This year has already been a tough one, and 2023 isn’t looking much better as the Federal Reserve expects the economy to grow by just 1.2%. Given this bleak outlook, investors need to choose carefully where to put their money.
In order to pick the right stocks, it can help to be aware of what Wall Street analysts are saying. Here are five stocks, picked by pros, who are at the top of their game according to TipRanks, which ranks analysts based on their performance records.
Mining equipment manufacturer Caterpillar (CAT) is navigating supply chain difficulties and cost pressures like a champ. Cost saving and pricing measures help the company improve its top line and bottom line even when end markets remain volatile.
The North American housing market has slowed significantly, with a negative impact on demand for construction equipment. However, Cowen analyst Matt Elkott believes end markets such as residential construction are likely to show improvement in 2023 and recover more significantly in 2024. (See Caterpillar stock chart on TipRanks).
Elkott also expects revenue to recover in late 2023 once the Biden administration’s infrastructure bill goes into effect. The revenue benefits from the law are likely to be significant in 2024 as well. Additionally, Elkott is optimistic about the growth of Caterpillar’s service segment.
“The company’s services revenue growth is on track to meet its goal of doubling to $28 billion by 2026. The new state of global energy insecurity should support oil and gas capital spending, at least by private companies,” the analyst noted.
Elkott has a Buy rating and a price target of $225 on the stock. He’s holding the 782nd Position among nearly 8,000 analysts tracked on TipRanks and has a 52% success rate. Each of his reviews has yielded an average return of 12.5%.
National Instruments (NATI) has a robust business developing automated test and measurement systems to support research and validation of new technologies. Earlier this year, the lockdown in Shanghai and the suspension of operations in Russia impacted the company’s business.
Nonetheless, Goldman Sachs analyst Mark Delaney is bullish on the company. (See National Instruments dividend date and history on TipRanks).
National Instruments operates in industry-specific business units (BUs) that are sensitive to long-term trends and in a BU portfolio that is exposed to macroeconomic factors. Now the company is focused on meeting its goal of generating at least 74% of its revenue from its industry-specific BUs by 2025. This transition is designed to make the company more resilient to market cycles in the coming years.
Strong uptrends in emerging technologies like ADAS (advanced driver assistance systems), electric vehicles, and 5G lead Delaney to believe the company can weather an economic slowdown better than many others “as parts of its business are tied to long-term growing end markets” that are defensive Characteristics.
The analyst has a Buy rating on NATI stock with a price target of $49.
Delaney, ranked 765th out of nearly 8,000 analysts ranked on TipRanks, was successful with 56% of his reviews. An average return of 9.8% was generated on each of his reviews.
Hydrogen fuel cell developer Plug Power (PLUG) is one of the biggest beneficiaries of the Inflation Reduction Act (IRA), which went into effect last month. Under the law, developers producing green hydrogen (hydrogen produced using clean energy electrolyzers) will be granted a tax credit of $3 per kg of production tax.
HC Wainwright analyst Amit Dayal believes the IRA will help taxpayers in the hydrogen industry “stack credits and allow for the transfer of hydrogen-related tax credits.” To this end, Plug Power has already entered into several partnerships with large companies, including Amazon (AMZN) to supply green hydrogen and electrolysers, and Dayal expects to sign more such deals in 2023. (See Plug Power Blogger Opinions & Sentiment on TipRanks).
“We believe the IRA should support that Plug’“It’s goal to expand its green hydrogen generation network to 70 tons per day (TPD) production by the end of 2022, 500 TPD in North America by 2025 and 1,000 TPD globally by 2028,” noted Dayal.
Dayal is also keen for Plug Power to start scaling and absorbing its early capital costs, as doing so would boost its near-term financial performance by improving operating expenses and margins. The analyst expects the company to generate operating profits in 2025.
“We believe that the company should be able to grow its gross margins from negative levels today to 15.7% in 2023, and thereafter to reach approximately 35.0% by 2030 if revenue continues to grow,” it forecast dayal
Interestingly, Dayal is a five-star analyst on TipRanks and ranks 27th out of nearly 8,000 analysts tracked on the platform. About 42% of its reviews were successful and generated an average of 44.9% return per instance.
As the ticker symbol indicates, Salesforce (CRM) is a customer relationship management software giant capitalizing on the increasing digitization of the industry. The company last week provided upbeat medium-term sales and margin guidance that drew more investors into its shares.
The expansion of the company’s addressable market, geographic spread, and customer base are key growth catalysts that help it finesse the pessimism surrounding technology stocks. (See Salesforce Stock Investors on TipRanks).
Monness Crespi Hardt analyst Brian White predicted that current headwinds, including recession-related concerns, inflationary pressures and mounting geopolitical issues, will prevent Salesforce from realizing its full growth potential over the next 12 to 18 months.
Still, White is one of the Salesforce bulls who are steadfast in the company’s longer-term prospects. While White acknowledges the problems that could accompany a recession (which by today’s standards seems almost impossible to avoid), he said so Foreclosure is “uniquely positioned” to benefit from accelerated digital transformation over the long term.
“Salesforce has proven it navigates turbulent times better than most software companies, a testament to relentless innovation, acquisitions, excellent execution and strong long-term trends,” said White.
The analyst reiterated his buy recommendation for Salesforce. It has a target price of $215. White ranks 484th among nearly 8,000 analysts tracked on TipRanks. Fifty-seven percent of its ratings were profitable, with each generating an average return of 10.4%.
Adobe (ADBE) recently disappointed investors with a loss in earnings, and the recent signing of a deal to acquire collaborative product design platform Figma for a whopping $20 billion confused investors. Adobe’s Price targets have been lowered and the company has even had some downgrades.
Nonetheless, Goldman Sachs analyst Kash Rangan decided to swim against the tide and reiterate his buy rating on the stock with a price target of $540. “We see Adobe investing in a market transition that can access a broad TAM and accelerate growth,” Rangan said while discussing the prospects of the Figma acquisition. (See Adobe hedge fund trading activity on TipRanks).
The analyst expressed his confidence in the company’s decision, recalling how Adobe’s acquisition of Macromedia in 2005 and its business model transition in 2011 greatly expanded the company’s growth potential.
In addition, Rangan made comparisons with other major acquisitions, noting that integrating Figma with Adobe would bring more developers on board and expand its market opportunity, just like LinkedIn and Github did Microsoft’s (MSFT).
“Based on the level of innovation Adobe has brought to each strategic transaction, we believe it can expand Figma’s $16.5 billion TAM,” noted Rangan, who is ranked 769thth among around 8,000 analysts on TipRanks.
The analyst has 55% profitable ratings, with each rating yielding 7.1% average returns.