Tag: Weekend brief

Top Wall Street analysts pound the table on these 5 stocks

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Celebration at the Nasdaq during the Datadog IPO, September 19, 2019.

Source: Nasdaq

Selecting the right stocks against a backdrop of mixed economic data and earnings can be challenging for investors. One strategy is to track the investment ideas of Wall Street pros and glean valuable insights into making successful stock decisions.

To that end, TipRanks, a platform that ranks analysts based on their past performance, has identified five stocks well liked by top-ranking analysts. Learn more about these stocks below.

Amazon

E-commerce and cloud computing giant Amazon (AMZN) is this week’s first pick. Earlier this month, the company trounced analysts’ second-quarter earnings estimates and returned to double-digit revenue growth.

DBS analyst Sachin Mittal noted that, after seven quarters of losses due to macro headwinds, the company’s retail segment generated operating profit in the second quarter. The analyst expects the retail segment to be a key driver of AMZN’s share price appreciation from this year onwards.

He also noted that, with 32% share of the global cloud infrastructure market, AWS is the most valuable business for Amazon. It is worth noting that AWS accounted for only about 17% of AMZN’s overall revenue in the second quarter but generated 70% of the company’s profit.

Mittal increased his price target for AMZN to $175 from $150 and reaffirmed a buy rating on the stock, citing the company’s leadership position in e-commerce and dominant position in cloud through AWS.

The analyst is also optimistic about the robust growth opportunity for Amazon’s online advertising business. “More advertisers are turning to AMZN’s retail media network to deceive Apple’s privacy changes and get closer to shoppers,” Mittal said.

Mittal ranks No. 744 among more than 8,500 analysts on TipRanks. His ratings have been successful 75% of the time, with each rating delivering an average return of 18.4%. (See Amazon insider trading activity on TipRanks).

AppLovin

Mobile app technology platform AppLovin (APP) recently impressed Wall Street by surpassing second-quarter earnings estimates. The company also issued better-than-anticipated revenue guidance for the third quarter.

Following the Q2 print, Goldman Sachs analyst Eric Sheridan increased his price target for AppLovin to $50 from $25 and reiterated a buy rating. The analyst noted that the evolution of the company’s software platform drove revenue and margin upside in the second quarter, in the wake of improving industry trends.

The analyst raised his operating estimates to reflect higher revenue growth expectations, fueled by the launch of the company’s latest artificial intelligence (AI)-based advertising engine, Axon 2.0.

Despite near-term concerns about volatility in the advertising and gaming end markets, Sheridan is bullish on the stock. He continues “to look long-term at the collection of businesses under AppLovin as producing above average industry growth and a strong margin profile in a recovered mobile ads/mobile gaming landscape.”  

Sheridan holds the 188th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 61% of the time, with each rating delivering an average return of 13.3%. (See AppLovin Stock Chart on TipRanks)

Datadog

Another Goldman Sachs analyst on this week’s list is Kash Rangan, who remains bullish on Datadog (DDOG) even after the cloud-based IT monitoring and security platform spooked investors with its lackluster revenue outlook for the third quarter. The company also trimmed its full-year revenue guidance.

Rangan noted that the slowdown in spending by Datadog’s larger customers and the pace of net new enterprise additions (80 in Q2 2023 compared to 130 in the previous quarter) disappointed investors.

Nevertheless, the analyst is encouraged by the solid second-quarter bookings, with remaining performance obligations (or RPO) increasing 42% year-over-year compared to the 33% growth seen in the first quarter. The growth in RPO was driven by higher average deal size and contract duration.   

Rangan reiterated a buy rating on DDOG stock with a price target of $114, saying that his long-term thesis remains intact. “Datadog maintains its competitive advantage as an E2E [end-to-end] observability platform as validated by product consolidation driving large deal sizes.”

The analyst also highlighted solid product stickiness, growing platform penetration, and product innovation as reasons for his optimism.

Rangan ranks 601 out of more than 8,500 analysts tracked on TipRanks. Also, 58% percent of his ratings have been profitable with an average return of 8%. (See Datadog’s Blogger Opinions & Sentiment on TipRanks)  

Royal Caribbean

We now move to cruise operator Royal Caribbean (RCL), which recently raised its full-year outlook and reported blockbuster second-quarter earnings. The company is enjoying strong business due to pent-up travel demand.

This week, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on RCL and raised his price target to $139 from $102, citing stellar demand for cruise vacations, the company’s industry-leading position and its solid value proposition.

The analyst thinks that the company is well-positioned to gain from the reprioritization of consumer spending toward travel and experiences following the pandemic. He said that demand in North America remains strong. In particular, Feinseth expects RCL’s “Perfect Day at CocoCay” private island resort to be a key growth driver and industry differentiator, which could fuel significant incremental revenue growth and yields.

“RCL’s current liquidity and ramp-up in cash flow will enable the ongoing funding of its fleet expansion and upgrades, growth initiatives, and balance sheet optimization,” said Feinseth.

Feinseth holds the 266th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 59% of the time, delivering an average return of 11.8%. (See RCL Financial Statements on TipRanks) 

Netflix

We end this week’s list with streaming giant Netflix (NFLX), which reported upbeat second-quarter earnings but fell short of analysts’ revenue expectations.

Despite the decline in NFLX shares since its Q2 results, JPMorgan’s Doug Anmuth reiterated a buy rating on the stock with a price target of $505. The analyst pointed out certain areas that investors are concerned about, including paid sharing monetization and how and when it will boost average revenue per membership.

While paid sharing monetization is happening at a slower pace than Anmuth’s initial forecast, he continues to expect it to be highly accretive to revenue over time. Of the more than 100 million password-sharing users globally, the analyst expects Netflix to monetize 18.8 million by the end of this year, 31 million by the end of 2024 and 38 million by the end of 2025.    

However, Anmuth, who ranks 92 out of more than 8,500 analysts tracked on TipRanks, expects advertising to be a bigger and more reliable revenue stream than paid sharing for Netflix in the future.

Calling Netflix a key beneficiary of the ongoing disruption of linear TV, the analyst said: “The recent launch of NFLX’s ad-supported tier, as well as the broader Paid Sharing launch, should further help re-accelerate subscriber & revenue growth while driving high-margin incremental revenue.”

Anmuth has a success rate of 61% and each of his ratings has returned 17.1%, on average. (See Netflix Hedge Fund Trading Activity on TipRanks).

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Top Wall Street analysts pick these dividend stocks for solid returns

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Michael Wirth, CEO of Chevron.

Adam Jeffery | CNBC

When times get rocky for the stock market, dividends can offer investors a measure of stability in the form of portfolio income.

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.

Chevron

Energy giant Chevron‘s (CVX) earnings declined in the second quarter of 2023, as energy prices have cooled down compared to last year when the Russia-Ukraine conflict sent oil and gas prices soaring.

Nonetheless, Goldman Sachs analyst Neil Mehta recently upgraded Chevron to buy from hold, citing leading capital returns and inflection in free cash flow next year. He raised his price target for CVX stock to $187 from $166.

Mehta stated that Chevron lagged its key rivals over the past two to three years due to issues related to upstream execution and lower refining exposure compared to Exxon. However, the analyst said that some of the upstream execution risks have been addressed, with major projects in Tengiz at 98% completion and Permian volumes growing better than anticipated in Q2 2023.

Regarding capital returns, Mehta noted that Chevron has grown its dividends for more than 25 years. The stock has a yield of 3.3%. Moreover, earlier this year, the company increased its annual share repurchase guidance range to $10 billion to $20 billion from $5 billion to $15 billion.

“We highlight that from 2024-2026, we expect a sharp improvement in ROCE [return on capital employed], production per share growth and FCF per share, all enabling a top decile return of capital profile in the S&P 100,” said the analyst.

