The top 10 things to watch in the stock market Wednesday

The 10 things to watch Wednesday, Dec. 6

1. U.S. stocks are higher in premarket trading Wednesday, with S&P 500 futures up 0.45% after back-to-back days of losses. The move comes amid increasing signs the labor market is loosening, suggesting the Federal Reserve’s interest-rate hikes are succeeding in cooling the economy. U.S. private payrolls rose by 103,000 last month, according to the ADP National Employment Report, well below forecasts for a 130,000 increase.

2. Home builder Toll Brothers (TOL) delivers better-than-expected quarterly results, with revenue of $3.02 billion and earnings-per-share of $4.11 on stronger margins. The company also provides upbeat commentary around 2024, with mortgage rates expected to come down.

3. Bank of America downgrades PayPal (PYPL) to neutral from buy, while lowering its price target to $66 a share, down from $77. The firm doesn’t think PayPal is “broken” but needs time to fix things, calling 2024 a transition year.

4. JPMorgan shuffles around its oil ratings, upgrading Devon Energy (DVN) to overweight from neutral, while downgrading EOG Resources (EOG) to neutral from overweight. The firm also lowers its price target slightly on Club name Coterra Energy (CTRA) to $29 a share, from $30, while reiterating an overweight rating and keeping the stock as a “top pick.”

5. Morgan Stanley downgrades Plug Power (PLUG) to underweight from equal weight, while lowering its price target to $3 a share, down from $3.50. If you want a hydrogen play with less of the risk, stick with Club holding Linde (LIN). It’s the largest supplier of liquid hydrogen in the U.S. and doing a lot for clean hydrogen, too.

6. Morgan Stanley resumes coverage on JM Smucker (SJM) with an equal-weight rating and $122-per-share price target. The firm liked Smucker’s quarterly results but cites “several concerns,” including the company’s acquisition of Hostess Brands and the risk posed by GLP-1 drugs.

7. Bank of America calls semiconductor company Qualcomm (QCOM) a “top pick” amid the end of the global smartphone downturn. The firm expects global smartphone shipments to rise by 5% in 2024.

8. Citi upgrades Signet Jewelers to buy from neutral, while raising its price target to $119 a share, up from $93. You can hear the full story from CEO Gina Drosos on Tuesday’s “Mad Money“. 

 9. Can Club holding Starbucks (SBUX) break a 12-day losing streak now that the bad news is out? CEO Laxman Narasimhan said Tuesday at a Morgan Stanley conference that the recovery in China is “perhaps half the rate of what you would expect it to be given what you saw in the fourth quarter last year.” Shares of the coffeemaker were up 0.5% in early trading, at $96 apiece.

10. Exxon Mobil (XOM) says it plans to repurchase $20 billion worth of stock annually through 2025 after its acquisition of Pioneer Natural Resources (PXD) closes. The oil major is buying back $17.5 billion of stock this year.

(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)

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Top Wall Street analysts are upbeat about these dividend stocks

A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California.

Lucy Nicholson | Reuters

Earnings season has a way of revealing which companies can thrive despite near-term headwinds and enhance shareholder returns in the long run.

With dividend-paying stocks, investors will want companies that have the strong balance sheets and cash flows needed to provide steady payments to shareholders. Analysts can dig through these details and identify stocks that could boost returns through dividends and price appreciation.  

Keeping that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

EOG Resources

Crude oil and natural gas exploration and production company EOG Resources (EOG) is first on this week’s list. On Nov. 2, EOG reported market-beating third-quarter results. It also announced a 10% increase in its regular quarterly dividend to 91 cents per share and a special dividend of $1.50 per share.

Additionally, EOG increased its cash return commitment from 2024 onwards to a minimum of 70% of annual free cash flow from the previous target of at least 60%. Considering just the regular dividends, EOG’s dividend yield stands at 2.9%.

