Clifton Pemble, President and CEO, Garmin at the NYSE December 7, 2021.
Investors have no shortage of worries, be it the economy slipping into a recession due to higher interest rates or the havoc that whiplashed financial stocks last week.
Nevertheless, there are buying opportunities for those who know where to look.
Here are five stocks to weather the storm, according to Wall Street’s top professionals on TipRanks, a platform that ranks analysts based on their past performance.
Cloud companies are experiencing a marked slowdown in their growth rates as macro challenges affect enterprise spending. Despite the ongoing pressures, cloud-based data warehouse company Snowflake (SNOW) delivered upbeat quarterly results.
Snowflake expects its product revenue to grow by 40% in fiscal 2024, marking a deceleration from the 70% rise recorded in fiscal 2023 (ended Jan. 31, 2023). Nonetheless, Snowflake continues to be optimistic about its growth in the years ahead and expects to achieve its product revenue target of $10 billion in fiscal 2029.
Deutsche Bank analyst Brad Zelnick agrees that Snowflake is “not immune from cloud growth moderation.” (See Snowflake Blogger Opinions & Sentiment on TipRanks)
That said, Zelnick reiterated a buy rating on Snowflake with a price target of $170, saying, “We still firmly believe the long-term outlook remains intact for Snowflake, with its unique multi-cloud architecture, rich platform features, data sharing capabilities and native app development tools positioning it to capture the massive Data Cloud opportunity.”
Zelnick ranks 85th out of more than 8,000 analysts followed on TipRanks. His ratings have been profitable 69% of the time, generating a 14.9% average return.
Let’s move to another cloud company, Salesforce (CRM), which recently reported solid results for the fourth quarter of fiscal 2023 (ended Jan. 31, 2023). The company expects fiscal 2024 revenue to grow by about 10%. While that number indicated a slowdown compared to the 18% growth seen in fiscal 2023, it did come in ahead of analysts’ estimates.
Moreover, Wall Street experts welcomed the company’s profitability projections. Salesforce has been under pressure from several activist investors, including Elliott Management and Starboard Value, to improve its profitability. (See Salesforce Insider Trading Activity on TipRanks)
Mizuho analyst Gregg Moskowitz, who holds the 264th position among more than 8,000 analysts on TipRanks, said that he is “encouraged by the recent activism in CRM over recent months.” The analyst also highlighted the company’s restructuring efforts and its fiscal 2024 operating margin outlook of 27%, which he observed was “even well above the most bullish expectations.”
“Notwithstanding macro challenges, we reiterate that CRM remains well situated to help its vast customer base manage revenue and process optimization via digital transformation,” said Moskowitz.
Moskowitz reaffirmed a buy rating and raised his price target for CRM stock to $225 from $200. Per TipRanks, 55% of Moskowitz’s ratings have generated profits, with each rating bringing in a return of 13.1%, on average.
Next on our list is athletic goods retailer Hibbett (HIBB), which sells footwear, apparel and equipment from top brands like Nike and Adidas. The company’s fiscal 2023 fourth-quarter results missed expectations due to macro pressures, higher costs, supply chain issues and increased promotional activity.
Hibbett expects mid-single-digit sales growth in fiscal 2024, driven by its assortment of high-demand footwear. Also, the company is conducting a “systematic review” of its operating expense structure to improve profitability. (See Hibbett Stock Chart on TipRanks)
Williams Trading analyst Sam Poser highlighted that Hibbett’s relationships with key brands, mainly Nike, are very strong. Additionally, the analyst thinks that the retailer has “the best in class omni-channel, consumer facing operation” in his coverage, which is reflected by the 21.4% rise in digital sales in the fiscal fourth quarter.
Poser lowered his fiscal 2024 and fiscal 2025 earnings per share estimates, given that the company’s recent results lagged guidance. Nonetheless, he reiterated a buy rating on Hibbett and a price target of $82 because he is “confident that HIBB’s guidance is far more realistic, prudent, and conservative than it has been in some time.”
Poser is ranked No. 144 among more than 8,000 analysts tracked on TipRanks. His ratings have been profitable 55% of the time, with each rating delivering a return of 17.6%, on average.
Cybersecurity company Zscaler‘s (ZS) fiscal second-quarter results crushed the Street’s expectations, with a 52% increase in revenue.
Nevertheless, ZS stock fell as investors seemed concerned about the company’s billings guidance of about a 9% sequential decline in the fiscal third quarter, compared to the mid-single digit declines seen over the last few years. Delays in large deals due to macro woes impacted the company’s outlook.
TD Cowen analyst Shaul Eyal remains bullish about Zscaler and reiterated a buy rating with a price target of $195 following the results. “In our view, despite macro uncertainty and elevated deal scrutiny, ZS occupies a strong competitive position as it addresses a $72B market opportunity,” said Eyal.
The analyst thinks that the company is well positioned to achieve its longer-term targets, including annual recurring revenue of $5 billion, operating margin of 20% to 22%, and free cash flow margin of 22% to 25%. (See Zscaler Hedge Fund Trading Activity on TipRanks)
Eyal holds the 15th position among more than 8,000 analysts on TipRanks. Additionally, 66% of his ratings have been profitable, with an average return of 24.1%.
Garmin (GRMN) is a leading provider of GPS-enabled-based devices and applications. Last month, the company reported a decline in its fourth-quarter revenue due to currency headwinds and lower demand for its fitness products.
Tigress Financial analyst Ivan Feinseth expects the company’s ongoing innovation and new launches, strength in aviation, and growing opportunities in wellness and automotive OEM (original equipment manufacturer) businesses to reaccelerate trends.
Feinseth is particularly confident about Garmin emerging as an industry-leading automotive OEM supplier. The company’s automotive OEM revenue increased by 11% to $284 million in 2022. The analyst expects the automotive segment to see annual growth of 40%, reaching a revenue run rate of $800 million by 2025. He expects this growth to be led by the company’s industry-leading product categories of in-cabin domain controllers, infotainment systems and other in-cabin connected interfaces.
Feinseth, who ranks 189th on Tipranks, reiterated a buy rating on Garmin stock with a price target of $165. The analyst’s ratings have been profitable 62% of the time, with an average return of 12.2%. (See Garmin Financial Statements on TipRanks)
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