Mehta ranks 262nd among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 66% of the time, with each rating delivering an average return of 12.3%. (See Chevron Stock Chart on TipRanks)  

ConocoPhillips

Mehta is also bullish on another dividend-paying energy stock – ConocoPhillips (COP). While the company’s second-quarter earnings and cash flow fell slightly short of the analyst’s expectations, he sees the possibility of a more constructive setup in the second half of 2023 as pricing realizations normalize and volumes increase.

Mehta added that though ConocoPhillips is in a higher spending mode to support longer-term and high-return projects, he continues to expect attractive capital returns in 2024 and beyond. The analyst projects a capital return yield of 7% in 2024, with room for further upside.

The analyst’s 2024 capital return projection is based on $5 billion of share buybacks and the expectation of a higher dividend payout of $4.3 billion compared to the prior estimate of $3.7 billion. ConocoPhillips has a capital return target of $11 billion for 2023, and it has returned about $5.8 billion to shareholders in the first half of the year through share repurchases and fixed and variable dividends.

Mehta reiterated a buy rating on COP and raised the price target to $128 from $120, saying, “We see COP as the most advantaged on return on capital employed, with a 2024-2026 avg ROCE of 21% vs the US Major peer avg of 16%.” (See ConocoPhillips’ Financial Statements on TipRanks) 

Pioneer Natural Resources

Next on this week’s list is Pioneer Natural (PXD), an independent oil and gas exploration and production company. Recently, PXD modified its capital return framework to pay at least 75% of free cash flow to shareholders through base and variable dividends and opportunistic share repurchases. The remaining 25% will be used to strengthen the balance sheet.

Mizuho analyst Nitin Kumar noted that in the second quarter — marking the inaugural quarter for the updated capital return framework — post-base dividend free cash flow was evenly divided between buybacks (about $125 million) and variable dividends ($138 million). He also mentioned that Pioneer recently announced its third-quarter dividend payment and pointed out that its forward dividend yield is over 3.0%, based on $1.25 per share of base dividend and $0.59 per share of variable dividend.  

Kumar, who has a buy rating on PXD with a price target of $265, highlighted that PXD’s second-quarter volumes and above-guidance production validated his prediction of an improvement in well productivity, as indicated by his firm’s proprietary database.    

“Critically, this well productivity is allowing management to increase oil/total production guidance by ~1%/3% while reducing capex by ~3%, setting the stage for strong capital efficiencies into 2024 without factoring in the impact of cost deflation anticipated by the industry,” said Kumar.

Kumar holds the 26th position among more than 8,500 analysts on TipRanks. Moreover, 79% of his ratings have been profitable, with each generating a return of 23.2%. (See PXD Insider Trading Activity on TipRanks)

Seagate Technology

Seagate (STX), one of the prominent makers of computer hard drives, is under pressure because of the uneven pace of recovery in China and cautious enterprise spending due to macro headwinds.

Nevertheless, Baird analyst Tristan Gerra, who ranks 398th among more than 8,500 analysts tracked on TipRanks, remains bullish on this dividend-paying tech stock. Seagate generated free cash flow of $626 million in fiscal 2023 and paid $582 million in dividends while directing $408 million toward repurchasing shares. STX offers a dividend yield of 4.2%.

The analyst noted that the June quarter’s shipments fell significantly due to the ongoing inventory correction among most of the company’s customers, with this trend expected to last a couple of additional quarters. However, the analyst contended that hard disk drive (HDD) secular demand trends remain intact.  

Gerra thinks that the worst is behind the company. He expects STX’s gross margin to improve due to the company’s aggressive cost reduction and ramp-up of higher-density architecture.

The analyst reiterated a buy rating on STX stock with a price target of $70. He said, “Net, business remains structurally sound, and we see no reason for Seagate not to return and eventually exceed a historical $5-$5.50 EPS run rate.”

Gerra has a success rate of 56% and each of his ratings has returned 10.3% on average. (See Seagate Hedge Fund Trading Activity on TipRanks)          

McDonald’s

Last on this week’s list, there’s fast-food chain McDonald’s (MCD), which impressed investors with strong second-quarter results. The company is a dividend aristocrat and has raised its dividend payment for 46 consecutive years. MCD has a dividend yield of 2.1%. 

Following the impressive Q2 2023 print, RBC Capital analyst Christopher Carril reiterated a buy rating on MCD and increased the price target to $340 from $325.

The analyst highlighted that the company delivered another solid quarter against elevated estimates, driven by still-elevated average check and positive guest counts, which were supported by its robust marketing efforts. 

“McDonald’s stable and improved business model, global scale and near best-in class dividend yield all help to balance relatively lower unit growth, in our view justifying a multiple above that of all franchised peers,” said Carril.

Carril ranks No. 661 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.3%. (See McDonald’s Blogger Opinions & Sentiment on TipRanks)  

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Top Wall Street analysts are banking on these stocks for solid returns

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The Spotify logo on the New York Stock Exchange, April 3, 2018.

Lucas Jackson | Reuters

With markets facing pressure at least in the short term, investors should try to build a portfolio of stocks that can weather the storm and offer long-term growth potential.

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

Domino’s Pizza

Domino’s Pizza (DPZ) reported mixed results for the second quarter, with the company blaming a decline in its market-basket pricing to stores and lower order volumes for the shortfall in its revenue compared to analysts’ expectations.

Nonetheless, BTIG analyst Peter Saleh reiterated a buy rating on Domino’s with a price target of $465 and said that the stock remains his top pick. (See Domino’s Financial Statements on TipRanks) 

In particular, Saleh expects the company’s Uber Eats partnership, changes in the rewards program, and the launch of its pepperoni Stuffed Cheesy Bread to boost the top line in the fourth quarter and into 2024.

The analyst noted that the pizza chain’s entire menu will become available to Uber Eats customers at regular menu prices, without any deals or coupons. Interestingly, the company is targeting the higher-income customers on Uber Eats and reserving the discounts and other benefits for its own ordering channels.

“We expect the improvement in delivery sales, coupled with declining commodities, to translate to healthier unit economics and accelerated domestic development next year and beyond,” said Saleh.

Saleh ranks No. 331 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.9%.  

Meta Platforms

Next up is Meta Platforms (META). The social media platform recently delivered upbeat second-quarter results and issued better-than-anticipated guidance for the third quarter, signaling improved conditions in the digital ad market.

Following the print, Monness analyst Brian White raised his price target for Meta to $370 from $275 and maintained a buy rating, saying that the company’s second-quarter results reflected strong execution and its massive cost-improvement measures.

The analyst noted that management’s commentary during the earnings call reflected positive vibes, backed by an improving digital ad market and a compelling product roadmap. He highlighted the momentum in Meta’s short-video feature Reels, which is growing at a more than $10 billion annual revenue run rate across apps. He also mentioned the better-than-expected traction in Threads and the company’s significant investments in artificial intelligence.        

White cautioned investors about regulatory risks and internal headwinds. However, he said that in the long run, “Meta will benefit from the digital ad trend, innovate with AI, and participate in the build-out of the metaverse.”

White holds the 27th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 67% of the time, with each rating delivering an average return of 20.7%. (See Meta Platforms Stock Chart on TipRanks)

Spotify

White is also bullish on audio streaming company Spotify (SPOT). While Spotify’s second-quarter revenue and Q3 2023 guidance missed analysts’ expectations, the analyst contended that results were “respectable” with meaningful year-over-year growth of 27% in monthly active users (MAU) to 551 million.

Commenting on Spotify’s decision to increase the price of its subscription offerings, White noted that the price hikes will impact most subscribers beginning September, thus having a small impact on the third quarter but contributing meaningfully to the fourth-quarter performance.

While the analyst acknowledges an intense competitive backdrop, he said that “Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure.”

