solana), and not the third party (like Coinbase or Kraken).

It’s also where it gets a little murky with the SEC, which said Thursday that Kraken should have registered the offer and sale of the crypto asset staking-as-a-service program with the securities regulator.

While the SEC hasn’t given formal guidance on what crypto assets it deems securities, it generally sees a red flag if someone makes an investment with a reasonable expectation of profits that would be derived from the work or effort of others.

Coinbase has about 15% of the market share of Ethereum assets, according to Oppenheimer. The industry’s current retail staking participation rate is 13.7% and growing.

Proof-of-stake vs. proof-of-work

Staking works only for proof-of-stake networks like Ethereum, Solana, Polkadot and Cardano. A proof-of-work network, like Bitcoin, uses a different process to confirm transactions.

The two are simply the protocols used to secure cryptocurrency networks.

Proof-of-work requires specialized computing equipment, like high-end graphics cards to validate transactions by solving highly complex math problems. Validators gets rewards for each transaction they confirm. This process requires a ton of energy to complete.

Ethereum’s big migration to proof-of-stake from proof-of-work improved its energy efficiency almost 100%.

Risks involved

The source of return in staking is different from traditional markets. There aren’t humans on the other side promising returns, but rather the protocol itself paying investors to run the computational network.

Despite how far crypto has come, it’s still a young industry filled with technological risks, and potential bugs in the code is a big one. If the system doesn’t work as expected, it’s possible investors could lose some of their staked coins.

Volatility is and has always been a somewhat attractive feature in crypto but it comes with risks, too. One of the biggest risks investors face in staking is simply a drop in the price. Sometimes a big decline can lead smaller projects to hike their rates to make a potential opportunity more attractive.

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February 5, 2023

Top Wall Street analysts find these stocks compelling

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Jim Umpleby, CEO of Caterpillar Inc.

Adam Jeffery | CNBC

During these challenging times, making informed decisions with a long-term view is vital for investors.

Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.

Advanced Micro Devices

Semiconductor company Advanced Micro Devices’ (AMD) fourth-quarter results surpassed Street expectations even as continued weakness in the PC market dragged down the company’s client segment revenue. Nevertheless, higher sales from the data center and embedded divisions helped offset the weakness in the client and gaming segments.

Although AMD expects its revenue in the first quarter of 2023 to decline by about 10%, CEO Lisa Su remains optimistic about the company’s ability to win market share this year.

Susquehanna analyst Christopher Rolland said the company’s client and gaming results were better than feared. However, he noted that management’s weaker data center outlook for the first half was a “surprise.”

“While sales into North American hyperscalers more than doubled in 2022, management believes cloud is now undergoing a period of digestion in 1H, returning to growth in 2H (we think helped by ramps of Genoa, Bergamo, MI300 and Pensando, all of which are on track),” explained Rolland about the data center segment guidance. (See AMD Blogger Opinions & Sentiment on TipRanks)

Overall, Rolland reiterated a buy rating for AMD with a price target of $88, saying he prefers to look beyond the uncertainty in 2023 “towards a better 2024.” Rolland’s conviction is worth trusting, given that he is ranked at the 13th position among more than 8,300 analysts tracked by TipRanks. Moreover, 72% of his ratings have been profitable, with each generating a 21% average return.

Tesla

Leading electric vehicle maker Tesla’s (TSLA) upbeat fourth-quarter results wiped out investors’ concerns about supply chain disruptions, the distraction related to Elon Musk’s Twitter acquisition, and the recently announced price cuts.

Tesla is focused on reducing costs and enhancing productivity to combat the near-term macroeconomic pressures and rising competition. Taking into account potential supply chain issues and other possible headwinds, the company issued production guidance of 1.8 million EVs in 2023, even though it has the potential to make 2 million units.

Mizuho Securities analyst Vijay Rakesh projects Tesla’s revenue will grow 29% this year and 26% in 2024. The analyst highlighted that his conservative growth estimates reflect “potentially slowing macro demand offset by secular EV transitional trends.”

Rakesh reaffirmed a buy rating and $250 price target, pointing out that Tesla has industry-leading margins and is on the path to deliver more than $10 billion in free cash flow, compared to rivals who are still at negative free cash flow. (See Tesla Hedge Fund Trading Activity on TipRanks)​

Rakesh holds the 113th position among more than 8,000 analysts tracked on TipRanks. Additionally, 60% of his ratings have been successful and have generated a 17.4% average return.

