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Stocks ended Friday positively, but an uncertain week – with a Federal Reserve meeting – lies ahead.
The three major moving averages posted gains for Friday’s session and were higher for the week. Nonetheless, investors are likely to be watching the upcoming Federal Reserve monetary policy meeting to see how the central bank will proceed with rate hikes. This means that a market shock could be imminent.
Investors need to look at short-term market developments and select stocks that can weather these uncertain times. Here are five stocks picked by Wall Street’s top pros according to TipRanks, a platform that ranks analysts based on their track records.
Premier K-12 Education Service Provider stepping (LRN) is a stable company that reported a decline in earnings but beat sales expectations in the most recent quarter. Additionally, the stock quietly entered oversold territory (with the Relative Strength Index dipping below the 30 mark), which is a sign for investors to get interested.
Alexander Paris, an analyst at Barrington Research, analyzed earnings performance and examined the outlook. The coming months have several headwinds linked to the broader economy, and the analyst trimmed its estimates for 2022 to reflect these. Nonetheless, Paris noted that although the company has provided guidance for lower margins for the year, management still “believes it can offset these expected declines later in the year through continued efficiency efforts.”
Despite near-term challenges, Stride reassured investors that it was still on track to meet its long-term (FY25) financial goals set in 2020, and that prompted Paris to reiterate a buy rating on the stock with a price target of $50. (See Stride Blogger Opinions and Opinions on TipRanks)
Paris ranks 207th among around 8,000 analysts tracked on TipRanks. With 56% profitable ratings, his beliefs on Stride are perhaps worth considering. Additionally, each of his reviews has averaged a 14.3% return.
Timken (TKR) designs, manufactures and markets bearings and power transmission products. Thanks to strong demand in the industrial market, the company has navigated quite well through 2022 despite supply chain setbacks and rising costs.
Last week, Timken comfortably beat Wall Street expectations in its most recent quarterly results, primarily due to its process industries division and complemented by lower corporate and interest expenses. Oppenheimer analyst Bryan Blair reiterated a buy rating and an $84 price target on the stock, citing several upsides.
“By combining Timken’s operational momentum, backlog position, solid end market values and improved price/cost ratio, we like the team’s prospects of achieving the revised 2022 EPS guidance and driving further earnings growth next year. TKR’s valuation should also prove supportive,” Blair said.
The analyst was also boosted by an increase in forecast for 2023, reflecting positive trends for next year. (See Timken Company Insider Trading Activity on TipRanks)
Blair, ranked 302nd out of approximately 8,000 analysts on TipRanks, has a 60% appraisal success rate. Additionally, each of his reviews has returned an average of 15.5%.
Solid State Switcher Texas Instruments (TXN) is another stock to watch for despite the recent weak forecast for the final quarter of the year. Susquehanna analyst Christopher Rolland seems to agree.
The company’s quarterly results came in higher than expected. Management expects most end markets (excluding Auto) to decline sequentially in the fourth quarter as “weakness has spread beyond Personal Electronics and is impacting Industrial, which has shown resilience so far.” (See Texas Instruments dividend date and history on TipRanks)
While this might sound worrying at first, Rolland said TXN stock is a great long-term investment because its enduring competitive advantage, achieved through size, far outweighs its short-term challenges.
“This scale helps provide an unmatched breadth of analog products (a 100,000 part catalog), comprehensive service and sales support, and manufacturing expertise,” said Rolland.
Rolland, ranked 62nd out of more than 8,000 analysts tracked on TipRanks, lowered the price target on the stock from $215 to $195 but maintained his buy rating on Texas Instruments. The analyst has had 63% success on its reviews over the past year, with each review returning an average of 19.8%.
Juniper Networks (JNPR), provider of products and services for high-performance networks, recently delivered strong quarterly results and a solid outlook. The company’s deal pipeline remains strong despite the challenges in the economy this year.
Based on what Needham analyst Alex Henderson has to say about Juniper, the stock is a firm buy.
“Juniper delivered a strong quarter, providing healthy but still supply-constrained guidance and showing confidence in its short-, medium- and long-term prospects,” the analyst said. (See Juniper Networks stock chart and stock technical analysis on TipRanks)
Henderson said the solid order backlog represents a strong upside for Juniper’s revenue growth over the next two to three years. The analyst thinks sales growth of 10% is possible during this period.
Henderson also cites “strong cash flow, improved product line, and expansion into the cloud and enterprise markets over time” as benefits that can help increase stock value and bolster the company’s financial health.
Henderson is ranked 144th among over 8,000 analysts followed on TipRanks. He has a 55% success rate and an average return of 17.3% per rating.
Provider of application delivery and security solutions F5 (FFIV) is another of Henderson’s favorite stocks for the season. The company recently beat sales and earnings estimates for the fiscal fourth quarter despite a significant slowdown in software revenue.
The only thing that worries Henderson is the revenue mix, which the analyst says is unfavorable. However, with management forecasting 9% to 11% revenue growth for FY23, Henderson felt compelled to raise its revenue and earnings per share estimates. (See F5 Networks Hedge Fund Trading Activity on TipRanks)
On the other hand, F5’s software business is currently vulnerable and a short-term recovery is uncertain. This issue prompted the analyst to lower the price target to $200 from $303. Nonetheless, Henderson maintained a Buy rating, reflecting his long-term bullish sentiment on FFIV stock.
“FFIV offers a strong mix of accelerated revenue growth, expanding GM and operating margins, strong balance sheet with $9.05/share cash, over $1.2 billion in authorized share repurchases and free cash flow generation. We expect the positive results to support a rising multiple as the stock increasingly plays with Kubernetes, modern application workloads and security,” said Henderson.