Following the print, Siebert Williams Shank analyst Gabriele Sorbara reiterated a buy rating on EOG with a price target of $172, citing the company’s “blowout quarter” that exceeded expectations across all metrics. Commenting on the subdued Q4 2023 guidance, the analyst reminded investors that EOG has a long track record of beating its guidance on production, capital expenditure and costs.

The analyst noted the hike in EOG’s cash returns commitment and also pointed out that this year’s total cash returns (dividends plus share buybacks) are tracking at $4.1 billion, representing about 75% of its estimated FCF of $5.5 billion.      

“We maintain our Buy rating on its track record of execution and shareholder returns with its cash rich balance sheet (~$5.33 billion) providing differentiation and optionality,” said Sorbara.

Sorbara holds the 434th position among more than 8,600 analysts on TipRanks. The analyst’s ratings have been successful 46% of the time, with each rating delivering an average return of 10.9%. (See EOG Resources Financial Statements on TipRanks). 

Coterra Energy

Another energy player, Coterra Energy (CTRA), recently announced better-than-anticipated third-quarter earnings. The company raised its 2023 production guidance, driven by faster cycle times and strong well productivity.

In Q3 2023, Coterra returned $211 million to shareholders, including $151 million via dividends and $60 million through share repurchases. Overall, the company’s year-to-date shareholder return of $839 million represents 91% of its free cash flow.

Management reiterated its commitment to return over 50% of its annual free cash flow to shareholders through its annual regular dividend of 80 cents per share and share repurchases. Based on just the regular dividend, CTRA offers a dividend yield of about 3%.  

Mizuho analyst Nitin Kumar, who ranks No. 124 out of more than 8,600 analysts on TipRanks, thinks that in a quarter where several exploration and production companies have attributed their strong volumes to improving operating efficiencies, CTRA still stands out in his opinion as its beat-and-raise performance was driven by both well timing and productivity.

Further, he highlighted that the company raised its 2023 oil production outlook by 3% compared to peers who increased their guidance by about zero to 1%, on average.

Kumar reiterated a buy rating on CTRA stock with a price target of $42 and designated it a top pick, noting, “CTRA returned ~84% of 3Q23 FCF via its dividend and buybacks, and is on track to return ~80% of 2023 FCF (vs. target of 50%+).”

Kumar’s ratings have been profitable 63% of the time, with each delivering an average return of 17%. (See CTRA Technical Analysis on TipRanks)

Crescent Energy

Kumar is also bullish on another dividend stock: Crescent Energy (CRGY), an independent energy company that develops and operates oil and natural gas properties. On Nov. 6, the company announced its third-quarter results and declared a quarterly dividend of 12 cents per share, payable on Dec. 4. CRGY offers a dividend yield of 4.6%.  

Commenting on the third-quarter results, Kumar said that CRGY reported an oil-driven production and EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense) beat, with lower capital expenditure.

Kumar noted that following Crescent’s two Western Eagle Ford acquisitions, the company is already displaying impressive capital efficiency improvements, realizing about 20% drilling and completions well cost savings compared to the prior operator. This suggests an incrementally better 2024 outlook compared to the company’s preliminary soft forecast, the analyst said.  

“Moreover, the company is further demonstrating it can deliver on its acquisition-driven model in the public market arena, which should give investors additional confidence in the strategy,” said Kumar.

In line with his bullish stance, Kumar reiterated a buy rating on CRGY with a price target of $19. (See CRGY Insider Trading Activity on TipRanks)

Diamondback Energy

Diamondback Energy (FANG) is an oil and natural gas company focused on assets in the Permian Basin in West Texas. On Nov. 6, it delivered better-than-projected third-quarter results. Also, the company announced a base dividend of 84 cents per share and a variable cash dividend of $2.53 per share, both payable on Nov. 24.

Diamondback said that the base and variable dividends combined indicate an annualized yield of more than 8%. It is worth noting that FANG also enhanced shareholder returns through share repurchases worth $56 million in Q3 2023.  

