A line of shoppers wait to enter the BJ’s Wholesale Club market at the Palisades Center mall during the coronavirus outbreak in West Nyack, New York on March 14, 2020.
Mike Segar | Reuters
Worries about a banking crisis added to the woes of investors, who were already burdened by stubbornly high inflation and fears of an economic slowdown.
Given the ongoing uncertainty, turning to stock market experts to pick attractive long-term stocks might be a good move.
Here are five compelling stocks picked by top Wall Street analysts, according to TipRanks, a platform that ranks analysts based on their track record.
Allegro Microsystems (ALGM) develops sensing and power semiconductor solutions for motion control and energy efficient systems. On Tuesday, the company held its first analyst day to provide an overview of its strategy and technology.
Needham Analyst Quinn Bolton noted that at the event, management focused on rapidly growing opportunities across two “secular megatrends” – electrification (primarily e-mobility) and industrial automation. Allegro expects to thrive in these two key markets and deliver low double-digit percentage revenue growth in fiscal year 2023 to 2028.
Bolton believes its margin estimates for fiscal 2024 and 2025 appear conservative, given Allegro’s new long-term model which targets a gross margin of over 58% and an operating margin of over 32%. He pointed out that the company’s available usable e-mobility market is expected to grow at a compound annual growth rate of 25% to reach $3.9 billion by fiscal year 2028.
“ALGM’s portfolio is aligned with secular industry growth trends in clean energy and automation,” Bolton said. Allegro expects its clean energy and automation SAM to grow at a CAGR of 18% to $3.5 billion by fiscal 2028. (See Allegro Insider Trading Activity on TipRanks)
Impressed with Allegro’s growth prospects, Bolton raised its price target from $42 to $50 and reaffirmed its buy rating. Remarkably, Bolton ranks 2n/a over 8,000 analysts tracked on TipRanks. His odds were profitable 67% of the time, generating an average return of 36.3%.
Recent results from several cybersecurity companies, including CrowdStrike (CRWD), reflected resilient demand. Businesses are moderating their IT spending due to macro pressures, but still allocating decent budgets to cybersecurity due to the growth of cyberattacks.
CrowdStrike’s adjusted earnings per share for the fourth quarter of fiscal 2023 (ended Jan. 31) increased 57%, fueled by revenue growth of 48%. At the end of the fourth fiscal quarter, the company’s annual recurring revenue was $2.56 billion, reflecting 48% year-over-year growth.
TD Cowen Analyst Shaul Eyal attributed CrowdStrike’s upbeat performance to strong execution and strong demand for the company’s Falcon platform. Eyal added that the company works with Dell to deliver its Falcon platform to Dell customers through various means.
“We believe CRWD is well positioned to achieve its goals of generating a final ARR of $5 billion by the end of FY26 and achieving its target operating model in FY25” , Eyal said. He reiterated a buy rating on CrowdStrike with a price target of $180.
Eyal is ranked #14 among more than 8,000 analysts tracked on TipRanks. Its ratings were profitable 66% of the time, with each rating delivering an average return of 23.7%. (See CrowdStrike Stock Chart on TipRanks)
Next on our list is the enterprise software giant Oracle (ORCL), which produced mixed results for the third quarter of fiscal 2023 (ended February 28, 2023). The company’s adjusted EPS rose 8% and beat Wall Street expectations, while revenue growth of 18% was below estimates.
Still, Oracle is bullish on the strong potential of its cloud business, which delivered 45% revenue growth in the fiscal third quarter. Additionally, management said Cerner, a health technology company acquired in June 2022, increased its health care contract base by approximately $5 billion.
Monness, Crespi, Hardt, & Co. analyst Brian White said Oracle delivered “respectable 3Q:FY23 results in a treacherous environment.” He says the company’s cloud business continues to weather current challenges better than major public cloud providers, which have reported a noticeable deceleration in revenue growth.
White warned investors that the “darkest days” of the economic downturn are ahead. That said, he reiterated a buy rating on Oracle with a price target of $113, stating, “Oracle represents a high-quality value play with the opportunity to participate in compelling cloud transformation and exposure to digital modernization initiatives in the healthcare sector. .”
White holds the 50e position among more than 8,000 analysts on TipRanks. Additionally, 64% of its ratings were profitable, with an average return of 18%. (See Oracle Blogger Opinions and Sentiments on TipRanks)
Big BJ club
Chain of warehouse clubs Big BJ club (bj) continues to perform well even though the macroeconomic backdrop is toughening and the pandemic-induced tailwinds have faded. The company recently hosted its fourth quarter earnings call and first-ever Investor Day.
Baird Analyst Pierre Benoitwho ranks 129e on TipRanks, noted that the company’s membership base is “stronger than ever.” Dues revenue increased 10% in fiscal year 2022 (ended January 28, 2023), driven by a 7% increase in membership to 6.8 million, increased senior tier penetration and strong renewal rates. It should be noted that BJ achieved his all-time high 90% reappointment rate for the year.
“With a structurally advantaged business model, a growing/increasingly loyal membership base, and an emerging unit growth track, BJ has the foundational elements of a compelling long-running consumer base growth story. “, explained Benedict. (See BJ Wholesale Financial Statements on TipRanks)
Benedict raised BJ’s stock price target to $90 from $85 and reiterated a buy rating based on multiple strengths including a strong balance sheet, free cash flow generation and efforts to improve the assortment. His odds were profitable 64% of the time, with an average return of 13.4%.
Medical device giant stryker (SYK) has built a strong business over the years through strategic acquisitions and continued innovation in its medical and surgical, neurotechnology and orthopedics and spine divisions.
BTIG Analyst Ryan Zimmerman recently hosted a fireside chat with Spencer Stiles, Group President of Stryker Orthopedics and Spine and Jason Beach, Vice President of Investor Relations. He pointed out that orthopedic procedure volumes are benefiting from a backlog that is expected to last about four to six quarters as patients who previously deferred care return.
Zimmerman believes that “SYK retains its position as a growth leader in orthopedics even when competing robotic systems repeat themselves.” He expects Stryker’s new Mako Knee 2.0 software, the launch of Insignia Hip, and upcoming robotic launches in the shoulder and spine in fiscal year 2024 can “sustain a growth cycle long and sturdy.
Zimmerman reiterated a buy rating on Stryker with a price target of $281. The analyst ranks 657 out of more than 8,300 analysts on TipRanks, with a success rate of 45%. Each of its ratings delivered an average return of 8.9%. (See Stryker Hedge Fund Trading Activity on TipRanks)