The Spotify logo on the New York Stock Exchange, April 3, 2018.
Lucas Jackson | Reuters
With markets under pressure, at least in the short term, investors should try to build a portfolio of stocks that can weather the storm and offer long-term growth potential.
Here are five stocks picked by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
Dominos Pizza (DPZ) reported mixed results for the second quarter, with the company blaming lower market basket prices for stores and lower order volume for the revenue shortfall compared to analysts’ expectations.
Nevertheless, BTIG analyst Peter Saleh reiterated his buy rating on Domino’s with a $465 price target, saying the stock remains his top pick. (See Domino’s Financial Reports on TipRanks)
In particular, Saleh expects the company’s Uber Eats partnership, changes to its rewards program and the launch of Pepper Stuffed Cheese Bread in the fourth quarter and through 2024.
The pizza chain’s entire menu will be available to Uber Eats customers at regular menu prices, with no deals or coupons, the analyst noted. Interestingly, the company targets high-net-worth customers on Uber Eats and offers discounts and other perks for its ordering channels.
“We expect delivery sales, along with declining commodities, to translate into a healthier overall economy and faster domestic growth next year and beyond.”
Saleh is ranked #331 out of over 8,500 analysts tracked on TipRanks. Also, 64% of its ratings were profitable, with an average return of 12.9%.
The next one Meta platforms (META). The social media platform recently posted its best-ever second-quarter results and better-than-expected guidance for the third quarter, indicating that conditions in the digital advertising market are improving.
After print, Monness analyst Brian White raised his price target for Meta from $275 to $370 and maintained a buy rating, saying the company’s second-quarter results reflected strong execution and its massive cost improvement measures.
The analyst noted that management’s comments during the earnings call reflected positive sentiment, supported by an improving digital advertising market and an attractive product roadmap. He highlighted the momentum of Meta’s short video feature Reels, which has grown to more than $10 billion in annual revenue across apps. He also cited better-than-expected shooting at Threads and the company’s significant investments in artificial intelligence.
White cautioned investors about regulatory risks and internal headwinds. However, he added that in the long term, “Meta will benefit from the digital advertising trend, innovate with AI and participate in building the metaverse.”
White is ranked #27 out of over 8,500 analysts on TipRanks. Its ratings are 67% profitable, with each rating earning an average of 20.7%. (See Meta Platforms Stock Chart on TipRanks)
White is also bullish on the audio streaming company Spotify (STAIN). While Spotify’s Q2 revenue and Q3 2023 guidance missed analysts’ expectations, the analyst claimed the results were “respectable” with a significant 27% YoY increase in monthly active users (MAUs) to 551 million.
Commenting on Spotify’s decision to increase the price of its subscription offerings, White noted that the price increases will affect most subscribers starting in September, so it will have a small impact on the third quarter, but will make a meaningful contribution to the fourth quarter’s performance.
While the analyst acknowledged the intense competitive backdrop, he noted that “Spotify is following a favorable long-term trend, improving its platform, entering a large digital advertising market, expanding its audio offerings and improving its cost structure.”
White raised his 2024 estimates and reiterated a buy rating, while raising his price target for SPOT shares to $175 from $160. (See Spotify Blogger Reviews and Sentiments on TipRanks)
There is another tech giant on the list of the week Microsoft (MSFT), made headlines this year thanks to developments in generative artificial intelligence. The company’s fourth-quarter financial results beat Wall Street estimates. However, the revenue forecast for the first quarter of fiscal 2024 fell short of expectations.
Despite this, Goldman Sachs analyst Kash Rangan, ranked #459 out of more than 8,500 analysts tracked on TipRanks, remains bullish on MSFT stock. (See Microsoft Hedge Fund Trading Performance on TipRanks)
In the short term, there may be concerns about when the company’s enhanced capital investments will pay off, the analyst believes. However, he noted that historically, when Microsoft has increased capital spending in the cloud market, Azure’s growth rate has increased significantly and margins have rebounded, which has boosted the stock price.
With a strong presence at all layers of the cloud stack, Rangan said Microsoft is well-positioned to capture opportunities in several long-term global trends, including public cloud and SaaS adoption, digital transformation, generative artificial intelligence and machine learning, analytics and DevOps.
In line with his bullish stance, Rangan reiterated his buy rating with a price target of $400. It has a success rate of 59% and each of its rankings has returned an average of 10%.
Now we’re heading to the old car maker General Motors (GM), impressed investors with strong growth in second-quarter revenue and earnings. In addition, the company raised its full-year forecast for the second time this year.
Tigress Financial Partners analyst Ivan Feinseth recently reaffirmed a buy rating on the stock with a price target of $86, noting the company’s strong performance and increased sales and production of new electric vehicles.
The company continues to see strong demand for its full-size SUVs and pickups, which boosts its revenue and cash flow and funds the transition and expansion of EV production, the analyst noted.
Feinseth called GM’s Ultium platform and supply chain for manufacturing EV batteries a significant competitive advantage. The analyst is also positive about the company’s recent initiatives to expand its charging network.
“In addition to increased production of electric vehicles, GM’s expansion of high-value software and services, which it plans to double the company’s revenue to $275-315 billion by 2030, should lead to significant increases in Return on Capital (ROC) and Economic return. Profit”, – the analyst said.
Feinseth is ranked #215 out of over 8,500 analysts on TipRanks. Its ratings are 61% successful, with an average return of 12.9% per rating. (See General Motors Insider Trading Action on TipRanks)