Clifton Pemble, President and CEO, Garmin at NYSE, December 7, 2021.
Source: New York SE
Investors have no shortage of worries, whether it’s the economy slipping into recession on the back of higher interest rates or the chaos that befell financial stocks last week.
Still, there are buying opportunities for those who know where to look.
Here are five stocks that will weather the storm, according to Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Cloud companies are seeing a significant slowdown in their growth rates as macroeconomic challenges impact corporate spending. Despite the ongoing pressure, cloud-based data warehouse company snowflake (SNOW) delivered positive quarterly results.
Snowflake expects its product sales to grow 40% in fiscal 2024, slowing from the 70% increase in fiscal 2023 (ending January 31, 2023). Nonetheless, Snowflake remains bullish on its growth over the coming years and expects to meet its $10 billion product sales target in fiscal 2029.
Deutsche Bank analyst Brad Zelnick agrees that Snowflake is “not immune to cloud growth moderation.” (See Snowflake bloggers’ opinions and opinions on TipRanks)
Nonetheless, Zelnick reiterated a buy rating on Snowflake with a price target of $170, saying, “We remain firmly convinced that the long-term prospects for Snowflake, with its unique multi-cloud architecture, rich platform capabilities, capabilities to… Data sharing and native app development tools that position it to capitalize on the tremendous opportunities of the data cloud.”
Zelnick ranks 85th out of more than 8,000 analysts followed on TipRanks. Its ratings were profitable 69% of the time, generating an average return of 14.9%.
Let’s switch to another cloud company, Foreclosure (CRM), which recently reported solid results for the fourth quarter of fiscal 2023 (ended January 31, 2023). The company expects revenue growth of about 10% for fiscal 2024. While that number indicated a slowdown compared to fiscal 2023’s 18% growth, it came in above analyst estimates.
In addition, Wall Street pundits applauded the company’s profitability projections. Salesforce has come under pressure from several activist investors, including Elliott Management and Starboard Value, to improve its profitability. (See Salesforce Insider Trading Activity on TipRanks)
Mizuho analyst Gregg Moskowitz, who ranks 264th among more than 8,000 analysts on TipRanks, said he was “encouraged by the recent activism in CRM over the past few months.” The analyst also highlighted the company’s restructuring efforts and its 27% operating margin guidance for fiscal 2024, which he said was “well above even the most optimistic expectations.”
“Notwithstanding the macroeconomic challenges, we reaffirm that CRM remains well positioned to help its vast customer base with revenue management and process optimization through digital transformation,” said Moskowitz.
Moskowitz reiterated a Buy rating and raised its price target on CRM shares to $225 from $200. According to TipRanks, 55% of Moskowitz’s reviews generated profits, with each review yielding an average return of 13.1%.
Next on our list is the sporting goods retailer Hibbett (MISTAKE), which sells shoes, apparel and gear from top brands like Nike and Adidas. The company’s results for the fourth quarter of fiscal 2023 missed expectations due to macroeconomic pressures, higher costs, supply chain issues and increased promotional activity.
Hibbett expects mid-single-digit sales growth for fiscal 2024, driven by its range of high-demand footwear. The company is also conducting a “systematic review” of its operating expense structure to improve profitability. (See Hibbett stock chart on TipRanks)
Sam Poser, analyst at Williams Trading, stressed that Hibbett’s relationships with major brands, mainly Nike, are very strong. Additionally, the analyst believes the retailer has “best-in-class consumer-centric omnichannel operations” under its reporting, reflected in a 21.4% increase in digital sales in the fiscal fourth quarter.
Poser lowered its earnings estimates for fiscal years 2024 and 2025 as the company’s recent results fell short of forecasts. Nonetheless, he reiterated a buy rating on Hibbett and a price target of $82 because he is “confident that HIBB’s guidance is far more realistic, prudent and conservative than it has been in a while.”
Poser is ranked 144th among more than 8,000 analysts tracked on TipRanks. Its ratings were profitable 55% of the time, with each rating delivering a 17.6% return on average.
Cyber Security Company Zscaler‘S (ZS) Fiscal second quarter results beat The Street’s expectations with revenue up 52%.
Still, ZS stock fell as investors appeared concerned about the company’s billing guidance of a roughly 9% sequential decline in the fiscal third quarter, compared to the mid-single-digit declines seen in recent years . Delays in major deals due to macro issues impacted the company’s outlook.
TD Cowen analyst Shaul Eyal remains bullish on Zscaler, reiterating a buy rating with a $195 price target following the results. “In our view, despite macroeconomic uncertainty and increased deal scrutiny, ZS holds a strong competitive position as it addresses a $72 billion market opportunity,” said Eyal.
The analyst believes the company is well-positioned to meet its longer-term goals, including $5 billion in annual recurring revenue, an operating margin of 20% to 22%, and a free cash flow margin of 22% to 25% %. (See Zscaler hedge fund trading activity on TipRanks)
Eyal ranks 15th among more than 8,000 analysts on TipRanks. Additionally, 66% of its valuations were profitable, with an average return of 24.1%.
Garmin (GRMN) is a leading provider of GPS-enabled devices and applications. Last month, the company reported a decline in fourth-quarter sales due to unfavorable exchange rates and lower demand for its fitness products.
Ivan Feinseth, financial analyst at Tigress, believes that the company’s ongoing innovations and new launches, its strength in aerospace and growing opportunities in wellness and automotive OEM (original equipment manufacturer) businesses will accelerate trends again.
Feinseth is particularly confident that Garmin will evolve into an industry-leading automotive OEM supplier. The company’s automotive OEM sales grew 11% to $284 million in 2022. The analyst expects the automotive segment to record 40% annual growth and reach a sales rate of $800 million by 2025. He expects that growth to be led by the company’s industry-leading product categories of cabin domain controllers, infotainment systems and other connected in-cabin interfaces.
Feinseth, who is ranked #189 on Tipranks, reiterated his buy rating on Garmin shares with a price target of $165. The analyst’s ratings were profitable 62% of the time, with an average return of 12.2%. (See Garmin Financial Statements on TipRanks)