The McDonald’s logo is seen on a restaurant in Arlington, Virginia January 27, 2022.
Joshua Roberts | Reuters
It seems that inflation, soaring oil prices and other commodities, and geopolitical unrest are affecting nearly every industry.
Now, the arrival of earnings season brings with it another element for investors to consider.
Instead of focusing on the short-term volatility these events can cause, investors should keep a long-term perspective. Wall Street’s top pros are highlighting their favorite stocks for these trying times, according to TipRanks, which tracks the best-performing analysts.
Here are five stocks that have caught analysts’ attention.
As nations weigh military spending, more investment in big data companies like Palantir (PLTR). The software analysis company has two segments, government and enterprise, and produces unique solutions for its customers.
While Palantir has grown more slowly than its peers, it remains profitable and continues to generate next-gen innovation while taking a “less followed path” compared to the typical big-tech names. At least that’s consistent with the recent report by Brian White for Monness, Crespi, Hardt & Co. (see Palantir’s TipRanks risk analysis).
White opened coverage of the stock with a Buy and provided a $20 price target.
He noted that Palantir “stayed true to its core values, nurtured its own culture and developed unique software.”
The story of digital transformation isn’t new, but White believes many companies are still in the early stages of properly embracing cloud and big data analytics as their top priorities.
White wrote that PLTR has “strong revenue growth, pioneering status in an emerging software category, building software that disrupts existing legacy solutions… and has a major market opportunity.”
On TipRanks, White retains a spot at #178 out of nearly 8,000 analysts. His stock picks were successful 64% of the time, and he returned an average of 29.1% each time.
Digital innovations have helped McDonald’s (MCD) to make drive-through processes more efficient, streamline delivery options and encourage brand loyalty through its rewards program. The multinational restaurant is well positioned to continue providing returns to shareholders.
Ivan Feinseth of Tigress Financial Partners noted that “MCD’s growth initiatives, including AI-based voice ordering, digital marketing, new supply partnerships, supply chain management and ongoing innovation, will continue to drive long-term business trends and market share gains.”
Feinseth gave the stock a Buy rating and stated a price target of $314 per share.
McDonald’s recent partnership with IBM (IBM) is expected to integrate AI technology into its drive-thru segment, which will significantly improve the customer experience and enable higher order rates. As for the McDonald’s app, the expanded loyalty program allows customers to earn points for their purchases, which is noticeable in repeat visits.
The fast-food conglomerate reported strong quarterly results in January and, according to Feinseth, posted its highest comparable store sales for a full year in the U.S., driven by an “outstanding performance of McRib along with strong demand for its crispy chicken sandwich.”
The analyst expects McDonald’s to continue paying dividends and buying back shares. (See McDonald’s Corp. dividend data on TipRanks)
Feinseth is rated #75 by more than 8,000 financial analysts. He has a 66% success rate coupled with an average return of 29.5% on each selection.
Tesla (TSLA) recently initiated the opening of its Austin facility. The plant has been a long time coming for many investors, and CEO Elon Musk expects it to become the flagship production site for its various vehicles, including the much-anticipated Cybertruck.
Domestically, according to Wedbush Securities’ Dan Ives, the company is light years ahead of its competition, which has found it quite difficult to get its operations running smoothly. He also expects the Austin and Berlin factories to push Tesla to produce 2 million vehicles by the end of this year. For comparison, that’s 100% more than the EV maker will have in 2021. Austin will account for a quarter of that amount.
Ives reiterated a buy rating on the stock while maintaining its price target of $1,400.
Describing it as a “high-class problem where demand outstrips supply,” Ives said orders for Tesla Model Ys are about half a year behind schedule. While this gives the company a clear view of its upcoming earnings, it can’t capitalize properly if it can’t fulfill the orders. In addition, consumers will go elsewhere if they cannot get their new cars. (See Tesla Website Trends on TipRanks)
After all, the Berlin plant is to accommodate all European deliveries that until recently were still being produced in the Shanghai plant. This system of shipping vehicles around the globe has been unsustainable at best and is expected to ease as Berlin ramps up.
Ives is ranked 332nd by nearly 8,000 professional analysts. He’s right 59% of the time when picking stocks, and he’s returned an average of 23.2% on each evaluation.
CrowdStrike (CRWD) stands out in the cybersecurity industry as the company has executed its pipeline well and built strong customer loyalty.
Baird’s Jonathan Ruykhaver recently reported on the stock, saying that “Cloud-native architecture, single intelligent agent, real-time cloud-scale AI, integrated platform and scalability [are] Key innovations creating a strong competitive moat and barriers to entry.”
Ruykhaver gave the stock a Buy rating and bullishly raised his price target to $275 from $225.
The analyst stated that CrowdStrike has “no shortage of growth opportunities,” citing the cybersecurity company’s execution in terms of its consumer-facing product modules. He noted that CRWD has increased its sheer volume of modules by over 100% since going public.
This wide range of offerings offers its customers a sticky ecosystem, an outstanding quality in such a competitive market. (See CrowdStrike Hedge Fund Activity on TipRanks)
Ruykhaver stated that “FalconXDR, cloud solutions, fusion and log management” have driven growth and put CrowdStrike in a competitive position among its peers.
Ruykhaver is ranked 8th out of nearly 8,000 analysts. He has been successful in evaluating stocks 81% of the time and has an average return of 57.1%.
Tough (EVERYTHING) received a tailwind from the pandemic as people adopted pets and turned to the online retailer for supplies.
However, the pandemic and its trends have largely abated in recent months, and Chewy’s valuation has taken a hit as a result. Still, JPMorgan’s Doug Anmuth doesn’t think the stock’s core business is any less attractive. In his report, the analyst calls the company the “largest pure-play petcare retailer in the US” in a “growing and highly attractive category that is early in the online shift.”
Anmuth gave the stock a Buy rating and offered a price target of $55.
He sees growth for the company in the pharmacy segment and room for international expansion. The analyst expects active customer growth to ramp up through the end of the year and into 2023. Until then, he forecasts sales growth of 16% for the current financial year. (See Chewy Stock Charts on TipRanks)
Despite these bullish factors, there are still near-term challenges for Chewy. Inflationary pressures and supply chain constraints remain uncertain and difficult to manage. No retailer wants their products to be unavailable, especially when their customers could shop elsewhere.
Gross margins are still expected to increase, “well beyond the 25-28% range, buoyed by new initiatives such as fresh and prepared food, health and wellness, including insurance and advertising, which should have a greater impact in 2023.” ‘ Grace remarked.
Anmuth is ranked 273rd out of almost 8,000 expert analysts in the TipRanks database. He has a 54% success rate and averages a 26.6% return on his reviews.