In reaction to the results and dividend announcement, RBC Capital analyst Scott Hanold said that Diamondback’s execution remains strong. He added that the company’s shareholder return strategy is differentiated, noting, “FANG quickly pivoted to higher levels of dividends, but was still able to execute buybacks and among the lowest relative points during the last quarter.”

The analyst noted that the company repurchased shares worth $1.9 billion at an average 6% discount to market prices since the start of 2022. He pointed out FANG’s discipline to purchase shares only during periods of significant price disconnects from the stock’s intrinsic value.

Hanold maintained a buy rating on FANG stock and raised the price target to $175 from $170 to reflect stronger free cash flow and stock buybacks executed at accretive value point. He ranks No. 16 among more than 8,600 analysts on TipRanks. His ratings have been successful 64% of the time, with each rating delivering an average return of 24.4%. (See Diamondback Hedge Fund Trading Activity on TipRanks)

Starbucks

Finally, there is coffee chain Starbucks (SBUX), which impressed investors with its fiscal fourth-quarter beats earlier this month. The demand for the company’s pricier beverages and higher traffic in the domestic market boosted its quarterly performance.  

The company also announced its long-term strategy called “Triple Shot Reinvention with Two Pumps,” which will focus on elevating the brand, bolstering and scaling digital presence, and expanding globally, while unlocking efficiency and reinvigorating partner culture.

Coming to shareholder returns, in September, Starbucks announced a 7.5% rise in its quarterly dividend to 57 cents per share, payable on Nov. 24. Starbucks initiated its dividend payments in 2010 and has increased its dividend for 13 straight years at a compound annual growth rate of about 20%. SBUX offers a dividend yield of 2.2%.

Following the fiscal Q4 results and updates on the long-term strategy, BTIG analyst Peter Saleh reiterated a buy rating on SBUX with a price target of $125. The analyst highlighted the company’s better-than-anticipated global same-store sales growth of 8% in fiscal Q4 and noted that traffic gains and solid operating margin fueled the earnings beat.

“We believe Starbucks has a compelling return profile as its unfolding sales and economic recovery is matched by continued global unit development and stronger shareholder return targets,” said Saleh.  

Saleh ranks No. 504 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, with each delivering an average return of 9.10%. (See Starbucks’ Stock Charts on TipRanks)

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Jim Cramer’s top 10 things to watch in the stock market Friday

My top 10 things to watch Friday, Nov. 3

1. U.S. stocks climb higher in premarket trading Friday, with S&P 500 futures up 0.46% after rising nearly 5% over the previous four sessions. Equities remain on track for their biggest weekly gain of the year. Government bonds also continue to rally this week, with the yield on the 10-year Treasury pulling back to around 4.5%. Oil prices tick up 0.78%, bringing West Texas Intermediate crude to just above $83 a barrel.

2. U.S. employment growth slows in October, with the economy adding just 150,000 jobs, according to the Labor Department’s monthly nonfarm payrolls report. That compares with September’s revised gain of 297,000 jobs and a Dow Jones estimate for October of 170,000 jobs. The news could take further pressure off the Federal Reserve in its ongoing battle to bring down inflation through higher interest rates.

3. Club holding Apple (AAPL) delivers an uneven fiscal fourth-quarter, with shares falling on lower-than-expected guidance for the current quarter. Analysts are using the results to reset expectations and lower price targets. Apple stock is down 1.7% in premarket trading, at $174.57 a share.

4. Semiconductor firm Skyworks Solutions (SWKS) reports a weak quarter as a result of Apple’s slowdown, prompting a slate of price-target reductions Friday. Barclays lowers its price target on the stock to $90 a share, down from $115, while maintaining an overweight rating on shares.

5. The takeaway from Club holding Starbucks‘ (SBUX) fiscal fourth-quarter beat is that the coffee maker needs so many more stores both in the U.S. and in China, while it’s barely begun to tackle India. Baird on Friday raises its price target on Starbucks to $110 a share, up from $100, while reiterating a neutral rating.

