As third quarter earnings come out and 2021 taps out, analysts and investors are looking for companies that can end the year on an optimistic note.
Many companies had a great start to the year and are in a difficult position to continue to grow at this rate.
Costco braved the economic storm of the pandemic, but can it continue to drive exponential membership and revenue growth? Cloud computing solution companies like Zscaler have said goodbye to the shift in work trends. What could their prospects be if the economies continue to open up?
Meanwhile, semiconductor shortages have had a devastating impact on automakers and smart electronics manufacturing, but analysts believe both General Motors and Sonos will be able to deliver long-term profits. Marvell is a chip maker itself and is expected to see continued high demand and accelerated business development.
Top analysts have high expectations for these five stocks, according to TipRanks.
Who Can Resist Free Samples? Apparently not many people as the membership renewal rates at Costco (COSTS). The big box retailer released another impressive round of monthly earnings with positive metrics on sales, market share and international expansion. (See Costco Risk Factors on TipRanks)
Robert W. Baird’s Peter Benedict presented his optimistic hypothesis about the company, mentioning that “COST, combined with its loyal membership base, accelerated MFI growth profile and defensive revenue mix, remains a rare mega-cap growth idea.”
Benedict reiterated his Buy recommendation for the stock and set a price target of $ 520.
The five-star analyst said that even with difficult report comparisons from the previous months, Costco continues to outperform Wall Street’s consensus estimates. The company’s strongest divisions were gasoline, its food court offerings, optical services, and Costco Pharmacy.
Costco has invested resources to position itself more as a convenience retailer. These initiatives include improved functionality of its digital platforms and a more vertically integrated logistics delivery system. As e-commerce trends continue to rise, Costco remains relevant to consumers.
Internationally, Costco’s clubs generate more profits than their domestic clubs. The company is focused on expanding its overseas presence, which will provide a more diversified source of income.
On TipRanks, Benedict has a ranking of 235 out of more than 7,000 analysts. His stock selection resulted in an 82% success rate and an average profit of 56.6% per valuation.
Stimulated by the increased demand and the challenges in the supply chain, the shortage of semiconductors has affected the smartphone and automotive industries longer than originally expected. The companies that manufacture the actual chips themselves, such as the Marvell Technology Group (MRVL) are seeing robust demand and moving towards cloud-optimized silicon adoption. (See Marvell Blogger Sentiment on TipRanks)
Needham & Co.’s Quinn Bolton shares his advantageous positioning, claiming Marvell has “one of the highest growth rates in large-cap semis”. Its long-term revenue expansion expectations could potentially outperform its serviceable market, which Bolton is also expected to grow by about 50% over the next four years.
The five-star analyst rated the stock as a buy and raised its price target from $ 69 to $ 75.
Market share gains are accelerated by Marvell’s 5G, data center, carrier and automotive semiconductor segments. Meanwhile, Bolton believes in the chipmaker’s ability to benefit from the transition to cloud-optimized silicon. He explains the technology as a combination of “computer, network, storage, security and electro-optical elements in the chip or in the housing in order to offer optimal performance and costs for certain cloud and infrastructure applications”.
Bolton argues that Marvell is an “ideal partner” for enterprise-level cloud and network infrastructure companies that are still outsourcing chip manufacturing. Because of its wide range of options, he sees Marvell as a staple in every investor’s semiconductor portfolio.
The financial aggregator TipRanks ranks Bolton number 1 out of a total of over 7,000 expert analysts. He succeeded 83% of the time valuing stocks, and his choices have resulted in an average return of 82% on each valuation.
There are auto companies and then there are disruptive electric vehicle (EV) technology companies. The transformation of the green tidal wave of traditional internal combustion engines will either take automobile companies to the banks of profit or wash away them. For the management of General Motors (GM), the latter is not an option. The company recently unveiled its promising roadmap to shift its product mix towards electric vehicles and ultimately increase its speculative value.
