By
Godfrey Benjamin
April 18th, 2024
Amid all the uncertainties and volatility on Wall Street, here are the top five picks which can deliver steady revenue growth moving forward-looking at the current shaping up of the macro economic data.
A large majority of the companies in the United States have announced their results for the second quarter of 2021. For most of the US companies in the tech space and their stocks performance, the numbers have been pretty impressive.
Also, the economic recovery during the first half of 2021 remained ramped up. However, investors have been watching the recent developments cautiously. With the Fed planning to dial back on its $120 billion bond purchase program, markets have remained volatile.
As we remain uncertain of where Wall Street is heading TipRanks’ unique tools give investors and analysts some insights into the shifting trends. Citing their data, CNBC comes out with five top-performing picks post the earnings.
Microsoft (NASDAQ: MSFT)
The surge in the cases on the Delta COVID-19 variants has got organizations to rethink getting employees back to the offices. Some of the top tech giants like Apple have also announced delays in the return dates. This, in turn, will keep the demand for cloud services at a high.
Microsoft’s popular services like Azure and Office 365 platforms are well poised to cater to it. Popular analyst Daniel Ives from Wedbush Securities reviews Microsoft’s performance. He notes that the cloud computing giant continues to crack large deals for enterprise and consumer-level packages.
As per Ives, these deals will keep Microsoft’s revenue cycle on an uptick. Thus, Ives has maintained the buy rating for the Microsoft Corp (NASDAQ: MSFT) stock thereby raising the price target from $325 to $350. Meaning, the MSFT stock will add another 15% gain from the current levels. Note that the MSFT stock is already up by 40% in the first eight months of 2021.
Interestingly, Ives also believes that Microsoft will emerge as a leader on the “Clouds arm race” and will further eat into the market share of competitors like Amazon Web Services. Microsoft’s recent decision to increase the price for its Office 365 suite will also be beneficial. Ives predicts an additional $5 billion in revenue through this price increase in 2022. He said:
“Microsoft remains our favorite large cap cloud play, and we believe the stock will move higher into year-end as the Street further appreciates the cloud transformation story.”
Target (NYSE: TGT)
Since the pandemic, US discretionary spending has been on the rise. Retail giant Target has been well poised to cater to the transition in digital shopping.
Guggenheim’s Robert Drbul has been reportedly very bullish about the stock. The analyst remains bullish about Target’s “profitability and cash-flow generation”. The company recently posted its second-quarter earnings report beating Wall Street estimates by a handsome 7% margin.
Target’s both – digital and in-store sales – suggests a confidence-instilling growth as per the analyst. It has successfully managed to capture the surging online demand as well as manage the fulfillment-from-store operations. Drbul noted that “all five core merchandise categories delivered positive comparable sales, on top of last year’s historic sales performance.”
Reiterating his buy rating for Target Corp (NYSE: TGT), the Guggenheim analyst is putting the price target to $295. It means another 18% from the current TGT price of $249. Interestingly, the TGT stock is already up by 40% on a year-to-date basis.
Nvidia (NASDAQ: NVDA)
Semiconductor producer Nvidia has been on the radar of several analysts this quarter. The California-based chip manufacturer has seen high demand for its chips. Because of this, the company also managed to report a strong surge in its Q2 revenues.
Rajvindra Gill of Needham & Co. has published a bullish outlook for the company going ahead. Gill has reiterated a buy rating for this stock, raising its price target from $200 to $245 per share. Over the last week, Nvidia (NASDAQ: NVDA) has shown strong momentum already gaining 7.5%. since the beginning of 2021, the NVDA stock is up a staggering 72.61%.
With the widening of its margins, Gill notes that Nvidia has “significant operating leverage”. However, note that analysts put the NVDA stock in a ‘high-risk-high-rewards’ category. Furthermore, Nvidia’s plans for the acquisition of Arm remain uncertain as of now.
With the continued negotiations and obstacles mounting, Gill predicts a 20% chance of success in it. However, Gill remains bullish on the rising demand for Nvidia’s data centers. The analyst considers them as the largest growth drivers for the company.
Applied Materials (NASDAQ: AMAT)
Another company operating in the semiconductor space remains on the radar of top Wall Street analysts. The semiconductor shortage amid the heightened demand among smartphones, computers, and automobile industries has created the perfect storm.
This heightened demand creates a perfect bull case scenario for Applied Materials. Because of it, the company is likely to see its revenue grow through 2022. As per Needham and Co. analyst Quinn Bolton, the AMAT stock “will outperform peers in 2022 due to a structurally favorable WFE [wafer fab equipment] mix next year.”
Reiterating the buy rating, Bolton has given a $153 price target for the AMAT stock. As of now, the stock is trading at $136. Moreover, its year-to-date returns stand at a staggering 57%. Beating Wall Street estimates, Applied Materials delivered strong Q2 2021 results.
The company’s earnings per share stood in a very healthy range along with strong gross margins. Amid the rising demand for semiconductors, Applied Materials is working for ramping up supply.
As of now, Applied Materials has an order backlog of more than $10 billion. As per Bolton, this reflects the company’s fundamental health along with the potential for ticking up solid revenues.
Petco (NASDAQ: WOOF)
This is an interestingly surprising pick from Wall Street analyst of Peter Benedict of Robert W. Baird. The analyst notes that the trends are currently in favor of Petco at this stage.
The rising cases with the COVID-19 pandemic are keeping more people at home with many of them acquiring pets. Thus, as the demand for pet care increases, Petco can benefit from this trend reports Benedict.
He writes that Petco “operates a unique, fully integrated pet care ecosystem within the ~100B US pet market”. With strong second-quarter earnings and lower debt burdens, Benedict categorizes it as an attractive stock.
Benedict has given a price target of $30 for the WOOF stock. Meaning the stock is poised for another 40% from the current levels. To note, the WOOF stock has remained under pressure throughout 2021 so far. On a year-to-date metric, it is down by 27%.
With economies reopening, Benedict notes “in-store shopping drove robust pet care center sales”.
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