White raised his 2024 estimates and reiterated a buy rating while increasing the price target for SPOT stock to $175 from $160. (See Spotify Blogger Opinions & Sentiment on TipRanks)  

Microsoft

Another tech giant in the week’s list is Microsoft (MSFT), which has been making headlines this year due to its generative AI advancements. The company’s fiscal fourth-quarter results topped Wall Street’s estimates. That said, the revenue outlook for the first quarter of fiscal 2024 fell short of expectations.

Nonetheless, Goldman Sachs analyst Kash Rangan, who ranks 459th among more than 8,500 analysts tracked on TipRanks, remains bullish on MSFT stock. (See Microsoft Hedge Fund Trading Activity on TipRanks)           

The analyst thinks that in the short term, there might be concerns about when the company’s ramped-up capital investments will pay off. However, he observed that historically, whenever Microsoft increased its capital expenditure in the cloud market, Azure growth rate shot up meaningfully and margins rebounded, driving the stock price higher. 

With a strong presence across all layers of the cloud stack, Rangan said that Microsoft is well positioned to capture opportunities in several long-term secular trends, including public cloud and SaaS adoption, digital transformation, generative AI and machine learning, analytics and DevOps.

In line with his bullish stance, Rangan reiterated a buy rating with a price target of $400. He has a success rate of 59% and each of his ratings has returned 10% on average.

General Motors

We now drive toward legacy automaker General Motors (GM), which impressed investors with robust growth in its second-quarter revenue and earnings. Additionally, the company raised its full-year outlook for the second time this year.

Recently, Tigress Financial Partners analyst Ivan Feinseth reaffirmed a buy rating on the stock with a price target of $86, noting the company’s strong execution and the ramp-up of new electric vehicle launches and production.

The analyst highlighted that the company continues to witness robust demand for its full-size SUVs and pickups, which is driving its revenue and cash flow higher and funding the transition and expansion of its EV production.

Feinseth called GM’s Ultium platform and supply chain for EV battery production its significant competitive advantage. The analyst is also positive about the company’s recent initiatives to expand its charging network.

“In addition to the ramp-up of EV production, GM’s ramp-up of high-value software and services as it plans to double company revenue to $275-315 billion by 2030 should drive significant increases in Return on Capital (ROC) and Economic Profit,” the analyst said.     

Feinseth holds the 215th position among more than 8,500 analysts on TipRanks. His ratings have been successful 61% of the time, with each rating delivering an average return of 12.9%. (See General Motors Insider Trading Activity on TipRanks)

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Top Wall Street analysts are upbeat about these dividend stocks

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While many growth stocks have recovered this year, investors continue to look for attractive dividend picks that can offer steady income and the potential for long-term capital appreciation.

Here are five dividend stocks worth considering, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

IBM

Tech giant IBM (IBM) recently reported mixed results for the second quarter. While revenue fell short of expectations, the company’s earnings smashed estimates due to improved gross margin.

IBM is transforming its business and focusing on growth areas like hybrid cloud computing and artificial intelligence. It generated free cash flow of over $3.4 billion and paid dividends worth $3 billion in the first six months of 2023. IBM expects to deliver free cash flow of $10.5 billion for the full year.

Earlier this year, IBM increased its quarterly dividend by a modest 0.6% to $1.66, marking the 28th consecutive year of dividend hikes. IBM’s dividend yield is about 4.6%.

Following the results, Stifel analyst David Grossman increased his price target for IBM stock to $144 from $140 and reiterated a buy rating. The analyst slightly raised his 2023 and 2024 estimates based on the organic and inorganic growth in the company’s software business.

“IBM has been a source of funds YTD and remains most appropriate for the dividend sensitive value investor looking for a defensive market hedge,” said Grossman.

Grossman is ranked 389th among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 64% of the time, with each one delivering an average return of 14.4%. (See IBM Blogger Opinions & Sentiment on TipRanks)

Chord Energy

Next up is Chord Energy (CHRD), an oil and gas operator with assets in the Williston Basin. The company rewards shareholders through a quarterly base dividend, a variable dividend and share buybacks.

For the first quarter, Chord declared a total cash dividend of $3.22 per share, including a variable dividend of $1.97 per share.

RBC Capital analyst Scott Hanold sees the possibility of the company exceeding its 75% minimum shareholder payout if excess cash builds and no other accretive acquisition opportunities arise. Hanold expects Chord to declare a variable dividend of $0.15 per share for the second quarter, along with a base dividend of $1.25 per share and share buybacks in the range of $25 million to $30 million.    

Ahead of the upcoming results, Hanold lowered his Q2 2023 earnings per share and cash flow per share estimates due to lower benchmark commodity prices, wider price differentials, and lower production. He also reduced his price target for CHRD to $180 from $185 to reflect his new commodity price forecast. 

Nonetheless, Hanold is bullish on CHRD and reiterated a buy rating on the stock, saying, “The company’s balance sheet is strong and leverage is de-minimis, providing the opportunity to allocate a significant portion of FCF to shareholder returns.”

Hanold, who ranks 43rd out of more than 8,500 on Tipranks, has a success rate of 63% and each of his ratings has returned 21.4%, on average. (See Chord Energy Hedge Fund Trading Activity on TipRanks)     

Energy Transfer LP

Another RBC Capital analyst, Elvira Scotto, is bullish on dividend stock Energy Transfer (ET), a publicly traded limited partnership that operates a vast pipeline network spanning 41 U.S. states.

On July 25, Energy Transfer announced a quarterly cash distribution of $0.31 per common unit for the second quarter, marking a 0.8% increase compared to the first quarter of 2023. That brings the dividend yield to over 9%. The company is targeting a 3% to 5% growth in its annual distribution.

Heading into second-quarter results, Scotto expects the performance of midstream companies to be affected by lower commodity prices. Nonetheless, the analyst reiterated a buy rating on Energy Transfer stock with a price target of $17.

“We believe ET has one of the most attractive integrated asset bases across our midstream coverage universe and view ET as a compelling investment opportunity, trading at a discount to large cap peers on EV/EBITDA and at a FCF [free cash flow] yield of ~14%,” said Scotto.    

The analyst thinks that ET is well positioned to generate significant rise in cash flows, which, coupled with its solid balance sheet, could drive higher cash returns through increased distributions to unitholders.

Scotto holds the 53rd position among more than 8,500 analysts on TipRanks. Additionally, 65% of her ratings have been profitable, with an average return of 19.6%. (See Energy Transfer Stock Chart on TipRanks)   

EOG Resources

Another energy name this week is EOG Resources (EOG), a crude oil and natural gas exploration and production company. Last year, the company returned $5.1 billion through regular and special dividends, representing 67% of its free cash flow.  

For the first quarter of 2023, EOG declared a regular quarterly dividend of $0.825 per share, payable on July 31. Moreover, the company repurchased $310 million worth shares in Q1. EOG offers a forward dividend yield of about 2.6%.

Mizuho analyst Nitin Kumar recently revised his estimates for EOG ahead of its upcoming results, to reflect actual pricing and improving Delaware well productivity based on the data from his firm’s proprietary database. Kumar’s Q2 2023 volume estimates are biased toward the higher end of the outlook range.

The analyst projects that EOG will deliver free cash flow of $753 million in the second quarter, despite his expectation of a 10% fall in aggregate pricing compared to the first quarter.

“Compared to the base dividend burden of ~$484mm and over $5bn of cash on hand at March 31, the company should have excess cash to pursue buybacks opportunistically,” said Kumar, who reiterated a buy rating on EOG with a price target of $146.

Kumar ranks 111th among more than 8,500 analysts on TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 22.5%. (See EOG Insider Trading Activity on TipRanks)  

Morgan Stanley

Finally, we will look at a dividend stock in the financial sector: Morgan Stanley (MS). Recently, the global financial services giant reported market-beating second-quarter results, as the strength in its wealth management division offset lower trading revenue.

