Sanjay Mehrotra, CEO of Micron Technology
Scott Mlyn | CNBC
The volatility in the stock market appears to be far from over.
Market turnover remains very high amid strong inflation and a worrying economic outlook. Although the short-term outlook may be fuzzy, investors can reap healthy long-term returns by choosing stocks with good long-term prospects and giving them time to grow.
Here are five stocks that some of Wall Street’s top professionals have selected, according to TipRanks, which ranks analysts based on their performance.
Tech stocks were hit particularly hard by this year’s recession. However, Google’s parent company, Alphabet (GOOGLE) managed to hold its own, supported by the rapid adoption of cloud computing and the popularity of its search engine.
Monness Crespi Hardt analyst Brian White reckons that regulatory headwinds, a volatile stock market and unpredictable geopolitics call for a cautious stance on near-term stock performance prospects. However, he believes strong long-term trends in digital ads, secular growth in the cloud space and steady share buybacks bode well for Alphabet.
White notes that Apple’s innovative privacy initiatives (AAPL) last year had a minimal impact on Alphabet’s ad business (with the exception of YouTube ads, which were slightly affected), compared to other digital ad players. This year, the economic downturn could hit digital ad spending budgets across industries, which could spell bad news for Alphabet’s ad revenue. Nonetheless, the company’s diverse portfolio will help spread risks and mitigate the impacts of headwinds. (See Alphabet Hedge Fund trading activity on TipRanks)
White said Alphabet has generated sales and operating profit of 23% and 27% annually, respectively, for the past five years. Meanwhile, the company has also maintained its dominant position in the search engine space. This led White to believe that “Alphabet should be trading at a healthy premium for the market and the tech sector in the long run.”
Taking short-term pressures and bleak prospects into account, White cut his price target for Alphabet to $2,900 ($145 adjusted for the 20:1 stock split, scheduled to be completed after the close of business on July 15), from $3500.
However, it reiterated a buy rating on GOOGL, showing its optimism in the long-term prospects of the second largest company by market capitalization and the world’s largest digital advertising player.
On TipRanks, White is ranked 423rd out of nearly 8,000 analysts. He has been successful in 57% of his 313 stock ratings, earning an average return of 10.9% on each.
Memory and storage giant Micron Technology (MU) had been struggling with component supply shortages even before the economy deteriorated this year. Like most other companies, Micron’s near-term prospects have been clouded by various macroeconomic pressures,
In addition, the persistent decline in demand for PCs and smartphones in recent months led to an inventory correction in DRAM and NAND memory semi-components. This has been hurting Micron, and Evercore ISI analyst CJ Muse expects this to continue hurting the company in the second half of the year before recovering sometime in 2023. (See TipRanks for Micron risk factors ).
Despite Micron missing revenue estimates in its recently reported quarterly results, Muse noted that buying power and free cash flow generating capacity look strong for Micron this year. Additionally, other inventory optimization initiatives are expected to help the company once the situation stabilizes. “Micron is also reducing its planned spending on WFE (wafer fabrication equipment) in FY23 to reduce bit production with plans to reduce inventory to meet demand in FY23,” Muse noted.
In addition, management noted that MU shares are trading well below intrinsic value (a measure of a share’s value through an objective calculation rather than the current market price), and the company plans to engage in share buybacks. more aggressive in the current quarter. . This is a positive sign for the future price of the stock.
With these comments, Muse confirmed a buy rating on the stock with a $90 price target. Notably, Muse is ranked 663rd out of nearly 8,000 analysts tracked on TipRanks. Furthermore, 55% of their qualifications have been successful, with each one generating a 14.5% return on average.
Seagate Technology (STX) offers hardware and software solutions for data storage and transfer. The company’s HDD products are tailored for mission-critical and near-line applications in enterprise servers and storage systems. Like most other tech companies, Seagate has also been battling numerous hurdles this year.
