Domino’s will launch 800 custom-branded 2023 Chevy Bolt electric vehicles at locations across the United States in the coming months.
dominoes
Wall Street analysts are focused on companies that are well positioned to weather the ongoing economic turmoil and emerge stronger.
Here are five stocks picked by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
CrowdStrike
Rapid digitization has helped companies increase their productivity. However, it has also made them more vulnerable to cyber attacks. This scenario increases demand for cybersecurity companies, including CrowdStrike (CRUD).
Following a recent virtual investor briefing with CrowdStrike’s management, Mizuho analyst Gregg Moskowitz reiterated a buy rating on the stock with a $175 price target and said CRWD remains a top pick.
The analyst noted that management expects solid growth opportunities for endpoint security and new use cases powered by Falcon, CrowdStrike’s “truly extensible cloud platform.” The company continues to see a potential total addressable market of $158 billion by 2026, a huge increase from $25 billion at the time of its IPO in 2019.
The analyst highlighted management’s claim that enterprise customers choose CrowdStrike over Microsoft 80% of the time for a number of reasons, including its next-gen platform that leverages artificial intelligence versus the competitor’s signature-based approach.
“Despite a more challenging macro backdrop, we continue to believe CRWD’s cloud platform, their GTM, remains highly differentiated [go-to-market] is unrivalled, the co. shows clear successes beyond the traditional endpoint security markets and FCF [free cash flow] Margins remain at ~30%,” Moskowitz said.
Moskowitz ranks 237th among more than 8,300 analysts, followed by TipRanks. Its ratings were profitable 57% of the time, with each rating delivering an average return of 12.6%. (See CrowdStrike stock chart on TipRanks)
Costco
Storage chain for members only Costco (COSTS) is known as one of the most enduring players in retail, thanks to its robust business model and impressive member renewal rates, which generally top 90%.
Costco recently reported revenue grew 0.5% in March to $21.71 billion, with comparable revenue falling 1.1% year over year. (See Costco Insider Trading Activity on TipRanks)
Baird analyst Peter Benedict noted that core comparable sales growth (excluding the impact of changes in gasoline prices and foreign exchange rates) slowed to 2.6% in March from 5% in February, reflecting weaker performance in the US and a weakening in the non-food categories. In addition, weakness in e-commerce continued.
Benedict acknowledged that Costco is “clearly not immune” to a slowdown in overall merchandise sales. The analyst said downward revisions to third-quarter estimates look likely following the March sales update. With COST’s forward valuation slightly below its five-year average, it prefers to “opportunistically accumulate stocks on pullbacks.”
Benedict reiterated a Buy rating on Costco with a price target of $535 as he believes the company is well positioned to deal with uneven consumer spending.
Benedict ranks 84th among the more than 8,300 analysts tracked by TipRanks. Its ratings were profitable 69% of the time, with each rating delivering an average return of 14.2%.
Caesar’s entertainment
Also on this week’s list is another analyst who was positive about his stock picks after meeting with the company’s management. Deutsche Bank’s Carlo Santarelli recently hosted investor meetings with casino operators Caesar’s Entertainment (CZR) management.
Santarelli noted that the company’s strategic priorities center on reducing debt, “operational prudence” and growing its digital business. The company reduced its debt by $1.2 billion in 2022. (See Caesars Hedge Fund Trading Activity on TipRanks)
The analyst said he remains “well-disposed” to the company given its stable operations and positive development in the digital business.
Santarelli reiterated a buy rating on Caesars with a price target of $70. He ranks 25th among the more than 8,300 analysts followed on TipRanks. Additionally, 66% of its reviews were successful, with each yielding an average return of 21.1%.
Domino’s Pizza
Fast food restaurant chain Domino’s Pizza (DPZ) reported lower than expected sales for the fourth quarter of 2022. The US delivery business was under considerable pressure last year. Meanwhile, the carry business saw strong momentum in the US market.
Based on a survey of over 1,000 Domino’s customers, BTIG analyst Peter Saleh found that takeout-only diners are very loyal to the brand, with few saying they shop at other major pizza chains, independents or aggregators.
While takeout sales have been strong of late, the analyst pointed out that the channel is seeing a significantly lower average check compared to delivery. He said that if Domino’s increases the price of the carryout deal by $1 and “reclaims the historic price gap with mix and match,” it would result in 300 to 350 basis points of same-store sales growth.
Saleh also believes Domino’s could steer customers into the take-out segment by shifting its rewards program to a spend-based model. The analyst discussed certain other potential catalysts for the company, including the possibility of a third-party supply partnership.
Saleh reiterated his buy rating on Domino’s with a price target of $400. He sees potential for the company, even though other analysts have downgraded it.
The analyst is ranked 376th among the more than 8,300 analysts that TipRanks follows. Its ratings were profitable 63% of the time, with each rating delivering an average return of 11.4%. (See Domino’s Blogger Opinions and Opinions on TipRanks)
Texas Roadhouse
Saleh is also optimistic about the casual dining restaurant chain Texas Roadhouse (TXRH) and reiterated a buy rating for TXRH. He increased the price target from $110 to $120 after several investor meetings hosted by his firm with key company executives.
The analyst highlighted management’s comment on how Texas Roadhouse is gaining market share as some fast-casual diners rise and other fine-dining diners fall. He added that the value differential between fast-casual operators and Texas Roadhouse has “narrowed significantly” over the past two years, as restaurant chains like Chipotle have increased menu prices by more than 20%, while Texas Roadhouse has increased prices by just about 10% raised %.
“We remain confident that Texas Roadhouse is leveraging its market leadership, particularly in the children’s menu, to gain market share, as evidenced by record average weekly sales,” said Saleh. (See Texas Roadhouse Financial Statements on TipRanks)
Despite higher raw material costs, the analyst expects Texas Roadhouse to stick to its strategy of setting lower prices than other restaurants in its category, with its pricing designed to only compensate for higher wages. Overall, Saleh finds TXRH to be one of the “most compelling casual dining concepts,” backed by its consistent industry-leading top line, better unit economics and significant long-term unit potential.