Last month, Morgan Stanley announced that it will hike its quarterly dividend per share to $0.85 from $0.775, commencing with the dividend to be declared in the third quarter of 2023. With this hike, Morgan Stanley’s forward dividend yield stands at about 3.6%. The bank’s board also reauthorized a $20 billion multi-year share repurchase program, beginning in the third quarter of 2023.

The bank’s upbeat second-quarter results prompted BMO Capital analyst James Fotheringham to increase his forward estimates by 1% to 2% and raise his price target for MS stock to $103 from $100. The analyst reiterated a buy rating on the stock, noting that the wealth management division remains the “bright spot.”

“Following two lackluster quarters for capital markets, MS noted the emergence of ‘green shoots’ across its businesses, supportive of a near-term improvement in deal activity,” said Fotheringham.

Fotheringham holds the 215th position among more than 8,500 analysts on TipRanks. Additionally, 65% of his ratings have been profitable, with an average return of 12.4%. (See Morgan Stanley Financial Statements on TipRanks)

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Top Wall Street analysts see solid potential in these five stocks

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The Rivian name is shown on one of their new electric SUV vehicles in San Diego, U.S., December 16, 2022.

Mike Blake | Reuters

There is more to investing in the right stocks than just buying them after a hot earnings report.

Investors can become better informed by researching the opinions of Wall Street experts, especially as they dive into the details of companies’ quarterly results.

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

Salesforce

First on this week’s list is cloud-based customer relationship management software provider Salesforce (CRM). The company recently announced that it would be raising the prices for some of its cloud products by 9% on average starting in August.

This marked the first price hike for Salesforce in seven years. Also, it comes at a time when cloud players are under pressure, as clients are optimizing their IT spending due to macro challenges. (See Salesforce Blogger Opinions & Sentiment on TipRanks) 

BMO Capital analyst Keith Bachman thinks that the company’s new generative artificial intelligence products and price increases across its core cloud products, including Sales, Service and Marketing clouds, as well as Tableau, could drive growth in fiscal year 2025 (calendar year 2024).

The analyst added that generative AI increases the importance of data, thus providing an advantage to companies that can help consolidate, curate and protect data. “In our opinion, Salesforce is well positioned to help companies leverage data, including GenAI,” said Bachman.

Bachman reiterated a buy rating on Salesforce and raised his price target to $255 from $245. He ranks No. 463 out of more than 8,500 analysts tracked on TipRanks. Also, 59% percent of his ratings have been profitable, with an average return of 8.6%.

Dell

Personal computer makers, including Dell (DELL), have been facing significant headwinds, as the demand for desktops and laptops plunged following a pandemic-driven rush.

However, Deutsche Bank analyst Sidney Ho highlighted that recent data points in the PC supply chain indicate that inventory has normalized, raising hopes that PC shipments could be above-seasonal levels in the second half of 2023.

Ho sees an upside to Dell’s Client Solutions Group (CSG) fiscal second-quarter revenue guidance of “roughly flat” on a quarter-over-quarter basis. Further, Gartner data indicates a gradual improvement in business demand trends, which works well for Dell as it has a significantly higher market share of 23% in the commercial PC market compared to a 9% share in the consumer PC market. Still, Ho cautioned about continued risks in the server market.

“Looking beyond the cyclical downturn, we believe a strong capital returns program could be a source of EPS upside for DELL, especially as its leverage ratio approaches its target level,” explained Ho.

Ho raised the price target on DELL to $60 from $48 and reiterated a buy rating. The analyst ranks 65th among more than 8,500 analysts on TipRanks. Ho’s ratings have been profitable 66% of the time, with each one delivering an average return of 23.9%. (See DELL Insider Trading Activity on TipRanks)         

Rivian Automotive

Next on our list is U.S. electric vehicle maker Rivian (RIVN), which impressed investors earlier this month with higher-than-expected deliveries for the second quarter. The company also reaffirmed its annual production guidance of 50,000 vehicles for 2023.

Mizuho analyst Vijay Rakesh sees a possibility of Rivian exceeding its 50,000 production guidance. The analyst noted that the company is executing well, with second-quarter production rising 49% quarter-over-quarter to about 14,000 units and handily exceeding his growth estimate of 23%.   

“We see the strong 1H23 deliveries positioning RIVN well for future ramps into 2H23E and beyond,” said Rakesh, who ranks 32 among more than 8,500 analysts on TipRanks. (See Rivian Financial Statements on TipRanks) 

The analyst increased his 2023 delivery estimate for Rivian’s R1 vehicle lines to about 39,000 units from 37,000, while maintaining the estimate for its EDVs (electric delivery vans) at 11,000. The analyst expects Rivian to deliver over 92,000 and 115,000 vehicles in 2024 and 2025, respectively.

In line with his bullish stance, Rakesh increased his price target for RIVN to $30 from $27 and maintained a buy rating. Rakesh has a success rate of 64% and each of his ratings has returned 23.9%, on average.

Mobileye Global

Rakesh is also bullish on Mobileye Global (MBLY), an Israel-based provider of autonomous driving technology. The analyst said that recent trends in the electric vehicle and advanced driver-assistance system (ADAS) bode well for Mobileye.

Rakesh noted that Mobileye’s key customer Zeekr, an EV brand owned by Geely Automobile, is ramping its production, with the June quarter units rising 80% sequentially to 27,000. This implies stronger prospects for Mobileye’s SuperVision systems in the June and September quarters.

The analyst now expects SuperVision units to increase 83% to about 163,000 this year, up from his prior outlook of 150,000. He also thinks that problems at Volkswagen’s software unit Cariad could create new opportunities for SuperVision at Porsche and other Volkswagen brands.

Rakesh raised his price target for MBLY to $48 from $43 and reiterated a buy rating on the stock. “We continue to see MBLY positioned well with ~70% market share and a strong AV [autonomous vehicles] roadmap,” he said. (See Mobileye Hedge Fund Trading Activity on TipRanks)           

Alphabet

The rapid growth of OpenAI’s ChatGPT has triggered massive interest in generative artificial intelligence. Tech giants, including Google parent Alphabet (GOOGL), have joined the race and are making huge investments to capture opportunities in this space.

Tigress Financial Partners analyst Ivan Feinseth thinks that the growing integration of AI functionality will help Alphabet maintain its dominant position across all key technology trends, including search, mobile, cloud, data center, home automation, autonomous vehicle tech and more.

He also expects the company to benefit from the increased integration of its Android operating system into Internet of Things devices. It will also benefit from Android’s adoption by several leading automotive original equipment manufacturers as the key driver of their infotainment platforms.

Further, GOOGL continues to build and strengthen its product portfolio through strategic acquisitions and collaborations, including those focusing on AI technology. Indeed, the company is a backer of AI startup Anthropic.

“GOOGL’s strong balance sheet and cash flow enable the ongoing funding of key growth initiatives, strategic acquisitions, and the further enhancement of shareholder returns through ongoing share repurchase,” said Feinseth.    

Feinseth increased his price target for GOOGL to $172 from $160 and maintained a buy rating on the stock. The analyst holds the 201st position among more than 8,500 analysts on TipRanks. His ratings have been profitable 61% of the time, with each rating delivering an average return of 13.2%. (See Alphabet Stock Chart on TipRanks)

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Top Wall Street analysts are bullish on these five stocks

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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

The second half has kicked off in earnest, and earnings are revving up.

Investors tracking the action may garner useful insights from Wall Street experts’ top stock picks, and this can help them make informed decisions as they seek solid returns over the long term.

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

Cava Group 

First on this week’s list is the Mediterranean restaurant chain Cava (CAVA), which made a blockbuster public debut last month. The rally in CAVA shares since its initial public offering reflects investors’ optimism about the fast-casual restaurant chain’s growth prospects. Cava has expanded to 263 locations since it opened its first restaurant in 2011.  

