As the world heads into another year of the pandemic, investors need to adapt to changing macroeconomic forces and trends.
Rising inflation, the Federal Reserve’s move to scale back its monetary support, and a workforce disrupted by the current surge in coronavirus cases are all impacting daily price action for stocks.
TipRanks, a financial data aggregation website, provides investors with the data they need to navigate the market. Wall Street analysts are highlighting these five stocks they think are staying the course.
Take Two Interactive
Take-Two Interactive Software (TTWO) announced on Jan. 10 that it would buy FarmVille creator Zynga for $12.7 billion. The news rocked shares of both companies, with Zynga ending the day up 40% and Take-Two falling more than 13%. Investors appear divided over the deal, but one of Wall Street’s top analysts has reiterated his bullish stance. (See Take-Two Interactive Earnings Data on TipRanks)
The analyst is Andrew Uerkwitz of Jefferies, who attributed the sell-off to misperceptions about Zynga’s suitability for Take-Two and fears of a possible bidding war for the game developer. As for the merger itself, Uerkwitz says, however, Uerkwitz said that just “nobody does the math.”
Uerkwitz gave the stock a buy rating and a price target of $231.
The analyst argued that the recent weakness in TTWO’s share price presents an attractive long-term entry point for investors.
As for Take-Two’s core business, Uerkwitz is bullish on the company’s robust pipeline and growing mobile gaming opportunities, led in part by more powerful hardware. The fact that “data transfer speeds, screen refresh rates, battery life, [and] “Chip speeds” are advancing so rapidly that more complex gaming systems can be developed for phones.
Meanwhile, the players playing the games are more familiar with using phone platforms than ever before.
On TipRanks, Uerkwitz is ranked #189 by more than 7,000 financial analysts. He has a 63% success rate at picking stocks and an average return on his reviews of 31.8%.
Dick’s sporting goods
Consumer discretionary could be radically hit by global supply-side restraints, but the companies that are mitigating their impact could see significant upside once they ease. One such company is Dick’s Sporting Goods (DCS) that has managed its inventories well and streamlined its supply chain. (See Dick’s Sporting Goods Insider Trading Activity on TipRanks)
Williams Trading’s Sam Poser published a review on the stock. He noted that DKS is also experiencing increased levels of consumer engagement and maintaining strong supplier relationships with companies like Nike (FROM).
Poser gave the stock a Buy rating and a price target of $180.
The analyst also mentioned that Dick’s Sporting Goods has “invested in its people.” Additionally, vertically integrated initiatives such as curbside pickup have increased operating margins and brought greater convenience to customers.
So far, sales of DKS have “taken off well,” which Poser says is due in part to the company’s strategic use of customer data. In terms of its financial position, the sporting goods retailer is approaching a possible earnings surpass of its forecast for the fourth quarter.
TipRanks rates over 7,000 analysts, and Poser currently holds a spot at #145. The analyst’s ratings were correct 54% of the time, and on average, they’ve earned him a 46.2% return.
The shift towards digitization is proving to be a boon for companies like Cisco Systems (CSCO).
Tigress Financial Partners’ Ivan Feinseth said Cisco is poised to maintain its “leading position as a global provider of IP-based connectivity and networking equipment.” The company has benefited from an increase in corporate spending on network infrastructure. (See Cisco Risk Factors on TipRanks)
Feinseth gave the stock a buy rating and stated a price target of $73.
The technology company completed its deal to acquire the cloud analytics platform Epsagon last fall. Feinseth said the acquisition is one of many strategic initiatives that demonstrate Cisco’s commitment to inorganic growth and the strength of its balance sheet.
In the age of increasing video conferencing and the general need for higher network speeds and capacities, Cisco can benefit from this. If the company is successful, so will its shareholders. The company has increased its dividend for the tenth straight year and is expected to do so again in February.
Feinseth ranks high at 89th among over 7,000 analysts on TipRanks. He has been successful in evaluating stocks 68% of the time and has achieved average returns of 18.1% each time.
While many tech companies have their cards in the game with cloud computing solutions, not all are as well positioned to grow in 2022 as Microsoft (MSFT). The tech giant has made strides in terms of the number of big deals for its Azure cloud services as well as its Office 365 bundle.
Dan Ives of Wedbush Securities released an upbeat report on the stock, detailing how strong Microsoft looks after weathering its financial tests in December. He was encouraged by the company’s robust spending on the Azure cloud and said the company will soon be “on to its next growth spurt.” (See Microsoft Hedge Fund Activity on TipRanks)
Ives gave the stock a buy rating and a price target of $375.
The technology analyst said others have been conservative in their view of Microsoft’s prospects. He said Wall Street has yet to consider the reality of remote work trends. Additionally, the sheer number of company-level deals up over 50% is enough for Ives to forecast more than his peers.
Noting that the total addressable market for remote cloud services could be worth as much as $1 trillion, Ives reckons Microsoft will see market share gains from established players such as AWS (AMZN). Additionally, he wrote that the recent Office 365 price hike can be viewed as a potential $5 billion “strategic poker move.” Ives believes the company is “on track for a $3 trillion market cap in the next 12 months.”
Ives is rated #81 on TipRanks by over 7,000 professionals. He has seen success 70% of the time and his reviews have an average return of 44.6%.
Needham & Co’s Alex Henderson sees cloud-based enterprise and network security company Zscaler (ZS) as a “unique investment vehicle with exceptional long-term value potential”.
He said the company has strengthened its sales capabilities and increased customer conversion rates. (See Zscaler stock charts on TipRanks)
The analyst gave the stock a Buy rating and a target price of $418.
Basically, Zscaler is in a very advantageous position. The company has already ramped up its sales and operating margin metrics, and expects to generate significant free cash flow over the long term. Henderson isn’t concerned about the volatile sentiment towards growth stocks right now, and he’s confident that Zscaler could outperform the market even if interest rates rise.
Regarding the evolution of its security capabilities, the analyst noted that “ZS sees an ongoing realization at the C-suite, CIO, and CTO levels that the legacy perimeter defenses and client-server architecture of the last 35-40 Years must be converted to a Cloud Direct Zero Trust design. We see Zscaler as uniquely positioned to provide this capability.”
Heading towards future earnings results, Henderson expects average revenue growth per user to rise 5% to 10% from Wall Street consensus estimates.
Henderson is ranked #42 on a list of over 7,000 financial analysts. His stock valuations have been successful 72% of the time, and they’ve given him an average return of 42.3% on each one.