6. Barclays on Friday raises its price target on Club name Eli Lilly (LLY) to $630 a share, up from $590, while maintaining an overweight rating on the stock. The call seems like a good idea after Eli Lilly delivered solid quarterly results on the back of its blockbuster drug Mounjaro.

7. Shares of cybersecurity firm Fortinet (FTNT) plunge nearly 20% in early trading after its third-quarter results miss on analyst expectations, while providing a weak outlook for the current quarter. Multiple Wall Street firms downgrade Fortinet Friday on the weak quarter and signs secure networking is seeing slower growth.

8. Barclays lowers it price target on Clorox (CLX) to $115 a share, down from $118, while maintaining an underweight rating on the stock — and that seems harsh. The firm calls Clorox’s reduced outlook “prudent given the uncertainty ahead.” Clorox warned last month that an August cyber attack had significantly weighed on sales and profits.

9. KeyBanc upgrades Uber Technologies (UBER) to overweight from a neutral-equivalent rating, with a $60-per-share price target. The firm says Uber’s expense discipline should continue to drive earnings and free cash flow, while advertising “provides a lever to keep prices low to drive volumes.” Uber is set to report third-quarter results on Nov. 7.

10. Gordon Haskett upgrades Ross Stores (ROST) to buy from accumulate, with a $135-per-share price target. The firm says its third-quarter proprietary store manager survey “paints a positive picture” for both Ross and Club name TJX Companies (TJX).

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(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)

As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.

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Here are all the portfolio moves the Club made in this week’s oversold market

People walk by the New York Stock Exchange (NYSE) on February 14, 2023 in New York City.

Spencer Platt | Getty Images News | Getty Images

With the stock market deeply oversold this week, we put cash to work by picking stocks across a range of sectors including energy, technology and materials. We also added a former Club chipmaker to our Bullpen and upgraded a premium beer name to a buy rating. Finally, Friday’s market reversal helped us make good on a pledge to trim a once-downtrodden health-care stock.

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Target shoppers can now make a return without leaving the car

Target is dangling a new perk to get shoppers to swing by its stores: customers can make returns without leaving their car.

The curbside-returns service, which began last week at roughly a quarter of Target’s nearly 2,000 stores nationwide, will be available across the chain by the end of summer. 

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Target is sweetening its curbside-pickup service, Drive Up, to attract and retain customers as the retailer braces for a potential sales slowdown and tries to hang on to pandemic-fueled gains. Total annual revenue grew by about $31 billion – or nearly 40% – from fiscal 2019 to 2022.

Now, as shoppers become more budget conscious and buy fewer discretionary items, Target said it expects comparable sales to range from a low single-digit decline to a low single-digit increase this fiscal year. At an investor day in February, it projected full-year earnings per share of between $7.75 and $8.75, below Wall Street’s expectations of $9.23 per share, according to StreetAccount estimates.

The company hopes convenient perks like curbside returns will boost customer loyalty and jolt sales.

“Any time we remove friction from our guest experience it benefits the guests and benefits Target because they deepen their relationship with us,” Chief Stores Officer Mark Schindele said. “We’ve shown that with Drive Up overall. Guests try that service, they love it and then they shop our stores more often.”

Curbside pickup became a bigger sales driver for retailers’ e-commerce businesses, especially as shoppers tried to avoid crowds during the Covid pandemic. For some shoppers, the habit has stuck as work and home schedules are fuller and commutes are back — and retailers including Target and rival Walmart now aim to capitalize on that.

Click-and-collect, a term used to describe buying online and picking up purchases curbside or in store, grew from 6% of overall e-commerce sales in the U.S. in 2019 to 11% in 2022, according to data from Euromonitor, a market research firm.

Delivery still accounts for the majority of online sales, but click-and-collect drove about $114 billion of sales in 2022 — a jump from $36 billion in 2019, according to Euromonitor.

In the U.S., the vast majority of click-and-collect comes from curbside pickups, said Bob Hoyler, industry manager for retail research at Euromonitor. 

