Prime Wall Avenue analysts suggest these purchases earlier than 2020 ends
Twitter CEO and co-founder Jack Dorsey gestures while interacting with students at the Indian Institute of Technology (IIT) in New Delhi on November 12, 2018.
Prakash Singh | AFP | Getty Images
Wall Street is waiting for a possible Santa Claus rally towards the end of the year. Historically, stocks have tended to trend during the last five trading sessions of the calendar year, with this rally continuing until the second trading day of the new year.
Since 1969, according to the stock trader’s almanac, the S&P 500 has risen an average of 1.3% over that seven-day trading period.
There are some stocks that investors may want to pick up for 2021 before closing their books for the year. It is not easy to find compelling investment opportunities. One strategy is to follow the movements of the analysts who consistently get it right. The TipRanks Analyst Forecasting Service tries to find the best performing analysts on Wall Street or the analysts with the highest success rate and average return per rating.
Here are the five most popular stocks of analysts right now:
JP Morgan’s top analyst Doug Anmuth just joined the Twitter bull and upgraded the rating to Buy on December 16. Along with the call, the five-star analyst raised the price target from $ 52 to $ 65, with the new target suggesting an upside potential of 16%.
Anmuth explains that its price target is based on 30 times its EBITDA estimate for 2022 and is also based on 9.5 times its sales estimate for 2022. While this reflects a premium for advertising and social media peers like Google and Facebook, he believes it is “justified given a depressed EBITDA base and an improvement in business momentum after 2020”.
“We believe Twitter is uniquely positioned as a real-time broadcast and communications network, complementing all other media including television,” commented Anmuth.
Additionally, Twitter should benefit from the move to mobile and video as the ad product and platform continue to improve, according to Anmuth.
However, in order for the analyst to be even more optimistic about the company, he argues that “better execution of advertising, including diversification towards DR and performance-based, is critical”.
Based on its success rate of 72% and an average return of 32.1% per review, Anmuth ranks 29th in the TipRanks ranking.
For Scot Ciccarelli of RBC Capital, Costco is a top choice in retail. On December 14th, it retained a buy rating and a target price of $ 439 (20% upside potential).
According to Ciccarelli, “Costco just keeps doing what it does best,” which is delivering strong sales growth and good margin performance. In the most recent quarter, the company posted comp growth of 17.1% which, according to the analyst, provided it with strong leverage in the first quarter of fiscal 2021. E-commerce sales increased by 86% and now account for around 7% of total sales.
Although the US comps were moderated, Ciccarelli argues, “This modest slowdown appeared to be due to pull-forward activity and … more aggressive Black Friday promotions launched as early as late October by some competitors.” In addition, gross margins reached 13.3% thanks to efficiency gains, labor productivity and significantly lower product spoilage in fresh food.
In addition, Ciccarelli points out that Costco has the strongest purchasing power in retail because it focuses its entire scale on a small group of SKUs while its larger competitors spread their purchasing power across millions of SKUs. Additionally, he believes it has the lowest premium in the business.
“We believe this combination creates extremely compelling value for its members. While Costco has actually benefited from accelerated shopping activity as more consumer dollars are focused on goods rather than services / experiences (what we call a retail lift), we believe Costco is extremely well positioned in 2021 regardless of general economic trends, “said Ciccarelli.
Ciccarelli currently has a 76% success rate and an average return of 20.6% per rating and is among the top 52 analysts on the TipRanks list.
After MKS Instruments’ Analyst Day, Benchmark’s Mark Miller is even more optimistic about his long-term growth prospects. To this end, he raised his target price from USD 150 to USD 175 (17% upside potential) and repeated a buy rating on December 14th.
According to Miller, the management painted a very “optimistic picture”. The team expects semiconductor business growth to outperform wafer fab device spending by 200 basis points between 2020 and 2025 and the advanced products business to grow by 300 basis points GDP. In addition, the company expects non-GAAP gross margins of 50%.
“We see an upward trend in the Advanced Products group over the next year, led by improved laser demand due to a recovery in global manufacturing and growth in the E&S segment,” said Miller.
Additionally, the data storage segment should benefit from the ramp of 5G phones as they require more storage content, according to Miller. “Next generation devices require more transistors and higher bit densities. Higher aspect ratios, which require more RF power, have allowed MKS to gain market share in the WFE market, which is led by RF etching applications such as hard mask removal,” said the analyst. In just the first nine months of 2020, MKSI’s power solutions business grew 110% year over year.
Miller argues that all of this puts MKSI on a path to higher profits in FY21. He increased his non-GAAP EPS estimate from $ 8.40 on sales of $ 2.47 billion to $ 8.82 on similar sales.
A success rate of 71% and an average return of 25.8% per rating support Miller’s # 45 ranking.
NeoGenomics is a cancer diagnostics and pharmaceutical services company committed to improving patient care by providing improved diagnostics and helping pharmaceutical companies bring innovative therapies based on precision genetics to market.
The company received approval from BTIG last week, with analyst Mark Massaro opening the report with a buy rating and a Street High price target of $ 60 (12% upside).
“We see NEO as the leading high-growth reference oncology laboratory providing comprehensive cancer diagnostic testing and pharmaceutical services to pathologists, oncologists, academic medical centers and pharmaceutical companies,” said Massaro.
To back this up, the five-star analyst points out that NEO has the broadest portfolio of cancer diagnostic tests in the United States and has a “strong track record of acquiring and integrating market-leading laboratory companies over the years”. This includes the acquisitions of Clarient, Genoptix and Human Longevity’s oncology assets, which were acquired at an average sales multiple of 2.5 times sales compared to the average industry takeout multiple of 6.5 times.
Massaro added, “We are positive about NEO’s partnership and stake in liquid biopsy company Inivata in May 2020 as NEO seeks to expand its presence in high-quality liquid biopsy and MRD (Minimal Resid Disease) testing. that NEO will likely do so, announce additional offers from here, and we consider NEO a “one-top oncology shop” as it has a leadership position in pathology and oncology. “
Massaro’s outstanding track record is evident in its success rate of 66% and an average return of 28.2% per review.
Wall Street’s sixth best analyst Brian Fitzgerald of Wells Fargo believes the negative reaction from investors to the results of game developer Zynga in the third quarter was “exaggerated” and the stock now looks “cheap relative to growth”. Against this background, he upgraded the rating from hold to buy on December 15. In addition, he held the target price at $ 12.50, which means upside potential of 26%.
“We believe that stocks of ZNGA represent a favorable risk / reward in light of a new, more detailed strategic vision of organic growth recently formulated by CEO Gibeau. This led us to envision what ZNGA will look like in a few years.” Fitzgerald explained.
Put simply, the analyst likes what he sees. He envisions a vertically integrated advertising network that, when combined with Rollic’s games, could monetize the hyper-random audience through ads and in-app purchases on the ZNGA network while reducing UA costs. Additionally, the portfolio is now so diverse that it offers multiple options to allocate advertising spend to genres and regions with the best ROI, which, according to Fitzgerald, could result in a “less volatile recurring revenue stream.”
In addition, Fitzgerald sees “an expansion of ZNGA’s TAM beyond cellular communications by deploying key franchises cost-effectively across platforms due to improvements in game engine technology.”
“We believe that FY 21E’s FCF return of over 5% will limit the risk of underperformance as mgmt has a successful track record of allocating capital to a TAM growing ~ 10% / year. In addition Management’s December 9 comment suggests ZNGA’s fourth quarter is still on track for double-digit year-over-year organic growth, “added Fitzgerald.
The Wells Fargo analyst has an impressive 83% success rate and an average return of 43% per rating.