Stifel analyst Chris O’Cull initiated a buy rating on Cava with a price target of $48. The analyst sees robust growth potential, given the company’s plan to expand to at least 1,000 restaurant locations in the U.S. by 2032. Cava’s expansion plans include a foray into new markets in the Midwest region next year.  

O’Cull expects the company’s growth plans to be backed by a healthy balance sheet. He noted that following the IPO, Cava had about $340 million in cash on hand and no funded debt. The analyst estimates annual revenue growth of 20% during the next four years, driven by at least 15% growth in Cava’s footprint. He projects adjusted earnings before interest, taxes, depreciation and amortization to almost double to $112 million in 2026 from $58 million this year and the company to generate positive free cash flow starting in 2026.  

“In our view, the stock’s premium valuation can be justified by its AUV [average unit volume] and unit count growth opportunity and the potential for solid operating momentum to cause upward revisions to near-term estimates and long-term earnings potential,” said O’Cull.  

O’Cull is ranked 349th among more than 8,400 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each rating delivering an average return of 12.3%. (See CAVA Technical Analysis on TipRanks)        

Apple  

Tech behemoth Apple (AAPL) is known for its innovative products, including the iPhone and iPad. That said, the company’s higher-margin Services segment has rapidly grown over recent years and has enhanced the firm’s revenue and profitability.  

Evercore ISI analyst Amit Daryanani, who ranks 258th out of more than 8,400 analysts tracked on TipRanks, recently revealed the results of the annual Apple Services survey conducted by his firm. The survey indicated that Apple Services continues to experience increased adoption across the board. In particular, Apple Pay, Music and TV+ saw the most notable rises in adoption compared to last year’s survey. 

The survey revealed that Services’ average revenue per user (ARPU) in the U.S. is $110, which is much higher than Daryanani’s global estimate of $81. The analyst contends that ARPU growth is the major catalyst for the Services business, given that smartphone penetration has likely reached peak levels.  

“We continue to see Apple Services as well positioned to maintain double digit growth through FY27 and beyond driven by increasing ARPU coupled with new product launches,” said Daryanani.  

Daryanani reiterated a buy rating on AAPL with a price target of $210. He has a success rate of 60%, and each of his ratings have returned 11.5%, on average. (See AAPL Insider Trading Activity on TipRanks)  

Meta Platforms 

Next on our list is social media giant Meta (META), which recently launched Threads, a social media app challenging Twitter.

Tigress Financial Partners analyst Ivan Feinseth thinks that the Thread launch was well-timed to take advantage of Twitter’s sliding popularity. He said that the introduction of Threads has created an additional growth catalyst that could further drive Instagram’s engagement.  

Feinseth also expects Meta’s ongoing artificial intelligence investments and integration to continue to enhance engagement and advertising revenue across all its apps. The analyst highlighted that Meta’s solid balance sheet and cash flows help support its growth initiatives, including investing in the Metaverse, strategic acquisitions, and share repurchases.  

Feinseth reiterated a buy rating on Meta and raised the price target to $380 from $285. The analyst said, “Increasing AI integration, better cost management, and increased operating efficiency will drive a reacceleration in Business Performance trends.” 

Feinseth holds the 205th position among more than 8,400 analysts on TipRanks. Sixty percent of his ratings have been profitable, with an average return of 12.8%. (See Meta Blogger Opinions & Sentiment on TipRanks) 

Nvidia  

Semiconductor giant Nvidia (NVDA) is seen as one of the major beneficiaries of the growing interest in generative AI, which is fueling tremendous demand for its GPU chips.  

Goldman Sachs analyst Toshiya Hari noted that Nvidia has already gained from the traditional AI boom for a decade, as reflected in the spike in its Data Center segment revenue from $129 million in fiscal 2013 to $15 billion in fiscal 2023. The analyst increased his revenue and earnings estimates for Nvidia, as he thinks that the company has entered a new phase of generative AI-driven growth. 

Hari projects demand for Nvidia’s products in training generative AI models to represent a cumulative revenue opportunity of about $85 billion (base-case scenario) in calendar years 2023 to 2025. (See Nvidia Financial Statements on TipRanks)     

Meanwhile, he estimated inferencing (comprises key applications that could leverage generative AI like search, productivity tools in enterprise, ecommerce, email, and social media) could be a nearly $7.7 billion revenue opportunity from 2023 to 2025, including $4.5 billion in 2025.     

Hari increased his price target for Nvidia stock to $495 from $440 and reiterated a buy rating. He continues to see “significant runway ahead for the company based on its robust competitive position in what is a rapidly growing (yet nascent) AI semiconductor market.” 

Hari holds the 171st position among more than 8,400 analysts on TipRanks. Additionally, 63% of his ratings have been profitable, with an average return of 19.1%. 

US Foods

US Foods (USFD) distributes fresh, frozen and dry food, as well as non-food products, to food service customers.  

Recently, BTIG analyst Peter Saleh reiterated a buy rating on USFD with a price target of $48, saying, “US Foods is one of the best self-help stories in our coverage, with the majority of the EBITDA growth contingent on operational improvements management has been diligently implementing for the past year.” 

Following a stellar gross profit margin in the first quarter, Saleh raised his second-quarter gross margin estimate by 20 basis points to reflect increased penetration of private brands, stock-keeping unit (SKU) rationalization, reduced waste and improved labor retention. 

The analyst also raised his Q2 EBITDA estimate and expressed confidence in US Foods’ ability to beat expectations, citing the company’s strategic initiatives, stable industry sales and its track record of handily surpassing Wall Street’s EBITDA projections in recent quarters.   

Saleh is ranked 325th among more than 8,400 analysts tracked on TipRanks. His ratings have been profitable 64% of the time, with each one delivering an average return of 12.7%. (See US Foods Stock Chart on TipRanks) 

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Top Wall Street analysts favor these stocks for the long haul

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Sanjay Mehrotra, CEO, Micron

Scott Mlyn | CNBC

The S&P 500 and Nasdaq notched a solid performance in the first half of 2023, thanks to an impressive rally in major tech stocks. However, macro pressures have not abated, with minutes from the latest Federal Open Market Committee meeting hinting at more interest rate hikes to tame high inflation.

Given the ongoing uncertainty, investors could benefit by looking at stocks with strong fundamentals and long-term growth potential.

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

Micron

First up is chipmaker Micron (MU), which reported better-than-feared fiscal third-quarter results in late June. The company cautioned that the recently imposed ban on its products by China remains a major headwind. However, investors chose to focus on management’s commentary on improving business conditions, with artificial intelligence driving strong demand for Micron’s memory chips.

Goldman Sachs analyst Toshiya Hari expects Micron’s near-term financial performance to continue to be noisy due to several factors, including the revenue uncertainty associated with the Cyberspace Administration of China’s ban and inventory-related issues.

Nevertheless, the analyst maintained a buy rating on Micron with a price target of $80, saying, “We have confidence in the company’s ability to mitigate potential share loss in China and drive share gains in the HBM3 market over time, while executing on its DRAM and NAND technology roadmaps.”

Hari believes that the company’s solid position in the DDR5 market, which is the latest generation of high-performance memory chips, and the prospects for its high bandwidth memory HBM3 chips (mass production to begin in early 2024) position it well to take advantage of the rapid growth in the AI space.

Hari’s recommendations are worth considering, as he is ranked No. 155 among more than 8,400 analysts tracked on TipRanks. His ratings have been profitable 64% of the time, with each rating delivering an average return of 19.7%. (See Micron Stock Chart on TipRanks)

Texas Roadhouse

Restaurant chain Texas Roadhouse (TXRH) is facing elevated input costs due to sky-high inflation. Despite near- and medium-term margin pressures, Wedbush analyst Nick Setyan continues to believe in the company’s ability to gain further market share in the casual dining restaurant space.