The market research firm anticipates click-and-collect sales in dollars will grow by 8% this year, compared with 2% for delivery. The growth will be fueled by consumers who opt for curbside pickup to avoid delivery fees or shipping minimums at a time of heightened price sensitivity, Hoyler said.

Target debuted Drive Up in 2017 as a test in Minneapolis, where the company is based. It expanded the service to stores across all 50 states in 2019. It added fresh and frozen groceries in 2020, and tacked on wine and beer the following year. 

Last year, the retailer expanded the service to allow shoppers to order a Starbucks drink to retrieve when they pick up their curbside order. The service is available at about 240 stores.

Sales fulfilled through Drive Up grew more than 70% in the fiscal year that ended in late January 2022, on top of a more than 600% boom during the prior fiscal year, the company said. Drive Up sales grew more than 10% in the most recent fiscal year.

Target’s same-day services, which include Drive Up, accounted for more than half of digital sales as of late January as consumers embrace convenience. Same-day services also include Target-owned delivery service Shipt and Order Pickup, which allows shoppers to retrieve an online purchase inside of a store.

The retailer’s average fulfillment cost per unit has fallen by 40% over the past four years as those services grow, Chief Operating Officer John Mulligan said at an investor day in February. More than 95% of Target’s total sales, including digital, are fulfilled in stores.

Other retailers have added to curbside pickup. Walmart rolled out curbside returns at all of its stores ahead of the 2022 holiday season. Dick’s Sporting Goods added curbside returns to its services in 2020 and offers it across all of its stores.

Neither company would quantify the use of curbside pickup or returns, but Walmart said it has seen nearly double the volume of customers using curbside returns from its launch across the chain last fall compared with this month.

At an investor event earlier this month, Walmart CEO Doug McMillon said the retailer is competing on convenience, too. He credited pickup and delivery for driving growth in recent years, and said the company’s recent survey results show customers are choosing the big-box retail giant to save time along with money.

Yet other retailers such as Kohl’s have eliminated curbside pickup. It ended the service last summer, swapping it out for a self-pickup service inside of stores.

The company’s shift to self pickup is part of efforts to cut costs, including by reducing its payroll, Chief Financial Officer Jill Timm said in September at a Goldman Sachs conference. She said Kohl’s is also testing self checkout and self returns.

For some retailers, the time and labor of curbside pickup can be hard to justify — especially since it encourages shoppers to stay in their cars rather than step into stores where they may fill up their carts with more purchases, Euromonitor’s Hoyler said.

Those concerns fueled skepticism of curbside returns within Target, too.

Most Target returns are made at the store, according to the company. Inside of a store, a shopper may swap out a returned product for another or grab an impulse item.

At Target’s investor day in late February, Citibank analyst Paul Lejuez asked if the retailer would ultimately miss out on purchases by adding curbside returns.

Schindele, the chief stores officer, said Target is focused on the lifetime value of a customer, not just the economics of a single transaction. He said allowing curbside returns also helps the retailer get unwanted items back on the sales floor faster and lowers the cost of mail-in returns.

He added that curbside pickup still inspires browsing and other purchases. On average, about 20% of customers who pick up Drive Up orders also make an in-store purchase on the same day, he said.

“What we find is when a guest uses Drive Up — and it could be Drive Up returns, it could be Drive Up purchase — we find that they spend more money in store over the course of the year.”

During tests of curbside returns, some shoppers have stopped by just to return an item, Schindele said. Others have picked up purchases while making a return. Still others have retrieved items they bought, made a return and gotten a Starbucks drink.

For Target, curbside returns could serve as a differentiator and a complement to the merchandise mix it sells, Hoyler said. Target’s sales focus is on general merchandise, such as apparel and beauty products, with only roughly 20% of its annual sales coming from grocery items. That’s much less than Walmart, which draws nearly 60% of its annual U.S. sales from grocery.

That general merchandise tends to be returned much more often than items like milk and bananas, he said.

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Starbucks workers contend company is busting unions. ‘This will be a priority for me,’ congressman says.

