A logo of Meta Platforms Inc. is seen at its booth at the Viva Technology conference on innovation and startups at the Porte de Versailles exhibition center in Paris, France, June 17, 2022.
Benoît Tessier | Reuters
Signs of a possible labor market slowdown are looming and are raising concerns about an impending recession, but investors would do well to ignore those sounds.
Instead, investors should look for stocks with strong fundamentals and robust growth potential — two traits that can get them through a rough patch in the market.
To that end, here are five stocks handpicked by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
meta platforms
Weakness in digital ad spend due to macro pressures has hit the social media giant meta platforms (META) in recent quarters. Nonetheless, the company is reducing its workforce, canceling lower-priority projects and cutting non-headcount-related expenses to improve profitability.
While Meta calls 2023 the “Year of Efficiency,” JPMorgan analyst Doug Anmuth says the company is “building the critical muscle for financial discipline over the long term.” (See Meta Platform Financial Reports on TipRanks)
Anmuth expects Meta’s revenue to return to double-digit growth in the second half of 2023 and 2024, driven by several key drivers such as artificial intelligence and product-driven improvements to the ad stack following the implementation of Apple’s app tracking transparency feature, the surge into the Reels engagement and monetization, and solid growth in click-to-message ads.
“Although Meta shares have more than doubled from early November lows, we still believe there is significant upside ahead, driven by accelerating top-line growth, continued cost efficiencies and a still-attractive valuation,” the analyst said .
Based on its optimistic investment thesis, Anmuth increased its price target for December 2023 for META shares from USD 225 to USD 270 and reiterated its Buy rating. He is ranked 157th among the more than 8,300 analysts tracked by TipRanks. Its ratings were profitable 58% of the time, with each rating delivering an average return of 14.5%.
SoFi Technologies
Next on our list is the fintech company SoFi Technologies (SOFI), which offers digital financial services to over 5.2 million members. SoFi recently announced the acquisition of fintech mortgage lender Wyndham Capital Mortgage. The acquisition is expected to drive SoFi’s mortgage growth and operational efficiencies and expand its mortgage product offering.
Jefferies analyst John Hecht, ranked 366th out of more than 8,300 analysts tracked by TipRanks, expects the Wyndham acquisition will help SoFi accelerate its mortgage origination volume “while SOFI bank expands its deposits continues to increase at an accelerated pace of 7.3x in 2022.” Note that SoFi’s mortgage segment accounted for about 4% of total lending in Q4 2022.
The analyst also stressed that the Wyndham acquisition would “minimize” SoFi’s reliance on third-party partners and processes, resulting in cost savings over the long term.
Hecht reiterated a Buy rating on the stock with a price target of $8, saying, “We are positive on the transaction as it is strategic and will enhance SOFI’s mortgage segment, while we use the current fintech valuation environment as an opportunity to upgrade.” build the next one mtg. Cycle.”
Hecht has a 59% success rate and each of his reviews has returned an average of 9.2%. (See SoFi Insider Trading Activity on TipRanks)
PVH
clothing company PVH (PVH), which owns popular brands like Calvin Klein and Tommy Hilfiger, delivered better-than-expected results for the fourth quarter of fiscal 2022. The company looks to the future with optimism, supported by its PVH+ plan, a multi-year direct-to-plan consumer and digital-led growth strategy aimed at further strengthening the Calvin Klein and Tommy Hilfiger brands.
Guggenheim analyst Robert Drbul believes the PVH+ plan would result in favorable earnings revisions and multiple expansion. The analyst sees “an attractive risk/reward profile” in PVH stock based on the company’s earnings growth potential and current valuation.
“We believe in the global strength of the Tommy and Calvin brands and the company’s ongoing margin initiatives, which we expect will position PVH favorably as the world continues to open up and recover,” the analyst said.
Drbul raised its price target on PVH shares to $110 from $105, reiterating a Buy rating based on the company’s rationalization efforts, revenue growth potential and margin expansion opportunities.
Drbul ranks 364th among the more than 8,300 analysts followed by TipRanks. Its ratings were profitable 62% of the time, with each rating delivering an average return of 8%. (See PVH stock chart on TipRanks)
Walmart
Drbul is also bullish on the retail giant Walmart (WMT). After attending the company’s investment community meeting in Tampa, Fla., the analyst reaffirmed a buy rating on Walmart with a price target of $165.
Drbul said Walmart is well positioned in the current retail environment and has one of the strongest leadership teams, mainly referring to its CEO, Doug McMillon, who he called “one of the best visionaries.” Despite the ongoing uncertainty, Drbul expects WMT shares to make new highs as the company continues to execute on its growth strategy. (See Walmart Insider Trading Activity on TipRanks)
The analyst highlighted the significant strides Walmart has made in e-commerce and its focus on technology. E-commerce now contributes $82 billion, or 14% of Walmart’s total sales, up from $25 billion, or 5% of sales five years ago. Walmart sees an opportunity for its e-commerce business to hit $100 billion in the near future.
“By combining the key goals and strategies of this gathering with its relentless technology-enabled focus, Walmart is executing several initiatives that are proving to be margin-enhancing, including its focus on automation and its market fulfillment initiatives that further leverage technology and robotics,” said Drbul.
Overall, he’s bullish on Walmart’s long-term strategy, including its efforts to improve the omnichannel shopping experience and build a more diversified profit base “led by a growing marketplace and fulfillment services, advertising, financial services, data monetization and healthcare.” Offer.”
Airbnb
Airbnb (ABNB), an online short-term rental marketplace, ended 2022 with market-leading fourth quarter results. The company is benefiting from pent-up travel demand despite ongoing macroeconomic pressures.
Recently, Tigress Financial Partners analyst Ivan Feinseth raised his target price on ABNB shares from $160 to $185 while maintaining a Buy rating. The analyst acknowledged that the company continues to benefit from solid travel demand and the shift in consumer preference towards “alternative, less expensive accommodations.”
“ABNB remains at the forefront of how consumers prefer to travel, offering a wide range of accommodation choices from budget to extravagant, meeting needs for a wide range of lengths of stay, while significantly benefiting from the ongoing hybrid work and travel lifestyles Reisetrends benefits,” said Feinseth.
He anticipates a notable increase in Airbnb’s ROI over time, fueled by booking fee revenue from its asset-light business model. The analyst listed several drivers for the company’s future growth, including the ability to increase capacity by adding new hosts, investment in new technology, international expansion, co-branded buildings and growing partnerships with travel service providers.
Feinseth ranks 154th among the more than 8,300 analysts tracked by TipRanks. Additionally, 62% of its ratings were profitable, with an average return of 12%. (See Airbnb Hedge Fund Trading Activity on TipRanks)