Checks by the analyst’s firm indicate that TXRH is set to deliver second-quarter same-store sales growth ahead of the consensus estimate of 8.2%. Accordingly, Setyan raised his Q2 same-store sales growth estimate from 8.5% to 9.5% to reflect robust dine-in traffic, the impact of increased local marketing efforts, and a higher off-premise mix.

Setyan expects continued strength in the company’s sales to more than offset the ongoing food cost inflation, including beef. He slightly increased his 2023 and 2024 EPS estimates, given his expectation of top-line upside.     

In line with his investment thesis, Setyan reaffirmed a buy rating on the stock with a price target of $123. He explained that his price target reflects a premium valuation, which is “appropriate given our expectation of accelerating market share gains within casual dining for the foreseeable future.”

Setyan holds the 798th position among more than 8,400 analysts on TipRanks. Additionally, 51% of his ratings have been profitable, with an average return of 7.2%. (See TXRH Blogger Opinions & Sentiment on TipRanks)

Carnival

Next on this week’s list is cruise operator Carnival (CCL). After being battered by pandemic-led lockdowns, Carnival and several other travel stocks have bounced back strongly this year due to robust travel demand.

Tigress Financial analyst Ivan Feinseth expects Carnival to benefit from solid bookings, higher pricing, and the reprioritization in consumer spending on travel. He projects revenue, economic operating cash flow, and net operating profit after tax to exceed pre-pandemic record levels by mid-2023.

“CCL’s accelerating Business Performance trends and significant recovery in cash flow continue to enable the ongoing funding of key growth initiatives, fleet expansion/transition, upgrades, and debt reduction,” said Feinseth, who ranks 174 out of more than 8,400 analysts tracked on TipRanks.  

The analyst noted that Carnival paid down $1.4 billion of its debt in the fiscal second quarter. CCL is expected to reduce its debt levels to less than $33 billion by the end of 2023, supported by improved cash flows. The company’s debt peaked at over $35 billion due to the disastrous impact of the pandemic on cruise lines.    

Feinseth reaffirmed a buy rating on CCL and boosted his price target to $23 from $13. He has a success rate of 62% and each of his ratings has returned 13.1%, on average. (See CCL Insider Trading Activity on TipRanks)

MongoDB

Feinseth is also bullish on database software maker MongoDB (MDB), which delivered market-beating results for the fiscal first quarter ended April 30 and raised its full-year guidance. The company had more than 43,100 customers at the end of the period, after witnessing the highest net new customer additions in more than two years.

Feinseth expects the growing integration of generative AI tools and capabilities will drive increased adoption of MongoDB’s highly customizable and scalable database as a service platform by enterprise customers.

The analyst said the company will continue to use its solid cash flows to invest in growth initiatives, including innovation, strategic acquisitions, marketing efforts to attract more customers, and international expansion.

“MDB will continue to benefit from increasing enterprise IT spending driven by enterprises’ ongoing needs to leverage AI capabilities as a growing competitive advantage,” said Feinseth.

Even after the solid year-to-date rally in MDB shares, Feinseth sees further upside in the stock. Accordingly, he reiterated a buy rating and increased the price target to $490 from $365. (See MongoDB Financial Statements on TipRanks)   

Amazon

E-commerce giant Amazon (AMZN) is holding its much-awaited 9th annual Prime Day on July 11 and 12. Prime Day is an annual sales event exclusively held for Amazon Prime members, which helps the company deepen its relationship with existing members and win new ones. 

JPMorgan analyst Doug Anmuth expects the 2023 Prime Day to see elevated demand despite a tough macro backdrop. The analyst projects Prime Day will generate about $7 billion in revenue, up more than 12% year-over-over, with gross merchandise value expected to increase more than 13% to $11 billion.

Anmuth highlighted the initiatives taken by Amazon over the past two years to strengthen its network. In particular, the company doubled the size of its retail network, established a massive last-mile transport network, and implemented a new sortation network to increase the speed of delivery for long-distance orders.

Amazon has also transitioned from a national U.S. fulfillment network to a regional model comprising eight interconnected regions to optimize inventory placement and other processes, reduce delivery costs, and boost speed.

“As such, Amazon should be well-equipped for the elevated demand of Prime Day, & the event should also help AMZN right-size inventory ahead of heavier demand deeper into 2H around the holidays,” explained Anmuth.

Amazon continues to be Anmuth’s “best idea,” with a buy rating and a price target of $145. Anmuth is ranked No. 110 among more than 8,400 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, with each rating delivering an average return of 16.7%. (See Amazon Hedge Fund Trading Activity on TipRanks)          

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Top Wall Street analysts say buy these stocks amid the latest macroeconomic uncertainty

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Domino’s will roll out 800 custom-branded 2023 Chevy Bolt electric vehicles at locations across the U.S. in the coming months.

Domino’s

Wall Street analysts are focusing on companies that are well-positioned to navigate the ongoing economic turmoil and emerge stronger.

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

CrowdStrike

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Rapid digitization has helped enterprises enhance their productivity. However, it has also made them more vulnerable to cyberattacks. This scenario is driving more demand for cybersecurity companies, including CrowdStrike (CRWD).

Following a recent virtual investor briefing with CrowdStrike’s management, Mizuho analyst Gregg Moskowitz reaffirmed a buy rating on the stock with a price target of $175 and said that CRWD remains a top pick.

The analyst noted that management expects solid growth opportunities for endpoint security and emerging use cases, fueled by Falcon, CrowdStrike’s “truly extensible cloud platform.” The company continues to see a potential total addressable market of $158 billion by 2026, a huge increase compared to $25 billion at the time of its initial public offering in 2019.

The analyst highlighted management’s claim that enterprise customers choose CrowdStrike over Microsoft 80% of the time for several reasons, including its next-generation platform that leverages artificial intelligence compared with the rival’s signature-based approach.

“Despite a more challenging macro backdrop, we continue to believe CRWD’s cloud platform remains highly differentiated, its GTM [go-to-market] is unrivaled, the co. is demonstrating clear success extending beyond traditional endpoint security markets, and FCF [free cash flow] margins remain ~30%,” said Moskowitz.

Moskowitz holds the 237th position among more than 8,300 analysts followed by TipRanks. His ratings have been profitable 57% of the time, with each rating delivering an average return of 12.6%. (See CrowdStrike Stock Chart on TipRanks)

Costco

Membership-only warehouse chain Costco (COST) is known to be one of the most consistent players in the retail space, thanks to its resilient business model and impressive membership renewal rates that are generally above 90%.   

Costco recently reported 0.5% growth in its March sales to $21.71 billion, with its comparable sales declining 1.1% year-over-year. (See Costco Insider Trading Activity on TipRanks)

Baird analyst Peter Benedict noted that core comparable sales (which exclude the impact of changes in gasoline prices and foreign exchange) growth slowed to 2.6% in March from 5% in February due to weaker performance in the U.S. and a slackening in non-food categories. Additionally, weakness in e-commerce persisted.

Benedict acknowledged that Costco is “clearly not immune” to a slowdown in general merchandise sales. The analyst said that downward revisions to fiscal third-quarter estimates appear likely following the March sales update. With COST’s forward valuation slightly below its five-year average, he prefers to “opportunistically accumulate shares on pullbacks.”

Benedict reiterated a buy rating on Costco with a price target of $535, as he thinks that the company is well-positioned to handle uneven consumer spending.

Benedict is ranked No. 84 among the more than 8,300 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, with each rating delivering an average return of 14.2%.  

Caesars Entertainment

There is another analyst on this week’s list who was positive about his stock pick following a meeting with the company’s management. Deutsche Bank’s Carlo Santarelli recently hosted investor meetings with casino operator Caesars Entertainment’s (CZR) management. 