Daniel Ives of Wedbush Securities expressed his confidence that “the loyal Detroit resident is in the midst of a massive turnaround that will change GM history in the future.” He has a brilliant decade ahead of the large-cap automaker and expects it to largely dominate the emerging market for addressable electric vehicles valued at $ 5 trillion. (See General Motors stock analysis on TipRanks)
Ives took a bullish buy on the stock and set a price target of $ 85.
The five-star analyst admitted that the negative sentiment among investors from the Chevy Bolt saga remains. In addition, the global chip shortage is causing sustained headwinds for GM. However, he sees these only as short-term obstacles that will inevitably be smoothed out by the inevitable EV revolution.
In addition to manufacturing vehicles, Ives expects GM to offer software and service subscriptions to autonomous and assisted schedules that generate recurring revenue. The “potential goldmine” of monetization opportunities was calculated by the analyst to ultimately result in additional revenue of approximately $ 2,000 per car sold.
General Motors has the potential to convert at least half of its customers to electric vehicles by the end of the decade. The company just has to implement its multi-year plan.
Ives is ranked No. 9 by TipRanks by more than 7,000 expert analysts. Its ratings were correct 77% of the time, generating average returns of 54.7%.
It is not often that a highly rated analyst writes that he believes that “investors are rewarded for buying and holding these stocks”. Zscaler (ZS) has accomplished this feat. The company has grown through aggressive investments in its sales department and is focused on improving productivity in this area. (See Zscaler Insider Trading Activities on TipRanks)
Needham & Co.’s Alex Henderson praised the company and mentioned that its platform and strategy are poised for long-term victory over the competition. During Covid-19, many companies and large corporations switched their operations to cloud-based solutions. Zscaler has seen accelerated growth and must now continue to perform.
Henderson listed the stock as a Buy with a price target of $ 345.
With earnings comparisons still hard to beat, Henderson noted that the stock could see some consolidation in the short term. In addition, the company is currently increasing its business travel expenses to close sales.
Despite these acute factors, he sees enormous long-term market outperformance of Zscaler’s security offerings, once operational leverage and investment growth are balanced.
Henderson ranks 87th out of over 7,000 professional analysts. TipRanks has calculated that its reviews were successful 68% of the time, resulting in average returns of 41.6%.
Intellectual property litigation can result in lucrative court settlements, especially when a smaller company challenges a tech giant. At the beginning of 2020 Sonos (I AM) accused Alphabet (GoogL) infringement of a number of patents. A judge sided with the smart speaker company in mid-August, but after a counterclaim, a short-term agreement seems unlikely. A subsequent sell-off of Sonos stock resulted in a discounted but fundamentally healthy stock.
Jefferies Group’s Brent Thill identified this attractive buying opportunity in his latest report on the stock, writing that he now considers the valuation too low and that Wall Street’s consensus estimates are conservative for its forecasts. (See Sonos Hedge Fund Trading Activities on TipRanks)
Thill listed the stock as a buy and added a price target of $ 50.
At press time, the speaker company saw its shares fall about 20% from their late August highs. While Thill is not expecting a short-term resolution of the litigation, a long-term game could be fueled by a positive outcome in the future.
Believing in the company’s financial momentum, the five-star analyst adds, “We believe SONO will continue to leverage OPEX through higher sales volume and believe their backlog will allow them to continue selling and leveraging Realizing marketing efficiencies. ” In addition, the recent price increases on its products are expected to boost revenue.
Sonos’ conservative forecast could make for an easy slap and an increase in earnings season. A primary reason for this would be the company’s ability to process its backlog and balance its supply against strong demand.
Thill’s only caveat to the drop in ratings was the difficulty of catching a falling knife. Once stocks begin to stabilize around a support level, he would expect the overreactional sell-off to move up.
TipRanks ranked Thill # 129 out of over 7,000 other financial analysts. Thill performed well on his reviews, earning a 69% success rate and an average return of 36.9%.