Jim Umpleby, CEO of Caterpillar Inc.
Adam Jefferies | CNBC
In these challenging times, it is crucial for investors to make informed decisions with a long-term perspective.
Here are five stocks picked by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their track records.
modern micro devices
semiconductor company modern micro devices’ (AMD) Fourth-quarter results exceeded Street’s expectations, although continued weakness in the PC market dragged down the company’s consumer segment revenue. Still, higher sales in the data center and embedded divisions helped offset weakness in the client and gaming segments.
Though AMD expects its revenue to fall about 10% in the first quarter of 2023, CEO Lisa Su remains optimistic about the company’s ability to gain market share this year.
Christopher Rolland, an analyst at Susquehanna, said the company’s customer and gaming results are better than feared. However, he noted that management’s weaker outlook for the data center in the first half came as a “surprise.”
“While sales to North American hyperscalers have more than doubled in 2022, management believes the cloud is now going through a 1 hour digestion phase and 2 hour bounce back to growth (we believe this supported by ramps from Genoa, Bergamo, MI300, and Pensando, all on track),” Rolland explained the guidelines for the data center segment. (See AMD Blogger Opinions and Opinions on TipRanks)
Overall, Rolland reiterated a buy rating on AMD with a price target of $88, saying he’d rather look beyond the uncertainty in 2023 “to a better 2024.” Rolland’s conviction deserves trust as he ranks 13th out of more than 8,300 analysts tracked by TipRanks. Additionally, 72% of its reviews were profitable, with each generating an average return of 21%.
Tesla
Leading manufacturer of electric vehicles Teslas (TSLA) Upbeat fourth-quarter results erased investor concerns about supply chain disruptions, the distraction surrounding Elon Musk’s Twitter acquisition and recently announced price cuts.
Tesla is focused on cutting costs and increasing productivity to counter short-term macroeconomic pressures and increasing competition. Factoring in potential supply chain issues and other possible headwinds, the company issued a production forecast of 1.8 million electric vehicles in 2023, although it has the potential to manufacture 2 million units.
Mizuho Securities analyst Vijay Rakesh projects that Tesla’s sales will grow 29% this year and 26% in 2024. The analyst stressed that its conservative growth estimates “reflect potentially weakening macro demand, offset by long-term transition trends in EVs.”
Rakesh reiterated a buy rating and a price target of $250, noting that Tesla has industry-leading margins and is on track to generate more than $10 billion in free cash flow compared to peers, which are still negative have free cash flow. (See Tesla Hedge Fund Trading Activity on TipRanks)
Rakesh ranks 113th among more than 8,000 analysts tracked on TipRanks. Additionally, 60% of its reviews were successful, generating an average return of 17.4%.
MC Donalds
After fast moving electric vehicles, fast food giant MC Donalds (MCD) is next on our list. McDonald’s beat expectations as the restaurant chain saw better-than-expected traffic at its domestic stores in the final quarter of 2022.
McDonald’s had robust comparable sales in its domestic and international markets thanks to “strategic menu price increases” in the US, attractive menu offerings and marketing campaigns such as the Happy Meal offer for adults. (See McDonald’s dividend date and history on TipRanks)
Despite difficult macroeconomic conditions, McDonald’s intends to continue expanding to add additional stores. It plans to open approximately 1,900 restaurants, including over 400 in the US and International Operated Markets segments. The remaining restaurants will be opened by development licensees and affiliated companies.
BTIG analyst Peter Saleh, who reiterated a buy rating and a price target of $280, expects McDonald’s to benefit from “moderate inflation, price-taking, easing of lockdowns in China and FX finally becoming a modest tailwind.” , will benefit.
Saleh is ranked #383 out of more than 8,300 analysts on TipRanks with a 65% success rate. Each of his reviews has returned an average of 12.3%.
Mondelez International
Mondelez International (MDLZ), recent results demonstrated the benefits of being a maker of robust product categories such as chocolate, cookies and baked snacks. The Oreo brand owner delivered robust sales growth, driven by higher prices, larger volumes and strategic acquisitions, including Chipita and Clif Bar.
Despite adverse currency effects and higher costs, Mondelez is confident of driving “attractive growth” in 2023 and beyond by increasing exposure to high-growth categories, cost discipline and continued investment in iconic brands. (See MDLZ stock chart on TipRanks)
JPMorgan analyst Kenneth Goldman, ranked 652 out of over 8,300 analysts tracked by TipRanks, thinks that with growing concerns about this key metric in the staples industry, it’s “refreshing to see at least one company surprise on the upside.”
Given the likelihood that several food makers will report weak volumes in the coming days, Goldman said it “may become increasingly important to own stocks of companies with (a) relatively inelastic categories, (b) strong and unique brands with limited private label competition, and ( c) a commitment to continually invest behind their brands.”
Consistent with its bullish stance, Goldman reiterated its buy rating and raised its price target to $74 from $71. It’s worth noting that 61% of its reviews were successful, generating an average return of 9.3%.
Caterpillar
Manufacturer of construction and mining machinery Caterpillar (CAT) ended 2022 with a double-digit increase in fourth-quarter sales, driven by steady demand and higher prices. However, investors seemed concerned about the impact of rising input costs and the stronger US dollar on the company’s bottom line.
Additionally, Caterpillar’s warning of weaker demand from China in 2023 didn’t sit well with shareholders. Nonetheless, based on healthy demand in its segments, the company is optimistic that overall sales and earnings will be higher this year.
Jefferies analyst Stephen Volkmann reiterated a buy rating following the fourth-quarter figures, keeping a price target of $285. Volkmann described the company’s price strength as an “outstanding advantage”.
The analyst also noted that demand for Caterpillar products remains strong, as evidenced by a $400 million sequential increase in backlog in the fourth quarter. (See Caterpillar’s Insider Trading Activity on TipRanks)
Volkmann’s recommendations are worth considering as he is ranked 51st out of more than 8,300 analysts tracked by TipRanks. Notably, 69% of Volkmann’s reviews generated profits, with each review yielding an average return of 19.9%.