Jim Umpleby, CEO of Caterpillar Inc.
Adam Jefferies | CNBC
Investors took a break last week as Friday’s major averages ended in gains, but volatility is likely to remain a key theme going forward.
Investors are not only considering the recently announced Federal Reserve rate hike, but are also considering inflation and the war between Russia and Ukraine. It’s easy to get caught up in the stock market’s daily swings, but investors need a long-term perspective to navigate the turmoil.
Wall Street pros have picked their favorite stocks and highlighted the names they think have long-term potential, according to TipRanks, which tracks the best-performing analysts.
Here are five names to watch this week.
oracle
oracle (ORCL) looks more appealing to tech investors, according to Brian White of Monness, Crespi, Hardt & Co.
The giant tech conglomerate managed to recently report “respectable” profits as well as a “healthy” outlook for its future, he said. The analyst noted that ORCL’s revenue growth is currently the highest since the company switched to cloud-based solutions.
White categorized the stock as a Buy and added a price target of $126.
The analyst wrote, “Oracle offers investors a high-quality value play with an opportunity to participate in an attractive cloud transformation.” The company’s relationships with TikTok and in the healthcare sector remain a source of encouragement, and there is strong momentum in SaaS -Business.
However, White noted that the current volatility in technology stocks may continue to weigh on ORCL stocks. Additionally, it’s not really clear if investors are excited about Oracle’s proposed $28.3 billion acquisition of healthcare IT company Cerner.
White is ranked #265 by TipRanks out of nearly 8,000 analysts. His win rate is 60%, and he’s returned an average of 25.2% on his stock picks.
Take Two Interactive
Take Two Interactive (TTWO) was recently denied after TTWO filed its S-4 form with the Securities and Exchange Commission regarding its acquisition of Zynga. However, Jefferies Group’s Andrew Uerkwitz sees the consistent price action as overdone.
In a published report, the analyst reiterated his case for Take-Two, stating that the stock offers “unprecedented value today.” Additionally, he estimates the strength of the video game publisher’s net bookings, which he expects to increase through FY24 and FY25.
Uerkwitz rated the stock as a buy with a price target of $231.
He said those metrics have traditionally been conservative despite lenient guidance from TTWO management.
Take-Two has complemented its vast pipeline of content with significant investments in R&D and more recently in sales and marketing. Uerkwitz wrote that the company “owns some of the highest quality content among US publishers” and that an “unprecedented wave of content” is expected to spill over the market. (See Take Two Risk Analysis on TipRanks)
The analyst didn’t rule out a positive re-rating of the stock in the future – once its pipeline becomes more visible.
Out of nearly 8,000 analysts in the TipRanks database, Uerkwitz is ranked 152nd. He has been successful in evaluating stocks 61% of the time, and has an average score of 27.7% on each evaluation.
service now
As workers return to the office, speculation arose that corporate IT spending would also fall. However, Wall Street believes secular tailwinds will continue to boost ServiceNow (NOW).
Brian Schwartz of Oppenheimer & Co. argued this case in his recent report on the stock, noting that the “general demand for modern cloud software, digitization of workflows, business continuity and analytics” aligns with NOW’s business model.
Schwartz rated the stock as a buy and calculated a price target of $660 per share.
Acknowledging the uncertainty and resulting volatility surrounding high growth and technology stocks, the analyst emphasized the short-term investment risk. However, Schwartz also hypothesized that ServiceNow’s industry peers lag far behind the company in terms of sheer number of satisfied customers.
Despite a reported slowdown in IT spending, Schwartz expects a strong recovery for ServiceNow in back-office business and demand. (See ServiceNow stock charts on TipRanks)
The analyst is ranked 19th out of almost 8,000 analysts on TipRanks. His stock picks were right 68% of the time, resulting in average returns of 48.5% each time.
SentinelOne
As the war between Russia and Ukraine continues, many expect cyberattacks on the West to increase. The need for more cybersecurity has profiled companies like SentinelOne (S).
Even before this development, SentinelOne maintained its position as the fastest growing company in coverage by Alex Henderson of Needham & Co. The analyst recently said that SentinelOne’s “purpose-built platforms designed for this market have a significant advantage and are expected to drive market share gains.”
Henderson categorized the stock as a Buy but stated a lower price target to $50 from $82.
Despite the guidance cut, Henderson remained upbeat about the company’s prospects. He said that the cybersecurity company recently released its quarterly results on a strong note, outperforming in areas such as customer growth and revenue.
Aside from its operating margins, which were tighter than one would prefer, Henderson highlighted the company’s technology in a competitive market. (See SentinelOne Hedge Fund Activity on TipRanks)
Additionally, SentinelOne’s management hasn’t included the recently announced acquisition of identity-recognition software company Attivo in its guidance. The merger’s contributions to SentinelOne will be just an added bonus in next quarter’s report.
Henderson is ranked 110th out of nearly 8,000 expert analysts. His win rate is 60%, and he’s returned an average of 31% on his stock picks.
Caterpillar
Russia’s war against Ukraine has contributed to rising commodity prices, especially given Moscow’s importance as a mining exporter. This development has also boosted the shares of companies that facilitate extraction elsewhere, such as B. Caterpillar (CAT).
The world’s largest manufacturer of mining equipment, engines and turbines is well positioned to capture a significant chunk of the rising spending in the sector. Jefferies Group’s Stephen Volkmann noted that Russia will not be welcomed back into global markets any time soon and that operations within its borders cannot be relied on.
Volkmann has upgraded the stock to a buy and has set a price target of $260.
The prominent company has historically been used by investors as an inflation hedge, and in a world of galloping rising costs, Volkmann anticipates a decade of reinvesting in his machines.
The analyst said that the war in Eastern Europe “is fundamentally reshaping global commodity markets, leading to structurally higher prices and supply diversification in both the mining and oil and gas sectors.”
Beyond its core commodity-related business, CAT is engaged in the commercial construction industry, which is vulnerable to the increasingly likely effects of stagflation. However, Volkmann sees possible losses as little more than a dent in the rating of Caterpillar. (See Caterpillar Dividend Data on TipRanks)
On TipRanks, Volkmann is rated #231 by nearly 8,000 analysts. He was right 67% of the time on stock picks and averaged a return of 23.5% on each.