A line of shoppers wait in line during the coronavirus outbreak in West Nyack, New York, March 14.
Fresh Mike | Reuters
Concerns about a banking crisis have added to the concerns of investors already weighed down by stubbornly high inflation and fears of an economic slowdown.
With continued uncertainty, it might be a good decision to turn to stock market experts to pick stocks that are attractive over the long term.
Here are five compelling stocks picked by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.
Allegro MicroSystems
Allegro Microsystems (ALGM) develops sensor and power semiconductor solutions for motion control and energy-efficient systems. On Tuesday, the company held its first analyst day to provide insights into its strategy and technology.
Needham analyst Quinn Bolton noted that management at the event focused on rapidly growing opportunities in two “secular megatrends” – electrification (primarily e-mobility) and industrial automation. Allegro expects to thrive in these two key markets and to deliver low double-digit revenue growth from fiscal 2023 through 2028.
Bolton believes its margin estimates for fiscal 2024 and 2025 appear conservative given Allegro’s new long-term model, which targets gross margin in excess of 58% and operating margin in excess of 32%. He stressed that the company’s available e-mobility market is expected to grow at a compound annual growth rate of 25% to $3.9 billion through fiscal 2028.
“ALGM’s portfolio is aligned with long-term industrial growth trends in clean energy and automation,” said Bolton. Allegro expects its clean energy and automation SAM to grow at a CAGR of 18% to $3.5 billion through fiscal 2028. (See Allegro Insider Trading Activity on TipRanks)
Impressed by Allegro’s growth prospects, Bolton raised its price target to $50 from $42 and reiterated a buy rating. Notably, Bolton ranks 2nd out of more than 8,000 analysts tracked on TipRanks. Its reviews were profitable 67% of the time, generating an average return of 36.3%.
CrowdStrike
Recent findings from several cybersecurity companies including CrowdStrike (CRUD) have reflected robust demand. Organizations are moderating their IT spending due to macro pressures but continue to allocate adequate cybersecurity budgets due to increasing cyber attacks.
CrowdStrike’s adjusted earnings per share for the fourth quarter of fiscal 2023 (ending January 31) increased 57%, driven by 48% revenue growth. At the end of the fiscal fourth quarter, the company’s annual recurring revenue was $2.56 billion, up 48% year over year.
TD Cowen analyst Shaul Eyal attributed CrowdStrike’s positive performance to solid execution and resilient demand for the company’s Falcon platform. Eyal added that the company is working with him Dell to ship its Falcon platform to Dell’s customers through a variety of routes.
“We believe CRWD is positioned to meet its goals of generating $5 billion in ARR by the end of FY26 and achieving its targeted operating model in FY25,” said Eyal. He reiterated a buy rating on CrowdStrike with a price target of $180.
Eyal is ranked 14th among more than 8,000 analysts tracked on TipRanks. Its ratings were profitable 66% of the time, with each rating delivering a 23.7% return on average. (See CrowdStrike Stock Chart on TipRanks)
oracle
Next on our list is the enterprise software giant oracle (ORCL), which reported mixed results for the third quarter of fiscal 2023 (ended February 28, 2023). The company’s adjusted EPS rose 8%, beating Wall Street expectations, while revenue growth of 18% fell short of estimates.
Still, Oracle is bullish on the solid potential of its cloud business, which delivered 45% revenue growth in the fiscal third quarter. Additionally, management indicated that Cerner, a healthcare technology company acquired in June 2022, increased its healthcare contract base by approximately $5 billion.
Monness, Crespi, Hardt & Co. analyst Brian White said Oracle delivered “respectable Q3 2023 results in a treacherous environment.” He claims the company’s cloud business continues to weather the ongoing challenges better than the leading public cloud providers, which reported a notable slowdown in revenue growth.
White warned investors that the “darkest days” of the economic downturn are ahead. Nonetheless, he reiterated his Buy recommendation on Oracle with a target price of $113, saying, “Oracle represents a high-quality value play that offers an opportunity to participate in compelling cloud transformation and engage in digital modernization initiatives in the healthcare industry.” participate .”
White ranks 50th among more than 8,000 analysts on TipRanks. Additionally, 64% of its ratings were profitable, with an average return of 18%. (See Oracle Blogger Opinions and Opinions on TipRanks)
BJ’s Wholesale Club
Warehouse Club chain BJ’s Wholesale Club (BJ) continues to perform well even as the macro backdrop is tightening and the pandemic tailwinds have eased. The company recently held its fourth-quarter earnings call and first-ever Investor Day.
Baird analyst Peter Benedict, ranked 129th on TipRanks, noted that the company’s membership base is “stronger than ever.” Membership fee revenue increased 10% in fiscal year 2022 (ending January 28, 2023), driven by a 7% increase in membership to 6.8 million, an increase in higher tier penetration and solid renewal rates. It’s worth noting that BJ’s hit its all-time high renewal rate of 90% for the year.
“With a structurally advantageous business model, a growing/increasingly loyal membership base and envisaged unit growth, BJ has the fundamental building blocks of a compelling long-term growth story in the consumer staples space,” stated Benedict. (See BJ’s Wholesale Financial Statements on TipRanks)
Raising the target price on BJ shares to $90 from $85, Benedict reiterated a buy rating based on several strengths, including a solid balance sheet, free cash flow generation and efforts to improve assortment. Its ratings were profitable 64% of the time, with an average return of 13.4%.
Strings
Medical equipment giant Strings (SYK) has built a solid business over the years through strategic acquisitions and continuous innovation in the fields of medicine and surgery, neurotechnology, and orthopedics and spine.
BTIG analyst Ryan Zimmerman recently hosted a fireside chat with Spencer Stiles, group president of Stryker’s orthopedics and spine business, and Jason Beach, vice president of investor relations. He stressed that the volume of orthopedic surgeries is benefiting from a backlog that is expected to last about four to six quarters as patients who previously postponed treatment return.
Zimmerman believes that “SYK will maintain its growth leadership in orthopedics even as competing robotic systems evolve.” He anticipates that Stryker’s new Mako Knee 2.0 software, launch of Insignia Hip, and forthcoming rollout of shoulder and spine robots could “support a long and robust growth cycle” in fiscal 2024.
Zimmerman reiterated a buy rating on Stryker with a price target of $281. The analyst is ranked 657th on TipRanks out of more than 8,300 analysts with a 45% success rate. Each of his reviews has delivered an average return of 8.9%. (See Stryker Hedge Fund Trading Activity on TipRanks)