SANTA CLARA, CALIF. — Starbucks Corp. employees met with U.S. Rep. Ro Khanna at his California office on Friday and contended the company is retaliating against employees who unionize or are trying to organize, and is not bargaining in good faith.

The giant coffee chain denies those allegations. But what the Democratic congressman from Silicon Valley heard Friday from Starbucks
SBUX,
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employees and union representatives in a meeting attended by MarketWatch echoes other complaints from around the nation that the company is engaging in union-busting — and he vowed to continue to try to help make sure the employees are treated fairly.

Edith Saldano, who works at a location in Santa Cruz County, sat next to the congressman and told him that the company “has embarrassed us over and over again and has not respected us.” Saldano said that during her store’s first bargaining session in November, Starbucks’ lawyers walked out after three minutes.

Saldano fought back tears as she recounted that she had “waited all day” and lost out on a day’s worth of work, which she really needed because she was “houseless” at the time in an area known for its high cost of living. She handed Khanna the employees’ contract proposal.

“We’re asking that you read it over and that you talk to them,” said Saldano, who added that she also sits on the national bargaining committee.

Khanna agreed to take a look and told Saldano: “I appreciate you for fighting not just for yourself but for everyone.”

The congressman has prided himself on being pro-labor and standing with low-wage workers, including Silicon Valley janitors and California’s fast-food workers, through the years. Khanna told the Starbucks employees Friday he has also met with the company’s unionized workers in Los Angeles, and that he hopes to help persuade the company — which is in transition and is set to have its new chief executive officially take over in a couple of months — change its approach to the growing movement to unionize at hundreds of its stores.

The National Labor Relations Board has accused Starbucks of illegally firing workers who have unionized, and the company is facing hundreds of charges of violating labor laws. Judges have ruled against the company in some of those cases. Starbucks in turn has filed complaints with the NLRB, accusing the union of not bargaining in good faith.

In-depth: Unions’ push at Amazon, Apple and Starbucks could be ‘most significant moment in the American labor movement’ in decades

A couple of other Starbucks employees who asked to remain anonymous for fear of reprisal at a Bay Area store where they’re seeking to unionize also gave emotional testimonies at Khanna’s office on Friday. They spoke of having their hours reduced to the point where they don’t qualify for benefits, and being understaffed and overworked in physically demanding jobs.

“They run us into the ground until we’re too fatigued, and we’re replaced with cheaper baristas,” one of the employees said. “We’re organizing because we’re powerless as individuals.”

The other said Starbucks “is dominating the market by any means necessary,” and that employees “need the support of congressmen” and other leaders.

Brandon Dawkins, vice president of organizing for SEIU Local 1021, said possible retaliation by the company is also “putting fear into stores that want to unionize… they see what the unionized workers are going through.”

Khanna thanked the employees for their “courage,” and said “this will be a priority for me just like last Congress,” and outlined how he plans to continue to try to help.

Starbucks spokesman Andrew Trull said Friday that allegations that the company has not bargained in good faith are “simply false.” Trull said Starbucks has “come to the table” for more than 85 bargaining sessions at different stores since October.

“At each of these sessions with Workers United, Starbucks has been met by union representatives who insist on broadcasting in-person sessions to unknown individuals not in the room and, in some instances, have posted excerpts of the sessions online,” Trull said.

As for the allegations that Starbucks is reducing the number of hours available for employees who unionize, Trull said “Starbucks has a longstanding practice of adjusting store hours to reflect seasonal changes in customer demand.”

A spokesperson for Starbucks Workers United said longtime Starbucks employees say “the current pattern of reducing hours does not fit the history in the company.” In addition, the union spokesperson said the company is complicating scheduling of meetings by not allowing bargaining committee members unpaid time off; that the union and the company have agreed to virtual bargaining sessions; and that the union introduces participants for every meeting.

Outgoing Starbucks Chief Executive Howard Schultz refused to appear before a Senate committee last week that wanted to ask him about the accusations of labor-law violations by the company.

