A Peloton exercise bike is seen after the opening bell for the company’s initial public offering at the Nasdaq Market location in New York City, New York, the United States, September 26, 2019.
Shannon Stapleton | Reuters
Inflationary pressures, supply chain snarls and a Covid resurgence weigh on businesses and shake stock prices.
The recent sell-off suggests that many investors would rather take losses and withdraw their money as soon as possible.
However, Wall Street’s top pros are telling investors that the current market turmoil is an opportunity in disguise for those with a long-term perspective. The pundits have chosen their favorite stocks to buy now, according to TipRanks, which ranks the top-performing Wall Street pros.
Here are five stocks that top analysts believe offer a bargain opportunity.
RingCentral
RingCentral (RNG) is a provider of cloud-based business communication solutions for customers from all industries. The company reported a solid first quarter of 2022, with revenue and adjusted earnings per share not only improving over the prior-year quarter, but also beating consensus estimates. The company provided an upbeat outlook for the second quarter.
Despite its strong results and upbeat guidance, RingCentral has not escaped the sell-off that has hit stocks across the board. Oppenheimer’s Timothy Horan is urging investors considering buying the dip to do so. In a recent report, the analyst said that RingCentral’s high-quality service allows it to maintain stable prices across its various offerings. The analyst also likes the company’s renewed focus on profitability. (See RingCentral Website Visits on TipRanks.)
Horan rated the stock as a Buy with a price target of $100.
RingCentral CEO Vlad Shmunis said the company’s success is built on three factors: trust, innovation and partnership. The company recently launched several new products, including ones targeting small business, hybrid work and study segments.
RingCentral has partnerships with telecom giants like AT&T (T), Verizon (vz), Vodafone (VOD), and Deutsche Telekom (DTEGY). Also, Frontier was recently added (FYBR) as a partner to reach more small business customers. According to Horan, RingCentral has the best go-to-market strategy, citing its partner network made up of many established telecom and PBX providers.
The analyst expects RingCentral to be a big beneficiary of the fast-growing cloud communications market, which he estimates will grow fourfold over the next six years to reach $100 billion.
Of the nearly 8,000 analysts in the TipRanks database, Horan is ranked 200th. The analyst got his stock ratings right 64% of the time, with an average return of 12.8%.
Peloton Interactive
Peloton Interactive (PTON) recently released an earnings report that showed a decline in sales and a mounting loss. The fitness company’s business hasn’t been in the best of shape amid high inflation and global supply chain disruptions. The market collapse has also taken a toll on Peloton stock.
However, Baird’s Jonathan Komp believes it would be wrong to write Peloton off because of his current problems. In a recent report, the analyst noted that Peloton’s new CEO, Barry McCarthy, is pursuing multiple growth opportunities and working on operational improvements. The analyst also thinks Peloton’s high-margin, fast-growing subscription business looks undervalued.
Komp rated the stock as a Buy with a price target of $25.
“We are optimistic that industry demand is near/at a new baseline and that PTON can achieve healthy profitability through F2024E,” the analyst said. Komp believes the subscription business will underpin Peloton’s profitability. He cited management’s cost-control efforts and cited Peloton’s annual cost savings goal of $800 million through fiscal 2024. (See Peloton stock charts on TipRanks)
Komp is ranked 473 out of nearly 8,000 analysts in the TipRanks database. The analyst’s stock ratings were correct 51% of the time, with an average return of 14.1% per rating.
Rivian Automotive
Rivian Automotive (RIVN) is a new electric vehicle manufacturer and has built several models, namely the R1T pickup, the R1S SUV and the EDV van. The company’s shares have slipped amid the market turmoil.
While some might see a falling knife in Rivian, Mizuho’s Vijay Rakesh is urging investors to buy the dip. In a recent report, the analyst highlighted that Rivian’s business is actually looking better than many investors would like to believe.
Rakesh has a Buy rating on the stock with a target price of $80.
Rivian aims to produce 25,000 vehicles in 2022. The company produced 2,553 vehicles in the first quarter of 2022. Given the strong demand for its vehicles, the company is expanding its production capacity to meet its production target. Rivian has now received more than 90,000 pre-orders for its truck and SUV models, compared to around 83,000 pre-orders in the previous update. Rakesh noted that Rivian’s nearly 10,000 new pre-orders come at a higher average retail price of $90,000 per vehicle compared to $77,000 for the previous orders. (See Rivian Retail Investors on TipRanks)
In addition to his optimistic hypothesis, the analyst noted that Amazon (AMZN) Rivian has placed an order for 100,000 vans to be delivered by 2030. As orders continue to come in, demand is not an issue for Rivian, the company just needs to ramp up production. According to Rakesh, Rivian has enough cash to last the next 11 quarters.
Out of the nearly 8,000 analysts in the TipRanks database, Rakesh is ranked 72nd. The analyst’s calls were correct 62% of the time, with an average return of 23.2% per review.
Six flags
Six Flags (SIX) operates regional theme parks and recently reported a generally strong first quarter. However, the stock continued to trade well below its recent highs alongside the broader market. In a recent report, Eric Wold of B. Riley Financial discussed how Six Flags’ business will improve in the future.
Wold rated the stock as a Buy with a price target of $55.
Investors have long focused on visitor numbers for amusement park operators. However, Wold said attendance is no longer a key metric when it comes to evaluating Six Flags. According to the analyst, Six Flags is focused on attracting premium guests while eliminating programs that have generally attracted low-margin guests. That means Six Flags should see improved profitability despite falling visitor numbers, the analyst said. (See SIX Flags Risk Factors on TipRanks)
The analyst also believes Six Flags is able to offset inflationary pressures. For example, a new pricing strategy that increases entry fees and efficient staffing should help mitigate inflation and wage pressures.
Of the nearly 8,000 analysts in the TipRanks database, Wold is ranked 701st. The analyst’s decisions were correct 46% of the time, with an average return of 10.9% per rating.
power adapter
Fuel cell company Plug Power (PLUG) recently reported that first-quarter revenue nearly doubled year-on-year, but high expenses led to a larger loss. Of late, PLUG stock has been under pressure, posting a steep decline from its recent high. (See Plug Power Blogger Mood on TipRanks)
According to HC Wainwright’s Amit Dayal, the decline in Plug Power’s shares is a blessing in disguise. The analyst sees the company’s business improving in the coming years and the stock also rising.
Dayal has a Buy rating on the stock with a price target of $78.
Plug Power is expanding its business globally and the analyst sees up to 25% of the company’s estimated $909 million revenue in 2022 in international markets. Natural gas price volatility has put pressure on Plug Power’s fuel margins, and Dayal acknowledges that this could remain so in the short term. However, the company is improving its service margins.
“We believe the stock should get better appreciation from the market as there is evidence of execution versus margin improvements and global growth,” Dayal said.
Plug Power’s fuel cell solutions meet the need for clean, renewable energy. According to the analyst, the stock will benefit from US and global climate change legislation.
Dayal is ranked 28th out of almost 8,000 analysts in the TipRanks database. The analyst’s ratings were correct 44% of the time, with an average return of 49.8% per rating.