At several recent investor conferences, many large companies, including Seagate, pointed to weakening consumer sales in the June quarter, catalyzed by a slowdown in demand for PCs and smartphones. This also prompted the company to issue weak guidance for its fiscal fourth quarter, which ended June 30. (See the Seagate Tech earnings date on TipRanks)
Benchmark analyst Mark Miller took these headwinds into account and lowered his expectations for the near term. He also lowered his price target from $100 to $90.
Nonetheless, Miller maintained his bullish stance on Seagate’s long-term prospects. “As such, we are lowering our Seagate estimates for the June quarter and FY23. However, the expected continued strength in Nearline impulse demand keeps us at Buy,” the analyst said, reiterating the rating on the rating. company on STX shares.
Miller is ranked 159th out of nearly 8,000 analysts in the TipRanks universe. In total, 53% of his 427 ratings have been successful, generating an average return of 17.5% per rating.
TD SYNNEX Corporation
Despite the year’s challenges, business process service provider TD SYNNEX (SNX) has benefited from an environment of constant IT spending amid rapid digital transformation. The company recently posted quarterly earnings.
Vincent Colicchio, an analyst at Barrington Research, elaborated on the results, noting that the strength of the company’s core and high-growth businesses were major positives. “The company experienced strong demand for technology products and solutions to enable hybrid working, foster collaboration, enhance security and advance multi-cloud adoption. The distribution business saw revenue growth in all regions, including the Asia-Pacific region, if we exclude the impact of a large government contract in the period last year,” the analyst said. (See TD SYNNEX Corporation stock chart on TipRanks)
Colicchio was also encouraged by the strong margin execution demonstrated by SYNNEX, amid difficulties related to high costs and supply constraints. The analyst reiterated his final forecast for the company’s fiscal year 2023 and raised his estimates for fiscal 2022.
However, taking short-term challenges into account, Colicchio lowered SYNNEX’s price target from $128 to $106. “Growth should continue to be moderated by continued supply chain challenges throughout the year,” he said.
However, Colicchio reinforced a buy rating on the stock, believing it to be undervalued and therefore offer a great entry point. “Revenue growth prospects should improve in fiscal 2023 and beyond as the company benefits from revenue synergies and supply chain conditions normalize. We are confident in management’s ability to achieve its targeted cost synergies given a strong track record of executing acquisitions,” Colicchio said. , justifying his long-term position.
Out of nearly 8,000 analysts on TipRanks, Colicchio is ranked 439th. Additionally, 54% of the time, his ratings have been successful, generating an average return of 11.9%.
Northern Trust Financial Services Company (NTRS) has held its own during strong headwinds this year, supported by its wealth management operations.
Recently, RBC Capital analyst Gerard Cassidy compiled the key reasons for his optimism regarding the company’s prospects. One of the main reasons he reiterated a buy rating on the stock was its strong balance sheet, which reflects its strong financial operations. “Although other banks claim to have ‘strength’ balance sheets, we believe that NTRS not only has one, but has stood the test of time; it is one of only two of the top 20 banks that did not cut their dividend during the Financial Times” . 2008-09 crash,” Cassidy said. (See the date and history of the Northern Dividend on TipRanks.)
According to Cassidy, a strong management team with a strong track record is also a strength for Northern Trust. Additionally, continued growth in assets under management (AUM) and assets under contract (AUC), coupled with improving market conditions, should ensure revenue growth.
More importantly, Cassidy is optimistic about the immediate tailwinds Northern is about to enjoy, in the form of soaring interest rates. “As the Federal Reserve moves to raise short-term interest rates in 2022, possibly by as much as 200 basis points, NTRS revenue will increase due to a reduction in money market fee waivers that were $200+ million annualized in 1Q22 and up. net interest income,” the analyst said.
However, Cassidy is concerned that volatility in the stock and bond markets could keep Northern Trust’s core custody and wealth management businesses under pressure. This led him to lower the price target on the stock to $110 from $133.
Cassidy is ranked 27th out of nearly 8,000 Wall Street analysts on TipRanks. Additionally, 66% of his grades have been correct, with each grade generating an average return of 22.1%.