The company’s letter to Sanders said that since Schultz is on his way out as CEO, the company was offering its chief public affairs officer, Al Jones, to appear before the committee instead.

The chair of the Senate Health, Education, Labor and Pensions Committee, Democratic Sen. Bernie Sanders, said in a statement lasst week that he intends “to hold Mr. Schultz and Starbucks accountable for their unacceptable behavior.”

In October, Khanna and 30 other lawmakers sent a letter to Schultz, urging him and the company to work with the unions that have formed at hundreds of Starbucks stores around the nation.

For more: Starbucks urged to work with unions in letter from members of Congress

Since then, the congressman’s staff has been in touch with the company, whose representatives have told them that Starbucks is allowing workers to exercise their rights under the National Labor Relations Act.

Khanna told the employees on Friday that he has corresponded with new Starbucks CEO Laxman Narasimhan and expects to meet with him after he takes over April 1.

“I’m hopeful that between the approach to him and the approach to some of the board members, who I know, that they may see the light — allowing for reasonable unionization and reasonable terms,” Khanna said. He mentioned that Microsoft Corp.
MSFT,
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last year came to a neutrality agreement with the Communications Workers of America; Microsoft CEO Satya Nadella is a Starbucks board member.

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Top Wall Street analysts like these stocks for maximum returns

A logo of Meta Platforms Inc. is seen at its booth, at the Viva Technology conference dedicated to innovation and startups, at Porte de Versailles exhibition center in Paris, France June 17, 2022.

Benoit Tessier | Reuters

As the earnings season rolls on, many companies are hinting at a challenging year ahead.

Meanwhile, it can be intimidating to invest in such a stressful environment. To ease the process, here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performances. 

Alphabet 

After languishing in the stock market last year due to numerous factors affecting the tech sector, Alphabet (GOOGL) will report its seasonally weakest quarter of the year on Thursday. From relatively low digital ad spending and regulatory crackdowns on digital ads to increasing costs and interest rates, Google endured it all. Needless to say, the company expects sequential growth deceleration in the fourth quarter. 

Nonetheless, Monness, Crespi, Hardt, & Co. analyst Brian White expects the results to be in line with his expectations. The analyst anticipates a 10% sequential sales increase, implying a quarter-over-quarter deceleration in growth. This is notably lower growth than what is usually expected of a typical Alphabet fourth-quarter report (17% on average in the past four December quarters).  

However, although Google Advertising revenue growth was significantly hurt by the slowdown in digital ad spending, White notes that “Alphabet proved more resilient than Meta and Snap that were   disproportionately impacted by Apple’s privacy initiatives, most notably App Tracking Transparency, along with other factors.” 

The analyst expects year-over-year digital ad spending comps to improve in the second half of the year. Also, White’s estimates suggest that Google Ad revenues should return to growth in the second quarter of 2023. (See Alphabet Blogger Opinions & Sentiment on TipRanks) 

White reiterated a buy rating on the stock with a price target of $135. The analyst holds the 66th position among almost 8,300 analysts followed on TipRanks. His ratings have been profitable 64% of the time, and each rating has generated an 18% average return.

Meta Platforms 

Another technology name in Brian White’s list is Meta Platforms (META), which is scheduled to report its fourth-quarter earnings on Wednesday “after taking a savage beating in 2022,” according to the analyst’s words. 

The headwinds that the company faced last year, including Apple’s privacy initiatives with App Tracking Transparency, the slowdown in advertisement spending, exorbitant investments in the metaverse, and regulatory scrutiny, are not expected to entirely dissipate in 2023. (See Meta Platforms Website Traffic on TipRanks) 

Over the past 52-weeks, Meta shares were cut nearly in half. Gains in early 2023, are helping to trim last year’s losses.

However, a leaner cost structure, thanks to its significantly downsized business and other initiatives, as well as softening challenges, will be a relief this year. Additionally, in the long run, White expects Meta to benefit from the secular digital ad trend and innovations in the metaverse.  

