Sanjay Mehrotra, CEO, Micron
Scott Mill | CNBC
The S&P 500 and Nasdaq delivered a solid performance in the first half of 2023 thanks to an impressive rally in major tech stocks. However, macro pressures have not abated, with minutes from the latest Federal Open Market Committee meeting pointing to more interest rate hikes to tame high inflation.
Given the continued uncertainty, investors may benefit from looking at stocks with strong fundamentals and 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.
The first is a chip maker micron (IN), reported in late June that its third-quarter financial results were better than feared. The company warned that the recent ban on its products by China remains a major headwind. However, investors chose to focus on management’s comments about improving business conditions with artificial intelligence driving strong demand for Micron’s memory chips.
Goldman Sachs analyst Toshiya Hari expects Micron’s near-term financial performance to be rocky due to several factors, including revenue uncertainty related to China’s Cyberspace Administration and inventory issues.
Nevertheless, the analyst maintained a buy rating on Micron with an $80 price target, saying: “We believe in the company’s ability to mitigate potential share loss in China and increase share gains over time in the HBM3 market as it executes on its DRAM and NAND technology roadmaps.”
Hari believes that the company’s strong position in the DDR5 market, the latest generation of high-performance memory chips, and the prospects for its high-throughput memory HBM3 chips (which will begin mass production in early 2024) position it well to take advantage of these opportunities. Rapid growth in the AI space.
Ranked #155 out of over 8,400 analysts tracked on TipRanks, Hari’s recommendations are worth considering. Its ratings were 64% profitable, with each rating earning an average of 19.7%. (See Micron Stock Chart on TipRanks)
Restaurant chain Texas Roadhouse (TXRH) faces high input costs due to high inflation. Despite near- to medium-term margin pressures, Wedbush analyst Nick Setian continues to believe the company can gain further market share in the casual dining restaurant space.
The analyst firm’s checks show that TXRH is poised to deliver same-store sales growth in the second quarter ahead of the consensus estimate of 8.2%. Accordingly, Setyan raised its Q2 same-store sales growth estimate to 9.5% from 8.5%, reflecting strong lunch traffic, the impact of increased local marketing efforts and a higher off-premise mix.
Setyan expects the company’s sales to more than offset the ongoing inflation of food costs, including beef. It raised its 2023 and 2024 EPS estimates slightly, given its high-end upside expectation.
In line with the investment thesis, Setyan reaffirmed a buy rating on the stock with a price target of $123. It explained that its price target reflects a premium valuation and is “appropriate given our expectations of accelerating market share growth in casual dining for the foreseeable future.”
Setyan has 798c Ranked among over 8,400 analysts on TipRanks. Additionally, 51% of its ratings have been profitable, with an average return of 7.2%. (See TXRH Blogger Reviews and Sentiments on TipRanks)
Next on this week’s list is a cruise operator carnival (CCL). After being battered by pandemic-related lockdowns, Carnival and several other travel stocks have bounced back strongly this year due to strong travel demand.
Tigress Financial analyst Ivan Feinseth expects Carnival to benefit from solid bookings, higher prices and a reprioritization of consumer travel spending. It forecasts that revenue, economic operating cash flow and net operating profit after tax will surpass pre-pandemic record levels by mid-2023.
Ranked #174 out of over 8,400 analysts tracked on TipRanks, Feinseth said, “CCL’s accelerating Business Performance trends and significant recovery in cash flow continue to enable continued funding of key growth initiatives, fleet expansion/transition, upgrades and debt reduction ” he said. .
The analyst noted that Carnival paid off $1.4 billion in debt in the second fiscal quarter. CCL is expected to reduce its debt level below $33 billion by the end of 2023, supported by improved cash flow. Due to the pandemic’s disastrous impact on cruise lines, the company’s debt has exceeded $35 billion.
Feinseth reaffirmed a buy rating on CCL and raised his price target to $23 from $13. It has a success rate of 62% and each of its ratings returns an average of 13.1%. (See CCL Insider Trading Activity on TipRanks)
Feinseth is also bullish on the database software maker MongoDB (CIS), reported market-beating results for its fiscal first quarter ended April 30 and raised its full-year guidance. After witnessing the highest net new customer additions in more than two years, the company had more than 43,100 customers at the end of the period.
Feinseth expects that the increased integration of generative AI tools and capabilities will lead to increased adoption of MongoDB’s highly customizable and scalable database as a service platform by enterprise customers.
The company will continue to generate strong cash flow to invest in growth initiatives, including innovation, strategic acquisitions, marketing efforts to attract more customers and international expansion, the analyst said.
“CIS will continue to benefit from increased enterprise IT spending, driven by the continued need for enterprises to leverage AI capabilities as a growing competitive advantage,” Feinseth said.
Even after a solid rally in CIS shares, Feyneth sees more upside for the stock. Accordingly, he reiterated his buy rating and raised his price target to $490 from $365. (See MongoDB Financial Reports on TipRanks)
The e-commerce giant Amazon (AMZN) is holding its long-awaited 9thc annual Prime Day July 11 and 12. Prime Day is an annual sales event held exclusively for Amazon Prime members that helps the company deepen its relationships with existing members and win new ones.
JPMorgan analyst Doug Anmuth expects Prime Day 2023 to see strong demand despite a challenging macro backdrop. Analysts project that Prime Day revenue will increase more than 12% year-over-year to nearly $7 billion, while total merchandise value will increase more than 13% to $11 billion.
Anmut highlighted Amazon’s initiatives over the past two years to strengthen its network. In particular, the company doubled the size of its retail network, created a massive last-mile transportation network, and implemented a new sorting network to increase delivery speed for long-distance orders.
Amazon also moved from a national US fulfillment network to a regional model of eight interconnected regions to optimize inventory placement and other processes, reduce delivery costs and increase speed.
“Thus, Amazon should be well-equipped for increased Prime Day demand, and the event should also help AMZN right-size inventory in the face of higher demand through 2H through the holidays,” Anmuth said.
Amazon continues to be Anmouth’s “top idea” with a buy rating and $145 price target. Anmut is ranked #110 out of over 8,400 analysts tracked by TipRanks. Its ratings are 61% profitable, with an average return of 16.7% per rating. (See Amazon Hedge Fund Trading Performance on TipRanks)