Apple CEO Tim Cook speaks during Apple’s annual Worldwide Developers Conference in San Jose, California, on June 6, 2022.
Peter Dasilva | Reuters
Using a market downturn to accumulate shares of companies with strong fundamentals and prospects can lead to good returns when the market rises. To that end, it can be a good practice to keep an eye on which stocks analysts recommend.
Here are five stocks picked by Wall Street’s top analysts, according to TipRanks, a service that ranks analysts based on their ratings.
Microns (IN) strives hard to be the most efficient and innovative global provider of semiconductor memory solutions. Rising demand for memory chips from cloud computing providers, along with the rapid deployment of 5G mobile networks and IoT (Internet of Things), is driving the company’s growth.
However, the company’s near-term outlook appears to be unclear, with weak demand from the PC and smartphone markets. In addition, supply constraints for certain components are also expected to hurt bit shipments for some time. (See Micron dividend date and history on TipRanks)
Last week, the company’s financial year 2022 for the fourth quarter painted a dull picture of the development. Nevertheless, Goldman Sachs analyst Toshiya Hari did not move from its bullish stance. The analyst was “encouraged by Microns supply-side response,” which included the company’s cost reduction strategy. Notably, Micron is working to reduce its FY23 capital expenditures (CapEx) by about 30% year-over-year (ie, about $4.1 billion).
That said, the company also said it would double its construction investments and make other strategic moves that will slow the ramping of certain DRAM and NAND processes. But these steps will ensure a smoother long-term growth trajectory. “From our perspective, we believe that these actions highlight Microns‘s commitment to make tough decisions to preserve profitability and shareholder returns and is likely to be well received by investors, based on our previous conversations,” noted Hari, reiterating a Buy rating on MU stock. Considering the near-term headwinds , however, the analyst lowered the price target from $63 to $62.
Ranked #318 out of nearly 8,000 analysts tracked on TipRanks, Hari has delivered profitable ratings 57% of the time. Furthermore, each of his ratings has achieved a 16.3% average return over the past year.
Amazon (AMZN) is enjoying solid Prime momentum thanks to fast delivery and a strong content portfolio. In addition, the company’s cloud dominance is consistently reinforced by the strong adoption rate of AWS. Most importantly, the company’s strong global presence and its unwavering customer centricity remain its biggest selling points. (See Amazon Stock Investors on TipRanks)
Amazon is hosting a Prime Early Access sale next week, ahead of which Monness Crespi Hardt analyst Brian White is optimistic. The analyst believes that a sale ahead of the holiday season will increase the value of Prime and also benefit customers struggling with high expenses.
In an effort to improve its Prime platform, Amazon also offered its US Prime members a free one-year membership to Grubhub+. The company has also invested heavily in improving its content portfolio in the past few months. White also thinks so Amazon’s purchase of MGM Holdings.
Also looking at Amazon’s reinvestment back into the business, White believes the company’s current profitability is far below its long-term potential. Needless to say, the analyst reiterated a buy rating on the stock with a price target of $172.
“We believe the company’s long-term growth path is attractive across the e-commerce segment, AWS, digital media, advertising, Alexa, robotics, AI and more,” White said, justifying his bullishness.
White comes 491St among nearly 8,000 analysts tracked on TipRanks. Notably, 56% of his assessments have been successful, each generating an average return of 10.10%.
Against this background, Tigress Financial Partners analyst Ivan Feinseth didn’t seem to worry too much about the short-term threats facing the company. The analyst maintained his Buy rating AAPL stock recently, believing that “ongoing innovation, new product introductions and increased service revenue will continue to drive long-term shareholder value creation.”
The analyst points out that the CarPlay interface for vehicles is a testament to its automotive expansion and integration, which could be a major growth driver. In addition, Feinseth is also looking forward to the launch of a virtual reality headset later this year or early 2023. The analyst believes the launch could “drive a further paradigm shift for services and the AAPL ecosystem.”
Furthermore, the company’s balance sheet and cash flow are strong enough to allow Apple to pursue growth initiatives and increase shareholder returns.
A five-star analyst on TipRanks, Feinseth has a 288th position among about 8,000 tracked analysts. 57% of his ratings have generated profits and each rating has returned 10.6% on average.
DHI Group (DHX), which offers a subscription-based career marketplace for technologists, rides on the competitive moat presented by the 6.4 million technologist candidates who currently subscribe to its two brands – Dice and ClearanceJobs.
Barrington Research analyst Gary Prestopino mean it DHI has the advantage of a long-term secular demand for technical specialists. “DHI specialize in employment categories where there is long-term excess demand for highly skilled technologists who work in a variety of industries or hold active government security clearances,” the analyst said. (See DHI Group Stock Chart on TipRanks)
Prestopino also found that the worldwide digital global technology job capacity is expected to grow from 41 million in 2020 to 190 million in 2025, underscoring the enormous opportunity in the market that DHI serves.
Furthermore, the analyst was encouraged by the relatively cheap valuation for a company with such strong growth and profitability potential. “DHI selling at a discount of over 60% to its peer group on 2022 and 2023 TEV/EBITDA multiples,” said Prestopino, who initiated coverage on the stock with a $12 price target.
Prestopino, who is also a five-star analyst on TipRanks, is 61stSt among nearly 8,000 analysts followed on the platform. Interestingly, 55% of his assessments have successfully achieved 31.5% average returns each.
Last on this week’s list of analysts’ top stocks is McDonald’s (MCD), who elegantly navigates another downturn in his lifetime. BTIG analyst Peter Salehwho is ranked No. 600 among roughly 8,000 analysts on TipRanks, gave us some valuable insight last week about the company he’s long been bullish on.
To delve deep into the company’s development, the analyst interviewed several franchisees and took notes on their sales, demand and supply of plant-based meats, labor, raw materials and automation. After the investigation, Saleh was encouraged by McDonald’s healthy sales trends that appeared to defy inflated food and gas prices.
In addition, the analyst found that labor and overtime contractions can lead to meaningful margin expansion for the franchises as labor availability improves. (See McDonald’s Blogger Opinions and Feelings on TipRanks)
“Shows McDonald’s as one of the strongest restaurant concepts in the world, in the midst of a multi-year sales recovery. After several years of lackluster performance, management has restored sales and earnings growth through a combination of relevant menu offerings, restaurant upgrades, digital engagement and stronger leadership,” said Saleh, who also noted that these steps have improved sales trends.
The analyst reiterated a Buy rating on MCD shares with a price target of $280.
Saleh has a 55% success rate with his assessments. Furthermore, each rating has achieved a return of 9.8% on average.