“With sales up 34% per annum over the past five years, EPS turning in a 32% CAGR and generating an   attractive operating margin, we believe Meta Platforms should trade at a premium to the market and tech sector in the long run; however, we expect the current macroeconomic and geopolitical environment will weigh on advertising spending in the coming quarters,” observed White, who reiterated a buy rating on the stock with a price target of $150. 

WNS 

India-based business process management company WNS (WNS) is next on our list. The company’s solid sales pipeline reflects a healthy demand environment that overshadows economic headwinds. This gives Barrington analyst Vincent Colicchio the “confidence in its ability to generate solid revenue and adjusted EPS growth in fiscal 2023 and beyond.” 

The company recently reported its quarterly earnings, where it beat Street estimates, thanks to the strong demand for its services and products. “As of the close of fiscal Q3/23, the company’s sales pipeline was strong and at record levels and sales cycles declined sequentially, reflecting strong demand. Sales cycles have declined in recent quarters as clients accelerated decisions to improve efficiency ahead of a potential recession,” observed Colicchio. (See WNS Stock Chart on TipRanks) 

The analyst was encouraged by the fact that WNS did not realize any meaningful pressures from the economic headwinds that have hung heavily on peers. Challenges like volume pressures, productivity issues, delays and cancelations, etc., did not deter the business from its growth path. 

Colicchio reiterated a buy rating on the stock with a price target of $97 and even raised his fiscal 2023 and fiscal 2024 earnings-per-share forecasts to $3.86 and $4.14 from $3.78 and $4.12, respectively. 

The analyst currently stands at #282 among almost 8,300 analysts tracked by TipRanks. Moreover, 62% of his ratings have been profitable, each generating a 13.1% average return. 

BRC 

BRC (BRCC) is a unique company. The operator of the Black Rifle Coffee Company is founded and led by military veterans. The company was built to serve premium coffee, content and merchandise to active military, veterans and first responders. 

BRC has been on Tigress Financial Partners analyst Ivan Feinseth‘s buy list in recent weeks. The analyst has a $19 price target on the company. (See BRC Insider Trading Activity on TipRanks) 

Feinseth is confident that the company is a solid emerging high-growth lifestyle investment opportunity, serving a loyal and niche customer base and offering meaningful growth opportunities through product innovation and a digitally native omnichannel distribution strategy. 

BRCC recently announced that it will “shift focus from the near-term buildout of restaurants (Outpost) and DTC (Direct-to-consumer) sales to a faster growth and higher return opportunity in the expansion of the sales of its RTD (Ready-to-drink) beverages packaged and premeasured (k-cup) coffee through an increasing FDM (food drug and mass-market) focus,” explained the TipRanks-rated 5-star analyst. 

Feinseth’s convictions can be trusted, given his 185th position among nearly 8,300 analysts in the TipRanks database. This apart, his track of 63% profitable ratings, each rating delivering 12.1% average returns, is also worth considering. 

Starbucks 

The world’s largest specialty coffee chain retailer Starbucks (SBUX) is also one of Ivan Feinseth’s favorite stocks for this year. The company continues to put its numerous growth drivers into action. This includes new product development, a global coffee alliance and ongoing store growth. Starbucks also enjoys strong brand equity and a committed customer base, which will help drive its new reinvention plan for long-term growth, according to the analyst’s observations. 

“SBUX continues to improve operating efficiencies and customer experience by leveraging ongoing   innovation, new technologies, and new store formats,” said Feinseth, reiterating a buy rating on Starbucks with a price target of $136.  

Moreover, the company’s focus on expanding its product portfolio to include new health and wellness beverages, teas, and core food offerings can boost customer traffic during later hours. (See Starbucks’ Dividend Date & History on TipRanks) 

Staying up to date with the changing industry trends, Feinseth noted that Starbucks is investing in new   digital initiatives to improve customer service, supply-chain management, its loyalty program, and mobile ordering and e-commerce capabilities.  

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3 takeaways from our daily meeting: Looking for new stocks, 2 trades, earnings recap




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