A McDonald’s restaurant logo is seen in the window with a reflection of the Kremlin Tower in central Moscow, Russia, March 9, 2022.
Maxim Shemetov | Reuters
Another month has passed and the market outlook shows no sign of improvement.
August started on an upbeat note, but ultimately ended with a slump for all three major indices. After a jobs report that came in just below estimates, investors are turning their focus to the upcoming September Federal Reserve meeting.
Now that the short-term economic outlook is once again blurry, it would be a good idea to select investment ideas with a longer-term perspective. To that end, here are five stocks picked by Wall Street’s top pros, according to TipRanks, a service that ranks analysts based on their performance.
Transportation management company Hub Group (HUB) has had to cope with supply chain disruptions, high freight costs and other headwinds.
A healthy balance sheet is a strength that helps the Hub Group innovate even in the face of adversity. In its quarterly earnings commentary, management confirmed that the company has approximately $300 million in cash excluding net debt. (See Hub Group equity investors’ take on TipRanks)
Hub Group recently acquired TAGG Logistics to expand its range of fulfillment solutions. Cowen analyst Jason Seidl believes the acquisition will add an additional $200 million in full-year revenue this year.
In addition, Seidl determined that the acquisition or cost increases will not prevent the company from its share repurchase commitments. “Consistent with commitments made during its Q2 earnings call, HUBG repurchased $35 million of stock in early August and an additional $15 million upon reauthorization, representing the total repurchases for the year to date raised the price target to $121 from $119 while maintaining a Buy rating on the stock.
Ranked 8th among 8,000 analysts tracked on TipRanks, Seidl was successful in 70% of his reviews and delivered an average return of 25.4%.
The world’s leading fast food chain McDonald’s (MCD) is next on analysts’ list of favorite stocks for the year. The company has learned to make itself resilient to recessions through continued collaborations and experimental menu upgrades for younger customers.
Tigress Financial Partners analyst Ivan Feinseth maintains his buy recommendation for McDonald’s and even recently raised the target price from $314 to $320. Feinseth believes continued growth initiatives will prompt McDonald’s to compensate for the closure of its business in Russia.
The analyst also noted that MCD “reinvests its cash flow into new growth initiatives and enhances shareholder returns through continued dividend increases and share buybacks.” This helps increase customer retention, add new customers, and improve brand loyalty and recognition. (See McDonald’s dividend date and history on TipRanks)
Feinseth ranks 189th out of 8,000 analysts in the TipRanks database. The analyst has seen 61% of his ratings generate gains, yielding an average return of 12.4%.
working day (WTAG) provides enterprise cloud applications for the finance and human resources departments of companies around the world. The software company recently released quarterly results. In addition, the company maintained its full year guidance despite accounting for the current headwinds. This strengthened the confidence of investors and analysts alike.
Following the release, Deutsche Bank analyst Brad Zelnick maintained his buy rating on the stock, raising his price target to $230 from $225. “Management continues to recognize the uncertain backdrop and sees increased scrutiny of larger deals while competition for what Workday offers remains healthy,” said Zelnick. (See Workday insider trading activity on TipRanks)
Zelnick ranks 77th among the 8,000 analysts followed on TipRanks. Notably, 69% of the analyst’s reviews were profitable, generating 17.3% average returns per review.
Another of Zelnick’s favorite stocks is tax preparation software provider Intuit (INTU). A consistent focus on expanding its software capabilities and a solid business model have helped the company weather the current macroeconomic headwinds.
Intuit also boosted investor confidence as it raised long-term growth prospects for its small business segment. In Zelnick’s words, that improved outlook underscored “its impressive expansion at scale and likely the upward shift in the company’s growth algorithm in the eyes of many investors.” (See Intuit Hedge Fund Trading Activity on TipRanks)
However, Zelnick also pointed to some potential pullbacks that could impact short-term stock appreciation. For one, aggressive investments in growth initiatives are holding Intuit back from improving its margin growth potential. Even for FY23, Intuit doesn’t have a confident margin growth outlook. Also, the forecast provided by the company does not effectively take into account the major economic downturn expected soon. Historically, however, Intuit has been resilient to downturns.
“While Intuit is not immune to an increasingly weakening macro environment, the forward guidance reinforces our belief that product leadership, stickiness and network effects are enduring differentiators across its leading AI expert platform,” said Zelnick, who maintains a buy rating and raises the price target to $525 to $560.
The final stock on our list is semiconductor star Marvell Technology (Murly). The shortage of semiconductor components that has long plagued the market is troubling Marvell.
Still, Marvell has benefited from the demand for chips to support advanced and emerging technologies. The company’s products support markets in the automotive/network, data center, enterprise network, consumer and carrier markets. (See Marvell Stock Chart, Price History and Graphs on TipRanks)
Needham analyst Quinn Bolton is one of the Marvell bulls. “With a solid execution history and expanding its product portfolio targeting high-margin, high-growth cloud/5G/automotive infrastructure markets, Marvell is now targeting one of the highest long-term revenue growth rates among large-cap companies in the semiconductor industry,” said Bolton.
The analyst expects Marvell to generate more than 30% organic revenue growth in CY22, with around 20% of that in CY23, driven by new design wins for its 5nm platform. This growth is also expected to be supported by increased chip supply from its key wafer foundry, substrate, assembly and test partners. Bolton notes that this growth expectation is the highest among Marvell’s large-cap peers.
The analyst also expects non-GAAP gross margin to hit 24.40% by the end of the fiscal year. Needless to say, Bolton reiterated a buy rating on the stock with a price target of $66.
The analyst is ranked #3 out of 8,000 analysts in the TipRanks database and has a 67% pass rate on his reviews. Additionally, each of his reviews has generated an average return of 41.4%.