Top Wall Street analysts look to these stocks to beat market volatility

In this article

  • AAPL
  • ORLY
  • CARS
  • VECO
  • SBUX

The fall rally appears to have regained strength over the past week.

A better-than-expected CPI last week lifted investor sentiment, sending the Dow Jones Industrial Average up 1,200 points on Thursday. Gains continued on Friday with all three major moving averages rising for the week.

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Still, when choosing stocks for their portfolios, investors need to keep a cool head and focus on the long term.

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

Apple

In an unusual move Apple (AAPL) announced that the company expects lower production numbers for the iPhone 14 due to repeated lockdowns in China. Granted, Apple’s earnings are likely to take a hit over the next quarter or two, but the longer-term outlook for the business, with multiple long-term growth avenues, isn’t changing.

JPMorgan analyst Samik Chatterjee agrees. Acknowledging downside risks for the coming weeks as Apple struggles with reduced capacity at its largest manufacturing site, the analyst believes brand loyalty will come into play to ease the pressure. That means iPhone customers are willing to wait longer for delivery. This ensures that iPhones will suffer the least demand destruction from supply shortages of any other Apple product. (See Apple Financial Statements on TipRanks)

Chatterjee also shows how risk is spread over the long term and how short-term disruptions should not deter investors. “Supply chain challenges have been common in recent years, and there is limited evidence that delays in device shipments across multiple quarters had an impact on the overall volume of a product cycle (example: iPhone 12 or iPhone 13). ‘ said the analyst.

Chatterjee reiterated its Buy rating and $200 price target on Apple. The analyst was ranked 724thth among more than 8,000 analysts followed on TipRanks. Additionally, 51% of its reviews were profitable, resulting in an average return of 9.5%.

O’Reilly Automotive

O’Reilly Automotive (ORLY), a retailer of auto parts, tools, supplies, equipment and supplies, delivered what Wells Fargo analyst Zachary Fadem called the “Q3 gem.” An EBIT margin of more than 15.25% year over year was the company’s best in 2022.

Despite an uncertain retail outlook amid slowing demand and high inflation, Fadem remained bullish on the company’s prospects, even raising the price target to $850 from $800 while maintaining a buy rating on the stock.

Third-quarter sales at O’Reilly’s do-it-yourself business increased by a low-single-digit percentage. The analyst noted that this growth indicates stable three-year DIY trends. (See O’Reilly Auto Stock Investors on TipRanks)

“As the broader retail market grows increasingly cloudy, ORLY delivered its best quarter of FY22 and given the premium execution, offense/defensive characteristics and a new round of upgrades, we like the FY23 lineup,” noted the analyst.

Fadem is one of the top 100 analysts on TipRanks, ranking 81st. He has a 65% success rate. Additionally, each of their reviews generated an average of 18.2% over the past 12 months.

Cars. com

Provider of products and services for the automotive industry Cars. com (CARS) attracts more than 27 million unique users each month, making it a top marketplace for car buyers and dealers. The company has also made some strategic acquisitions like CreditIQ and Accu-Trade that have helped Cars.com expand into areas like auto financing and used car transactions.

The company recently released its quarterly results, which according to Gary Prestopino, analyst at Barrington Research, “highlighted continued progress despite a challenging environment.” (See Auto Hedge Fund Trading Activity on TipRanks)

The analyst highlighted the momentum in adopting Cars.com’s digital solutions. He pointed out that the adoption rate the company is now seeing represents only a fraction of its overall potential, “since one retailer’s adoption of all digital solutions can easily double ARPD (average revenue per retailer).”

“Cars.com’s financial results and long-term prospects continue to improve, but that improvement is not reflected in the stock’s valuation,” said Prestopino, who has a buy rating and a $25 price target on CARS.

rank 68th In a database of over 8,000 analysts on TipRanks, Prestopino has given profitable reviews 57% of the time. Each of his reviews returned an average of 29.6%.

Veeco instruments

Semiconductor process equipment manufacturers Veeco instruments (VECO) is facing a slowdown in some aspects of its business due to sales of softmobile and computer equipment. Still, benchmark analyst Mark Miller points to some strengths in the business that are hard to overlook.

Veeco’s laser annealing systems for logic applications are gaining traction with customers, as indicated by the increase in orders in the third quarter.

Miller expects a $5 million revenue impact in the fourth quarter due to trade restrictions with China. Nonetheless, the company is confident it can deliver most of its Chinese backlog as “most of Veeco’s tools are used in trailing-edge applications.” (See Opinions and Veeco Blogger Opinions on TipRanks)

Despite the short-term headwinds that Veeco expects over the next quarter or two, Miller believes the recent decline in VECO’s stock price has fully priced in the likelihood of lower earnings in 2023 compared to 2022.

The analyst reiterated a Buy rating on the stock with a $25 price target. Müller in 254th placeth among more than 8,000 analysts tracked on the platform. Over the past year, 51% of its valuations have been profitable, returning an average of 15.1%.

Starbucks

coffee giant Starbucks (SBUX) is benefiting from strong same-store sales in the US with its “affordable luxury that resonates with consumers,” according to BTIG analyst Peter Saleh. The return to normalcy has been the theme that has boosted the company’s revenue. The analyst believes that the momentum of customer traffic will continue to increase now.

Saleh is also optimistic about Starbucks sales in China, which are expected to rise remarkably after a Covid-induced decline. “We believe this rate, coupled with the addition of a new deal every nine hours, should unlock significant earnings power throughout the year and into FY24,” the analyst said. (See Starbucks stock chart on TipRanks)

Saleh has an interesting proposition for the company to match Starbucks’ investment in pay increases and other employee benefits. The analyst believes that slightly more aggressive menu pricing won’t hurt sales as much, and a mid-single-digit price increase could offset the aforementioned costs for the company.

Peter Saleh reiterated a Buy rating on the stock with a price target of $110. The analyst ranks 445th out of more than 8,000 analysts tracked on TipRanks. His reviews were successful 62% of the time, and each of the reviews has delivered an average return of 11%.