McDonald’s

After fast-moving EVs, fast-food giant McDonald’s (MCD) is next on our list. McDonald’s topped expectations, as the restaurant chain witnessed better-than-anticipated traffic at its domestic stores in the final quarter of 2022.

McDonalds’ delivered robust comparable sales across the domestic and international markets, thanks to “strategic menu price increases” in the U.S., attractive menu offerings, and marketing campaigns like the Happy Meal offering for adults. (See McDonald’s Dividend Date & History on TipRanks)

Despite tough macro conditions, McDonald’s intends to expand further to grab additional business. It plans to open about 1,900 restaurants, with over 400 of these locations in the U.S. and the International Operated Markets segments. The remaining restaurants will be opened by developmental licensees and affiliates.

BTIG analyst Peter Saleh, who reiterated a buy rating and $280 price target, expects McDonald’s to gain from “moderating inflation, carryover pricing, easing lockdowns in China, and foreign exchange finally becoming a modest tailwind.”

Saleh ranks 383 out of more than 8,300 analysts on TipRanks, with a success rate of 65%. Each of his ratings has delivered a 12.3% return on average.

Mondelez International

Mondelez International’s (MDLZ) recent results reflected the advantages of being a manufacturer of resilient product categories like chocolate, cookies and baked snacks. The Oreo-brand owner delivered robust revenue growth, fueled by higher pricing, increased volumes and strategic acquisitions, including Chipita and Clif Bar.

Despite currency headwinds and higher costs, Mondelez is positive about driving “attractive growth” in 2023 and beyond by increasing its exposure to high-growth categories, cost discipline, and continued investments in iconic brands. (See MDLZ Stock Chart on TipRanks)

J.P.Morgan analyst Kenneth Goldman, who ranks 652 out of over 8,300 analysts tracked by TipRanks, feels that it is “refreshing to see at least one company surprise to the upside” on the volumes front amid growing concerns about this key metric in the staples industry.

Given the likelihood of several food producers reporting weak volumes in the coming days, Goldman said it could “become increasingly important to own stocks of companies with (a) relatively inelastic categories, (b) strong and unique brands with limited private label competition, and (c) a commitment to continually spending behind their brands.”

In line with his bullish stance, Goldman reiterated a buy rating and increased his price target to $74 from $71. It’s worth noting that 61% of his ratings have been successful, generating a 9.3% average return.

Caterpillar

Construction and mining equipment maker Caterpillar (CAT) ended 2022 with a double-digit increase in revenue in the fourth quarter, driven by steady demand and higher pricing. However, investors seemed concerned about the impact of rising input costs and the strengthening U.S. dollar on the company’s bottom line.

Furthermore, Caterpillar’s warning about weaker China demand in 2023 didn’t go down well with the shareholders. Nonetheless, the company is optimistic about higher overall sales and earnings this year due to healthy demand across its segments.

Jefferies analyst Stephen Volkmann reaffirmed a buy rating following the Q4 print and maintained a price target of $285. Volkmann called the company’s pricing strength as “the standout positive.”

The analyst also noted that the demand for Caterpillar’s products remains strong, as indicated by a $400 million rise in the order backlog in the fourth quarter on a sequential basis. (See Caterpillar’s Insider Trading Activity on TipRanks)

Volkmann’s recommendations are worth paying attention to, given that he stands at the 51st position out of 8,300 plus analysts tracked by TipRanks. Remarkably, 69% of Volkmann’s ratings have generated profits, with each rating bringing in a 19.9% average return.

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February 1, 2023

Here’s what the Federal Reserve’s 25 basis point interest rate hike means for your money

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The Federal Reserve raised the target federal funds rate for the eighth time in a row on Wednesday, in its continued effort to tame persistent inflation.

At its latest meeting, the central bank approved a more modest 0.25 percentage point increase after recent signs that inflationary pressures have started to cool.

“The easing of inflation pressures is evident, but this doesn’t mean the Federal Reserve’s job is done,” said Greg McBride, chief financial analyst at Bankrate.com. “There is still a long way to go to get to 2% inflation.”