Santarelli noted that the company’s strategic priorities are focused on bringing down its debt levels, “operational prudence,” and the growth of its digital business. The company reduced its debt by $1.2 billion in 2022. (See Caesars Hedge Fund Trading Activity on TipRanks) 

The analyst said that he remains “favorably inclined” toward the company, given its stable operations and positive movement in its digital business.

Santarelli reaffirmed a buy rating on Caesars with a price target of $70. He ranks No. 25 among the more than 8,300 analysts followed on TipRanks. Additionally, 66% of his ratings have been successful, with each generating a return of 21.1%, on average.

Domino’s Pizza

Fast-food restaurant chain Domino’s Pizza (DPZ) reported lower-than-anticipated sales for the fourth quarter of 2022. Its U.S. delivery business faced significant pressure last year. Meanwhile, the carryout business saw strong momentum in the U.S. market.

Based on a survey of over 1,000 Domino’s customers, BTIG analyst Peter Saleh noted that carryout-only guests are very loyal to the brand, with only a few indicating that they purchase from other large pizza chains, independents or aggregators.

While carryout sales have been strong recently, the analyst pointed out that the channel is seeing a considerably lower average check compared to delivery. He said that if Domino’s increases the price of the carryout deal by $1, “reclaiming the historical pricing gap with Mix and Match,” it would translate into same-store sales growth of 300 to 350 basis points.

Saleh also feels that Domino’s could drive customers to the carryout segment by migrating its rewards program to a spend-based model. The analyst discussed certain other potential catalysts for the company, including the possibility of a third-party delivery partnership.

Saleh reiterated a buy rating on Domino’s with a price target of $400. He sees potential for the company, even though other analysts have downgraded it.  

The analyst is ranked No. 376 among the more than 8,300 analysts followed by TipRanks. His ratings have been profitable 63% of the time, with each rating delivering an average return of 11.4%. (See Domino’s Blogger Opinions & Sentiment on TipRanks)

Texas Roadhouse

Saleh is also bullish on the casual-dining restaurant chain Texas Roadhouse (TXRH) and reaffirmed a buy rating on TXRH. He increased the price target to $120 from $110 following several investor meetings hosted by his firm with the company’s key executives. 

The analyst highlighted management’s commentary about how Texas Roadhouse is gaining market share due to the decision by some diners to scale up from fast casual restaurants, and by other diners to scale down from fine dining.  He added that over the past two years, the value gap between fast casual operators and Texas Roadhouse has “narrowed considerably,” as restaurant chains like Chipotle have increased menu prices by more than 20%, while Texas Roadhouse has raised prices by only about 10%.

“We continue to believe that Texas Roadhouse is leveraging its value leadership, especially on the kid’s menu, to take market share, as evidenced by record average weekly sales,” said Saleh. (See Texas Roadhouse Financial Statements on TipRanks) 

Despite higher commodity costs, the analyst expects Texas Roadhouse to stick to its strategy of setting lower prices than other restaurants in its category, with its pricing focused on offsetting higher wages only. Overall, Saleh finds TXRH to be one of the “most compelling casual dining concepts,” backed by its consistent industry-leading top line, better unit economics and substantial long-term unit potential.

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Top Wall Street analysts expect these five stocks to fetch attractive returns

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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

Signs of a potential slowdown in the jobs market are emerging and triggering worries about an impending recession, but investors would be wise to ignore the noise.

Instead, investors should keep an eye out for stocks with strong fundamentals and robust growth potential — two characteristics that can get them through a rocky patch for the market.

To that effect, here are five stocks chosen by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance. 

Meta Platforms 

Weakness in digital ad spending due to macro pressures has hit social media giant Meta Platforms (META) over the recent quarters. Nonetheless, the company is reducing its workforce, canceling lower-priority projects and curtailing non-headcount-related expenses to improve its profitability.  

While Meta is calling 2023 the “Year of Efficiency,” JPMorgan analyst Doug Anmuth says that the company is “building the critical muscle for financial discipline over the long term.” (See Meta Platforms Financial Statements on TipRanks) 

Anmuth expects Meta’s revenue to return to double-digit growth in the second half of 2023 and 2024, fueled by several key drivers like artificial intelligence and product-driven improvements to the ad stack following the implementation of Apple’s App Tracking Transparency feature, the rise in the engagement and monetization of Reels, and the solid rise in click-to-message ads.   

“While Meta shares have more than doubled off the early November lows, we still think there’s meaningful upside ahead driven by accelerating revenue growth, continued cost efficiencies, and still attractive valuation,” the analyst said.  

Based on his bullish investment thesis, Anmuth raised his December 2023 price target for META stock to $270 from $225 and reiterated a buy rating. He is ranked No. 157 among the more than 8,300 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, with each rating delivering an average return of 14.5%.  

SoFi Technologies 

Next on our list is fintech firm SoFi Technologies (SOFI), which offers digital financial services to over 5.2 million members. SoFi recently announced the acquisition of fintech mortgage lender Wyndham Capital Mortgage. The acquisition is expected to drive SoFi’s mortgage growth and operational efficiencies and broaden its mortgage product offerings.  

Jefferies analyst John Hecht, who ranks No. 366 among more than 8,300 analysts tracked by TipRanks, expects the Wyndham acquisition to help SoFi accelerate its mortgage originations volume “at the same time as the SOFI bank continues to grow deposits at an accelerated pace of 7.3x in 2022.” Note that SoFi’s mortgage segment accounted for about 4% of total originations in the fourth quarter of 2022.      

The analyst also highlighted that the Wyndham acquisition would “minimize” SoFi’s dependence on third-party partners and processes, thus driving cost savings over the long term.  

Hecht reiterated a buy rating on the stock with a price target of $8 saying, “We view the transaction favorably as it is strategic and will enhance SOFI’s mortgage segment, while taking advantage of the current Fintech valuation environment as an opportunity to build into the next mtg. cycle.” 

Hecht has a success rate of 59%, and each of his ratings has returned an average of 9.2%. (See SoFi Insider Trading Activity on TipRanks) 

PVH 

Apparel company PVH (PVH), which owns popular brands like Calvin Klein and Tommy Hilfiger, delivered better-than-expected results for the fourth quarter of fiscal 2022. The company is optimistic about the road ahead, supported by its PVH+ Plan, a multi-year direct-to-consumer and digitally-led growth strategy that aims to further strengthen the Calvin Klein and Tommy Hilfiger brands.  

Guggenheim analyst Robert Drbul feels that the PVH+ Plan would drive favorable earnings revisions and multiple expansion. The analyst sees “an attractive risk reward profile” in PVH stock based on the company’s earnings growth potential and current valuation.  

“We believe in Tommy and Calvin brand strength globally and ongoing margin initiatives at the company, which we anticipate will position PVH favorably as the world continues to reopen and recover,” the analyst said.   

Drbul raised his price target for PVH stock to $110 from $105 and reiterated a buy rating based on the company’s streamlining efforts, revenue growth potential, and margin expansion possibilities. 

Drbul holds the 364th position among the more than 8,300 analysts followed by TipRanks. His ratings have been profitable 62% of the time, with each rating delivering an average return of 8%. (See PVH Stock Chart on TipRanks)  

Walmart 

Drbul is also bullish on retail giant Walmart (WMT). After attending the company’s investment community meeting in Tampa, Florida, the analyst reaffirmed a buy rating on Walmart with a price target of $165.  

Drbul said that Walmart is well-positioned in the current retail backdrop and has one of the strongest leadership teams, referring mainly to its CEO Doug McMillon, whom he called “one of the best visionaries.” Despite the ongoing uncertainty, Drbul expects WMT shares to touch new highs as the company continues to execute its growth strategy. (See Walmart Insider Trading Activity on TipRanks) 

The analyst highlighted the significant progress that Walmart has made on the e-commerce front and its focus on technology. E-commerce now contributes to $82 billion or 14% of Walmart’s overall sales, up from $25 billion or 5% of sales five years ago. Walmart sees an opportunity for its e-commerce business to reach $100 billion in the near future.    

