We enter the new year with largely unchanged macroeconomic conditions and a recession awaits us. However, investors can maintain a healthy portfolio if they think longer term and cut out any noise.
In that regard, we’re kicking off 2023 with five stocks handpicked by Wall Street’s top analysts, according to TipRanks, a service that ranks analysts based on their past performance.
STAAR surgery
medical technology company STAAR surgery (STAY) is benefiting from solid global demand for refractive corrections (surgical correction of eye conditions). In addition, BTIG analyst Ryan Zimmerman believes that favorable demographic trends, including an aging population and rising rates of myopia, are also driving demand for STAAR’s products.
In early December, the company announced that its President and Chief Executive Officer, Caren Mason, was retiring at the end of the month. Mason will be succeeded by Thomas Frinzi, who previously served as head Johnson & Johnson’s Vision Unit and President of Abbott Medical Optics. Zimmerman said Frinzi’s appointment could give investors peace of mind thanks to his 40-year experience in medical optics. (See Staar Surgical Hedge Funds Trading Activity on TipRanks)
The analyst is also bullish on the demand environment for STAAR’s products over various timeframes. “Next-generation lenses for emerging markets should drive near-term growth, while expanded indications, presbyopia and cataract companions drive long-term growth,” noted Zimmerman, who reiterated a buy rating on the stock with an $80 price target.
Zimmerman ranks 861st among more than 8,000 analysts tracked on TipRanks. Additionally, 44% of its reviews were profitable, with each review generating an average return of 7.2%.
papa johns
Fast service pizza chain papa johns (PZZA) stock has fallen significantly this year due to the challenges in the UK and inflationary pressures, but its longer-term prospects remain robust. BTIG analyst Peter Saleh noted that during these times when inflation is high and a recession looming, lower-income consumers are spending less on eating out. Therefore, Papa John’s inexpensive offerings like Papa Pairings attract new, lower-income guests.
After surveying more than 1,000 Papa John customers, Saleh found that only a low single-digit percentage of them find menu prices too expensive, even after the company increased prices 3-4 times in 2022. Encouraged by these trends, the analyst slightly raised its domestic same-business sales expectations for 4Q22. (See Papa John’s international insider trading activity on TipRanks)
Saleh reiterated a buy rating on the stock with a $100 price target. “We believe the new leadership has the right strategies in place to turn things around; these efforts have already translated into improved operational efficiencies, increased franchisee alignment and improved net unit growth, which we expect to continue to expand in 2022/23. We see several short- and long-term shareholder value levers that have begun to unfold and will allow Papa John’s to once again outperform the competition, leading to our Buy rating,” said Saleh.
Saleh is ranked 524 among more than 8,000 analysts on TipRanks. Each of its 59% successful reviews has generated an average return of 10.3%.
alphabet
Next on our list is Monness Crespi Hardt analyst Brian White’s stock picks. alphabet (Google), which has proven more resilient than its peers in the digital ad market this year. Additionally, the company could mitigate the impact on its business with the help of Google Cloud’s strong growth.
White said “a challenging year is drawing to a close, but staggering headwinds persist in 2023” that Alphabet has begun to cut spending to be better prepared. (See Alphabet Class A Stock Chart on TipRanks)
“In our view, Alphabet is well positioned to capitalize on the long-term trend in digital advertising, to participate in the shift of workloads to the cloud, and to benefit from digital transformation,” White explains his stance on Alphabet’s prospects for 2023. He reiterated a buy rating on the stock with a price target of $135.
The analyst noted that over the past five years, Alphabet has delivered annual revenue growth of 23% and operating income of 27%. Along with a dominant position in the search engine space with a leadership role in digital advertising, White believes the stock should trade at a healthy premium versus the technology sector over the long term.
White, a 5-star analyst on TipRanks, is ranked 71st out of more than 8,000 analysts tracked. Additionally, 62% of its reviews were profitable, with each review delivering an average return of 17.2%.
Verizon
wireless and wired communication services Verizon (vz) is another name on our top 5 list this week. One of the favorites of Tigress Financial Partners’ 5-star analyst Ivan Feinseth, Verizon is well-positioned to capitalize on continued growth in 5G wireless subscriptions, as well as new growth opportunities in fiber and fixed-line broadband connectivity.
Feinseth believes its “scale advantage” and prospects of rapidly deploying high-speed 5G connectivity in the US should spur continued mobile subscriber growth. (See Verizon Stock Investors Sentiment on TipRanks)
Verizon boasts a strong balance sheet and cash-flow generating capabilities that allow the company to invest in spectrum expansion and other growth initiatives. Additionally, a healthy financial position helps the company maintain a compelling dividend yield and consistent dividend increases.
“VZ’s expected near-term generation of $54.53 billion in economic operating cash flow (EBITDAR) provides the company with significant cash to fund the rollout of its high-speed 5G network, spectrum purchases, other growth initiatives, strategic acquisitions and ongoing dividend increases. said Feinseth, who ranks 283rd among more than 8,000 analysts on TipRanks.
The analyst reiterated a Buy rating and a price target of $64 (adjusted lower from $68) on VZ stock.
Notably, 58% of Feinseth’s ratings have generated profits, and each rating has yielded an average return of 10.3%.
MongoDB
Provider of a universal database platform MongoDB (MDS) is one of Feinseth’s buy stocks that we think will make a great portfolio addition this week. Feinseth said the company’s “industry-leading open-source database software structure” is attracting new customers.
Despite lowering its price target to $365 from $575, the company is well positioned to benefit from a gradual increase in corporate IT spending as companies adopt MongoDB’s highly customizable and scalable Database as a Service, said Feinseth. (See MongoDB Website Traffic on TipRanks)
“The rapid acceleration of hosted and hybrid cloud migration is driving increasing demand for scalable, customizable, and developer-friendly database architectures that will continue to drive the growth of MDB’s subscription-based revenue model. This will lead to a sustained acceleration in business performance trends, leading to increasing return on capital employed (ROC), leading to significant gains in economic profit and long-term shareholder value creation,” Feinseth explains his stance on MDB stock.