What the federal funds rate means to you

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves do affect the borrowing and saving rates consumers see every day.

This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing — putting more pressure on households already under financial strain.

“Inflation has shredded household budgets and, in many cases, households have had to lean against credit cards to bridge the gap,” McBride said.

On the flip side, “with rates still rising and inflation now declining, it is the best of both worlds for savers,” he added.

How higher interest rates can affect your money

1. Your credit card rate will rise

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.

“Credit card interest rates are already as high as they’ve been in decades,” said Matt Schulz, chief credit analyst at LendingTree. “While the Fed is taking its foot off the gas a bit when it comes to raising rates, credit card APRs almost certainly will keep climbing for at least the next few months, so it is important that cardholders continue to focus on knocking down their debt.”

Credit card annual percentage rates are now near 20%, on average, up from 16.3% a year ago, according to Bankrate. At the same time, more cardholders carry debt from month to month while paying sky-high interest charges — “that’s a bad combination,” McBride said.

At more than 19%, if you made minimum payments toward the average credit card balance — which is $5,474, according to TransUnion — it would take you almost 17 years to pay off the debt and cost you more than $7,528 in interest, Bankrate calculated.

Altogether, this rate hike will cost credit card users at least an additional $1.6 billion in interest charges in 2023, according to a separate analysis by WalletHub.

“A 0% balance transfer credit card remains one of the best weapons Americans have in the battle against credit card debt,” Schulz advised.

Otherwise, consumers should consolidate and pay off high-interest credit cards with a lower-interest personal loan, he said. “The rates on new personal loan offers have climbed recently as well, but if you have good credit, you may be able to find options that feature lower rates that what you currently have on your credit card.”

2. Mortgage rates will stay higher

Rates on 15-year and 30-year mortgages are fixed and tied to Treasury yields and the economy. As economic growth has slowed, these rates have started to come down but are still at a 10-year high, according to Jacob Channel, senior economist at LendingTree.

The average interest rate for a 30-year fixed-rate mortgage is now around 6.4% — up almost 3 full percentage points from 3.55% a year ago.

“Relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many,” Channel said.

This rate hike has increased the cost of new mortgages by around 10 basis points, which translates to roughly $9,360 over the lifetime of a 30-year loan, assuming the average home loan of $401,300, WalletHub found. A basis point is equal to 0.01 of a percentage point.

“We’re still a ways away from the housing market being truly affordable, even if it has recently become a bit less expensive,” Channel said.

Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.65% from 4.11% a year ago.

More from Personal Finance:
64% of Americans are living paycheck to paycheck
What is a ‘rolling recession’ and how does it impact you?
Almost half of Americans think we’re already in a recession

3. Auto loans will get more expensive

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans, so if you are planning to buy a car, you’ll shell out more in the months ahead.

The average interest rate on a five-year new car loan is currently 6.18%, up from 3.96% last year.

The Fed’s latest move could push up the average interest rate even higher, although consumers with higher credit scores may be able to secure better loan terms or look to some used car models for better deals.

Paying an annual percentage rate of 6% instead of 4% would cost consumers $2,672 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

“The ever-increasing costs of financing remain a challenge,” said Ivan Drury, Edmunds’ director of insights.

4. Some student loans will get pricier

Federal student loan rates are also fixed, so most borrowers won’t be affected immediately. But if you are about to borrow money for college, the interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year and any loans disbursed after July 1 will likely be even higher.

If you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates, which means that as the central bank raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

Currently, average private student loan fixed rates can range from just under 4% to almost 15%, according to Bankrate. As with auto loans, they also vary widely based on your credit score.

For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the Education Department expects to happen sometime this year.

the savings account rates at some of the largest retail banks, which have been near rock bottom during most of the Covid pandemic, are currently up to 0.33%, on average.

Also, thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.35%, much higher than the average rate from a traditional, brick-and-mortar bank.

Rates on one-year certificates of deposit at online banks are even higher, now around 4.75%, according to DepositAccounts.com.

As the Fed continues its rate-hiking cycle, these yields will continue to rise, as well. However, you have to shop around to take advantage of them, according to Yiming Ma, an assistant finance professor at Columbia University Business School.

“If you haven’t already, it’s really important to benefit from the high interest environment by getting a higher return,” she said.

Still, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time.

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