Stocks snapped a three-week losing streak on Friday, but uncertainty looms on the horizon as the Federal Reserve prepares for its September meeting.
The prospect of a major interest rate hike is imminent, and such a move by the central bank may rattle markets. It is essential for investors to keep a long-term view in mind. They should look for stocks that can survive a downturn and rebound with healthy returns.
Here are five stocks picked by top Wall Street professionals, according to TipRanks, a platform that ranks analysts based on their backgrounds.
Manufacturer of semiconductor chips Ambarella (AMBA) specializes in the design and manufacture of fabless chips for various human and computer vision applications. The company’s low-power CVflow processors support smart cameras for security and automotive applications.
The company has impressively navigated high spending and global supply chain constraints, which made Needham analyst Quinn Bolton optimistic about the stock’s outlook. (See Ambarella stock analysis and ratings on TipRanks)
The analyst was optimistic about the start of production of Ambarella’s CV5 processor, which was completed earlier than expected. This means that significant revenues are expected in advance, during the first half of fiscal year 2024 (February-July of calendar year 2023). Additionally, the sampling of the CV3 prototype also garnered rave reviews.
Interestingly, Bolton sees a decline in the stock in the near term, after management mentioned reduced inventory and delays in orders over the next few quarters. However, he’s not too worried about it as he thinks lead times will improve with reduced inventory.
“These factors allow for a better environment for the CV5 ramp and the auto industry. We would be bulls on weak stocks as we believe AMBA’s best days are coming, and that starts with the CV5 ramp,” said Bolton while reiterating a buy note on the stock. with a price target of $110.
Bolton is ranked No. 4 among nearly 8,000 analysts rated on TipRanks. Of his odds, 65% were profitable, generating an average return of 40.2% per odds.
Another of Bolton’s favorite stocks to buy these days in Credo Technology (CRDO), a fabless semiconductor company and a peer of Ambarella. One of the company’s primary goals is to ameliorate bandwidth challenges with its secure, high-speed connectivity solutions as the industry’s bandwidth performance demands increase.
The company’s extensive analog and DSP design capabilities give it a competitive edge in the market by allowing it to “maximize the separation between analog and digital processing in its designs and utilize ‘N-1’ process technology. to deliver high performance, low power designs. and at a lower cost,” the analyst noted. (View Credo Technology Group Holding Ltd stock chart, price history and charts on TipRanks)
“Leveraging its competitive advantage, we expect Credo to significantly outpace its TAM data center over the next three years and be one of the fastest revenue growth stories in semiconductors in the world. during this period,” Bolton said, setting the price target for CRDO at $15.
The analyst thinks now is the perfect time to buy shares of Credo, as the multiple of the company’s value to sales is likely to rise.
Monness Crespi Hardt analyst Brian White is most excited about Oracle (ORCL) acquisition of Cerner, a provider of healthcare IT solutions.
Ahead of its fiscal 2023 first-quarter results on Sept. 12, White is confident that exposure to the emerging trend of digital modernization will be a great catalyst for growth once recessionary pressures ease. (See Oracle insider trading activity on TipRanks)
Despite some currency headwinds, the analyst expects the company to meet its earnings expectation of $1.09 per share on $11.48 billion in revenue.
It should be mentioned that Oracle runs the risk of not being able to integrate Cerner’s business in a financially optimal way, given the current circumstances. However, there shouldn’t be much to worry about for long-term investors who can look past the turmoil.
“2Q:CY22 results in the software and cloud markets had a more cautious tone, with some companies outperforming others; however, economic headwinds have not yet driven apocalyptic trends across the board,” said White, reiterating a buy rating on the stock with a price target of $113.
White holds 436e rank among nearly 8,000 analysts tracked on TipRanks. In addition, 58% of its reviews were successful and they generated an average return of 11.2% per review.
The technology giant Microsoft (MSFT) is among the top three most valuable companies in the world, and it makes sense that it’s among analysts’ favorite defensive stocks. Recently, Tigress Financial Partners analyst Ivan Feinseth reiterated a Buy rating and $411 price target on MSFT stock, driven by several strengths.
Microsoft’s Azure cloud platform plays a pivotal role in the global digital transformation, which Feinseth says “highlights its long-term investment opportunity.” This platform gives the company a competitive edge and should continue to be Microsoft’s main driver of revenue and profitability. (See Microsoft Blogger Opinions & Sentiment on TipRanks)
Moreover, the digitization of businesses is rapidly accelerating, leading to a constant need for greater investments in technological solutions to boost business efficiency and competitiveness. The analyst believes this will continue to accelerate business performance trends for MSFT.
Additionally, Microsoft can cement its dominance in gaming if its acquisition of leading game developer Activision Blizzard materializes. The acquisition will also open up the possibility for the company to expand into the metaverse with more resources than before.
Feinseth is also optimistic about Microsoft’s strong financial health. “MSFT’s strong balance sheet and cash flow will continue to fund ongoing growth initiatives and expanding strategic acquisitions and enhance shareholder returns through further dividend increases and share buybacks.” , said the analyst.
Feinseth is ranked #234 among analysts on TipRanks. His odds were profitable 59% of the time, and they resulted in average returns of 11.7% each.
Chewy Pet Products Retailer (CHWY) recently released mixed quarterly results amid macro challenges that weighed on discretionary demand. Nonetheless, Wells Fargo analyst Brian Fitzgerald decided there was still meat on the bone.
Despite weaker-than-expected revenues, the company’s earnings were remarkably strong in the quarter. This was the result of resilient non-discretionary demand, which was a tailwind for the company’s supply chain initiatives and longer-term strategic initiatives in healthcare and insurance. . Fitzgerald believes that “investors will be rewarded for waiting out the macro turmoil.” (See Chewy Hedge Fund trading activity on TipRanks)
The analyst is confident in the continued growth prospects of Chewy’s freight services unit. “Improved inventory placement continued to benefit delivery speed and cost, CHWY opened a second import routing facility, and Chewy Freight Services mid-mile volume tripled sequentially,” said said Fitzgerald.
Additionally, the company’s CarePlus insurance and wellness plans have expanded to 31 states and are expected to serve all US states by the end of the year. With management noting strong initial customer response, this could be a strong revenue driver.
Admittedly, macroeconomic uncertainties led the analyst to lower his price target on Chewy to $50 from $55. However, he maintained his buy rating, looking beyond the clouds.
Fitzgerald is ranked No. 212 among nearly 8,000 analysts tracked by TipRanks. A total of 53% of his notes succeeded in generating an average profit per note of 15.8%.