“Combining this meeting’s top-line objectives and strategies, along with its relentless tech-enabled focus, Walmart is executing several initiatives that stand out as margin-enhancing, including the focus on automation, and its market fulfillment initiatives that further utilize technology and robotics,” said Drbul.  

Overall, he is upbeat about Walmart’s long-term strategy, including its efforts to enhance the omnichannel shopping experience and build a more diversified profit base that’s “led by a growing marketplace and fulfillment services, advertising, financial services, data monetization, and its healthcare offering.” 

Airbnb  

Airbnb (ABNB), an online marketplace for short-term rentals, ended 2022 with market-beating fourth-quarter results. The company is benefiting from pent-up travel demand despite persistent macro pressures.  

Recently, Tigress Financial Partners’ analyst Ivan Feinseth increased his price target for ABNB stock to $185 from $160 and maintained a buy rating. The analyst acknowledged that the company continues to benefit from solid travel demand and the shift in consumer preference to “alternative, better-value accommodations.”  

“ABNB remains at the forefront of how consumers prefer to travel by offering a broad variance of accommodations from budget to extravagant and meeting the needs for a broad range of stay duration while benefiting significantly from ongoing hybrid work and travel trends,” said Feinseth.  

He expects a notable rise in Airbnb’s return on capital over time, boosted by the booking fee income of its asset-light business model. The analyst listed several drivers of the company’s future growth, including the ability to enhance capacity by adding new hosts, investment in new technologies, international expansion, cobranded buildings and growing partnerships with travel service providers.  

Feinseth ranks No. 154 among the more than 8,300 analysts tracked by TipRanks. Additionally, 62% of his ratings have been profitable, with an average return of 12%. (See Airbnb Hedge Fund Trading Activity on TipRanks)  

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Top Wall Street analysts prefer these five stocks despite ongoing uncertainty

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A USB-C (USB Type-C) cable is seen in front of a displayed Apple logo in this illustration taken October 27, 2022.

Dado Ruvic | Reuters

Market experts continue to look for opportunities to pick promising stocks trading at attractive levels as recession fears linger. Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Apple

First on the list is innovative tech giant Apple (AAPL). The company’s performance in the December quarter was significantly hit by iPhone-related supply chain disruptions in China, currency headwinds and macro challenges. Nonetheless, several analysts, including Evercore ISI analyst Amit Daryanani, remain bullish on the stock.

In a recent research note, Daryanani addressed investor concerns about his bullishness on Apple, despite its premium valuation compared to big tech peers. The analyst contended that in the current macro environment, Apple’s premium valuation is “not only justified but could further expand,” given its superior efficiency metrics like return on invested capital (5-year average ROIC of 39% compared to the peer group average of 21%), solid free cash flow and capital return.

Further, Daryanani stated that “AAPL has typically operated with a higher degree of consistency and importantly lower volatility.” He explained that the company was “more rational” in its hiring during the pandemic, unlike several tech companies that aggressively increased their headcount. Consequently, Apple avoided excessive stock-based compensation costs or layoffs.  

Daryanani reiterated a buy rating on Apple with a price target of $190. The analyst holds the 236th position among more than 8,000 analysts on TipRanks. Additionally, 60% of his ratings have been profitable, with an average return of 11.4%. (See Apple Blogger Opinions & Sentiment on TipRanks)

Cloudflare

Next up is Cloudflare (NET), a cloud-based content distribution network and security provider. The company has an extensive global network that reaches more than 285 cities in over 100 countries and powers websites, APIs (application programming interface), and mobile applications.

TD Cowen analyst Shaul Eyal thinks that the market is “underappreciating” Cloudflare’s ability to leverage the breadth of its global presence to “efficiently deliver new applications, including advanced security, with limited incremental cost.”

Eyal, who ranks 11 out of more than 8,300 analysts tracked on TipRanks, expects Cloudflare’s revenue to grow more than 38% this year, driven by new business and expansion within the company’s existing customer base. (See Cloudflare Hedge Fund Trading Activity on TipRanks)

Eyal noted that over 40% of the company’s revenue is generated internationally, and the company is “disrupting” several market segments, including infrastructure, telecommunications, security, and edge computing. Currently, these segments represent a total addressable market of over $115 billion, which is expected to grow to $135 billion by 2024.

Eyal reaffirmed a buy rating on Cloudflare with a price target of $75. Remarkably, Eyal has a success rate of 67% and each of his ratings has returned 24.1%, on average.

Foot Locker

This week, sneaker and athletic apparel retailer Foot Locker (FL) delivered upbeat results for the fourth quarter of fiscal 2022. The company revealed its revitalized partnership with Nike and long-term growth strategy, which includes several initiatives like transforming its real-estate footprint by opening new format stores, shifting to off-mall locations, and closing underperforming stores. 

Through its long-term growth plan, under the leadership of Mary Dillon, Foot Locker is targeting sales growth of 5% to 6% and adjusted earnings per share growth in the low-to-mid twenties range for fiscal 2024 through 2026.

Guggenheim analyst Robert Drbul expects Foot Locker to benefit from CEO Dillon’s “extensive knowledge and deep understanding of off-mall and big-box retailing.” That said, he thinks that the company’s strategic plan needs time to materialize as Dillon is still building her team.

Drbul reiterated a buy rating on Foot Locker stock with a price target of $60, noting that “2023 will be a reset year as Foot Locker navigates its revitalized Nike (NKE) relationship, repositions its Champs banner, optimizes its fleet, absorbs exit costs, increases its tech investments, and continues to drive cost savings.” 

Drbul is ranked No. 440 among more than 8,000 analysts followed on TipRanks. His ratings have been profitable 61% of the time, with each rating delivering an average return of 7.5%. (See Foot Locker Stock Chart on TipRanks)

Cisco Systems

Cisco (CSCO) offers a broad range of products and solutions across networking, security, collaboration, and the cloud. Tigress Financial analyst Ivan Feinseth recently reiterated a buy rating on Cisco with a price target of $73, saying that the company continues to gain from the rising need for faster, secure networks and cloud hosting infrastructure.

Feinseth noted that the company built up a large order backlog during the pandemic when corporate customers continued to upgrade their networks, fueled by “increasing demand for information access and supporting larger networks.”

“The recovery and growth of IT spending in 2023 and beyond, along with CSCO’s ongoing shift to services and software-driven subscription revenue, will continue to drive accelerating Business Performance trends,” said Feinseth. (See Cisco Insider Trading Activity on TipRanks)

The analyst also explained that Cisco’s solid balance sheet and cash flow continue to support its growth efforts, strategic acquisitions, and enhanced shareholder returns. Feinseth holds the 164th position among more than 8,000 analysts on TipRanks. Additionally, 62% of his ratings have been profitable, with an average return of 11.8%.

Acushnet Holdings

Feinseth is also bullish about Acushnet (GOLF), a company that sells golf products and owns leading brands like Titleist and FootJoy. The analyst recently upgraded GOLF stock to buy from hold and increased the price target to $62 from $50.

Feinseth expects Acushnet’s impressive brand equity and market-leading products, coupled with new launches, to drive further gains in the stock. Feinseth emphasized that the company’s 2022 results were boosted by double-digit sales growth in the Titleist golf club, Titleist gear and FootJoy golf wear segments.

The analyst noted that Acushnet’s 2022 performance benefited from a wide range of innovative products, including new TSR models that rapidly became “the most-played model on the PGA tour.” (See Acushnet Financial Statements on TipRanks)

“GOLF is well-positioned to gain from the ongoing post-pandemic growth in golf, including rounds played and growth in player population, especially from younger and new golf players,” said Feinseth. 

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