A shopping cart is seen in a Target store in the Brooklyn neighborhood of New York City on November 14, 2017.
Brendan McDermid | Reuters
Over the year, most companies have already released their latest quarterly results.
The economic recovery accelerated in the first half of 2021 and many companies recorded massive revenues. Now investor attention has shifted from summer trends and travel to what could be the fall season.
With the unique tools of TipRanks, investors can see which companies top Wall Street analysts believe are in a good position to capture these changing trends. These analysts are among the highest ranked on TipRank based on their pass rate and average return per rating.
Here are five stocks that Wall Street’s top-performing analysts have the potential for strong growth even after earnings.
Companies are preparing their workforce for a big comeback in the office, some hybrids, some full-time. However, due to the high rate of COVID-19 infection in the United States, several leading companies such as Apple have announced delays in their return dates. This cloud computing architecture bodes well for services, such as Microsoft’s Azure and Office 365 platforms.
Looking at Microsoft’s performance, Daniel Ives of Wedbush Securities said he sees a trend towards working from home. After showing strong momentum throughout 2020 and the first half of 2021, Microsoft continues to close important deals for enterprise and consumer level packages of its cloud-based services. These deals are expected to generate revenue for Microsoft until 2022.
Ives maintained his buy rating on the stock and quickly raised his price target from $ 325 to $ 350.
The five-star analyst said that in the “cloud arms race,” Microsoft is poised to capture more market share than Amazon Web Services. Microsoft recently increased prices for Office 365, which Ives says could generate more than $ 5 billion in 2022.
Regarding long-term stock picking in cloud computing, Ives said: “Microsoft remains our favorite game in the large-cap cloud, and we believe the stock will rise towards the end of the year, because Street appreciates the story of the cloud transformation. ” “
Out of more than 7,000 analysts on TipRanks, Ives is ranked # 36. The analyst has a 73% pass rate on his stock picks, which translates to an average return of 34% per rating.
US consumer discretionary spending trends have accelerated over the past year and a half, especially when it comes to digital purchases. Target has been able to capture these moves and is in a good position to continue to do so.
Robert Drubull of Guggenheim gave an optimistic report on the stock, saying he is “encouraged by the continued strength of Target’s business, profitability and generation of cash flow.” Target recently released its second quarter results, beating Wall Street consensus estimates of 7% earnings per share, along with a number of other key areas and metrics.
Drubull reiterated Target’s buy note and raised its price target from $ 250 to $ 295.
The five-star analyst noted that Target has seen growth that boosts confidence in in-store and digital sales. The general merchandise retailer was very successful in its in-store fulfillment operations, moving 95% of its total sales for the quarter and capturing demand online. After massive growth of 270% in 2020, same-day shipping and pickup services have grown an additional 55% over the same period.
Department stores remain relevant through partnerships with leading brands. In addition, Drubull said that “in addition to the historic sales performance of last year, the five main business categories generated positive comparable sales”.
While the increase in freight and shipping costs slightly squeezed Target’s margins, the company approved up to $ 15 billion in new share buybacks and finalized the $ 1.5 billion buyback. actions of a program already approved.
On TipRanks, Drbul is ranked # 319 out of over 7,000 analysts. His average return per note is 12.3%, and he currently maintains a 67% pass rate.
Closed semiconductor factories, combined with increased demand for smartphones, computers and automobiles, driven by the economic recovery from COVID-19, have sparked a perfect storm. The current semiconductor shortage is putting pressure on technology and automakers for the second quarter. Although many analysts thought it was getting easier, the situation is not that easy. However, the increase in demand bodes well for Applied Materials, which is expected to continue driving revenue growth through 2022.
Needham & Co. optimist Quinn Bolton believes the stock “will outperform its peers in 2022 due to a structurally favorable WFE.” [wafer fab equipment] Mix next year.
Bolton reiterated a buy note on the stock and declared a price target of $ 153.
Applied Materials last Thursday reported strong second quarter results, beating Wall Street consensus estimates for earnings per share and gross margin, as well as higher expectations for the third quarter.
Expansion equals demand for semiconductors as the company remains committed to increasing supply. Despite this, dynamic random access memory chips remain scarce, although their spot prices started to drop a few weeks ago, Bolton wrote.
Applied Materials is said to have an order book of more than $ 10 billion at Bolton. This fact alone underscores the fundamental health of the business and its potential for steady revenue growth in the future.
Five Star Analyst is ranked # 5 by TipRanks out of over 7,000 total analysts on the site. Its stock market rating success rate is accurate at 74% and it has an average return of 45.1% per rating.
Identifying trends is one of the main requirements of top Wall Street analysts. Indeed, the trends are in favor of Petco. The COVID-19 pandemic has kept people at home, and many have acquired pets in need of care. As this pattern persists, Petco is taking advantage of it.
Peter Benedict of Robert W. Baird wrote that Petco “operates a unique and fully integrated pet care ecosystem within the approximately $ 100 billion US pet market.” Its strong second quarter earnings, roadmap to healthcare offerings, and low leverage help rank it as an attractive stock.
Benedict maintained a buy rating on Petco and set a price target of $ 30.
Calling pets an “annuity,” the analyst said multiple services are needed to maintain one, so clients often come back. Petco has already conquered this market with its diversified offerings and is also expanding its internal veterinary services. This opportunity is seen by Benedict as a long term initiative that will increase market share.
The company reported quality second quarter results, exceeded expectations and raised its guidance. Benedict said that as the economies reopen, “in-store shopping has bolstered pet care center sales” and high-end services such as grooming, training and therapy are in high demand. .
Noting the company’s additional initiatives in “merchandising, services, digital analytics and data capabilities,” Benedict said Petco’s shares have an attractive valuation.
Benedict is ranked 25th out of over 7,000 experts by TipRanks and obtained 83% of his scores. They have an average return of 24.9% per note.
Another large semiconductor company is seeing continued strong demand for its chips. Nvidia managed to cap off a bullish second quarter and expects revenues to continue growing as game and auto makers meet demand for its products. As the company struggles to close a buyout deal, Needham & Co’s Rajwinder Gill has nonetheless released his bullish outlook on its future outlook.
Gill reiterated the buy rating of the stock and raised his price target from $ 200 to $ 245 per share.
Nvidia beat Wall Street consensus estimates in the second quarter on earnings per share and gross margin. With its growing margins, Gill expects the company to generate “significant operating income”.
In contrast, the five-star analyst does not expect the acquisition of tech company Arm Ltd. by Nvidia to be profitable anytime soon. The odds are increasing and negotiations are ongoing, so he estimates that this opportunity has a 20% chance of success.
Despite this, the demand for data centers continues to grow, as the trend of enterprise-wide cloud computing takes hold. Additionally, Gill identifies a growth opportunity as an ISP can run a full-fledged data center based on Nvidia’s Triton programming language. The construction of data centers remains the main driver of growth for Nvidia.
Additionally, analysts don’t view the volatility of cryptocurrency mining regulations as a concern. He writes that although Nvidia’s products are used by some minors, the company’s exposure to this revenue stream is not significant.
For Gill, Nvidia remains a buy, in part because of its attractive valuation. They are encouraged by its “improved track record”, calling it “the best in the industry”.
On TipRanks, Gill is ranked 161st among more than 7,000 Wall Street analysts. His mark averages 18.2% and he succeeds 68% of the times.