A Boeing 777X aircraft takes off during its first test flight from the company’s facility in Everett, Washington January 25, 2020.
Terray Sylvester | Reuters
February got off to a dramatic start as big tech companies including Meta Platforms and Amazon released quarterly results and sent major averages tumbling.
While the short-term turbulence is enough to unsettle most investors, it takes a long-term perspective to see through the dramatic swings in stock prices. To that end, top analysts are highlighting the companies they believe have long-term potential, according to TipRanks, which tracks the top-performing stock pickers.
Here are five stocks Wall Street analysts find compelling.
The turmoil in tech stocks isn’t the only thing giving investors indigestion. Bitcoin and other cryptocurrencies have seen strong moves — and the stocks of companies mining the flagship crypto have also suffered.
According to Jefferies’ Jonathan Petersen, one company is starting to look like an attractive buy: Marathon Digital Holdings (MARA). Marathon’s strong peg to Bitcoin’s spot price has exposed its shares to volatility. Rather than pull out, however, the company has invested in even more mining infrastructure and is currently on track to control the largest market share in its industry. (See Marathon Digital Insider Trading Activity on TipRanks)
Petersen expects this milestone to be reached later this year. He reckons Marathon Digital holds about 1.9% of the total mining market, and he expects that number to grow to over 5% once his new hardware is deployed.
After calculating MARA’s growth potential, the analyst sees “the miners as a better investment than BTC.”
Petersen rated the stock as a buy with a price target of $51.
The analyst noted that MARA has placed more deposits for its miners than any of its competitors. Additionally, the company uses third-party data centers to speed up its deployment processes. Petersen wrote that “MARA’s strategy for future growth of using data center hosting providers sets the company apart from some of its biggest competitors.”
This method ensures lower operating costs in the short term, but may pose a problem years later when margins shrink after Bitcoin’s halving in 2024. A bitcoin halving event halves the cryptocurrency mining reward and decreases the rate at which new bitcoins are circulated. It happens about every four years.
Petersen is rated #290 by more than 7,000 analysts. His success rate is an impressive 72%, and his stock picks have produced an average return of 20.8%.
Another name that has fallen significantly from its November highs is Roblox (RBLX), which has been dragged into the decline of technology and growth over the past two months. The stock was heavily influenced by Meta Platforms (FB) are pivoting toward the Metaverse, and it appears that the stock price has been unsustainable.
Despite the rotation, the video game developer is expected to continue to play a strong role in emerging Metaverse opportunities. The stock is down more than 50% since its peak in mid-November. (See Roblox Stock Charts on TipRanks)
Stifel’s Drew Crum noted that Roblox “has shown both annual and sequential wins.” He said the company ranked third globally in December 2021 compared to other popular gaming platforms.
Crum gave the stock a Buy rating and a price target of $110.
The analyst was encouraged by RBLX’s progress in terms of relevance among its peers on both iOS and Xbox systems, as well as its robust organic growth in bookings revenue.
Crum believes that “Roblox represents a compelling game with the convergence of content and social, two ‘viral loops’ that provide a mutually reinforcing network effect that together should drive high engagement and therefore monetization across its platform.”
On TipRanks, Crum is ranked 121st out of over 7,000 financial analysts. He got the stocks right 69% of the time and averaged a 39.3% return on his ratings.
Boeing (B.A) was plagued by his 737 Max saga, a story that saw his new planes grounded around the world. However, many countries have since recertified it, and Boeing is seeing new orders for other aircraft.
RBC Capital Markets’ Ken Herbert pointed out that Qatar Airways recently placed an order for 34 new 777X freighters with an option for 16 more. (See Boeing Risk Factors on TipRanks)
Herbert rated the stock as a Buy and calculated a price target of $265 per share.
Referring to a potential industry-wide recovery, the analyst noted that he expects “continued strength to support activity to support a positive view on aerospace fundamentals.” As consumer spending continues to boost e-commerce activity and shipping costs remain high, airlines are shifting focus to cargo operations.
This strategy comes as vacation and business travel have an ongoing impact and airlines have been sent to recover losses. Additionally, the new fuel-efficient 777X cargo jets are particularly attractive at a time when oil commodity prices remain at sky-high levels.
TipRanks ranks Herbert 214th out of more than 7,000 professional analysts. He was successful at picking stocks 64% of the time, and has averaged a 27.3% return on each of them.
modern micro devices
Chipmaker Advanced Micro Devices (AMD) narrowly beat Wall Street consensus estimates in its earnings report, posting “spectacular March guidance,” according to Susquehanna’s Christopher Rolland. (See yield data from Advanced Micro Devices on TipRanks)
The analyst rated the stock as a Buy and raised his price target to $180 from $175.
Rolland stated that AMD is strong in all of its businesses and remained upbeat about the company’s prospects. He noted that the DC GPU segment saw robust deliveries and increased profitability in the Enterprise, Embedded and Semi-Custom (EESC) segment. The latter performed tremendously, with fourth-quarter gains almost double those of all of 2020.
Rolland added that the acquisition of Xilinx, a programmable logic semiconductor company, is expected to close in the next two weeks. AMD is also in the process of ramping up production of its Milan-X processor, with the Genoa and Bergamo chips expected to support the product cycle through the second half of the year.
Rolland concluded by mentioning that AMD had repurchased about $1 billion worth of stock and that “we encourage investors to do the same.”
Out of more than 7,000 expert analysts, TipRanks ranks Rolland 4th. His stock ratings have been proven correct 86% of the time and have an average return of 53.4%.
Blocks (Q), the rating skyrocketed as consumers turned to contactless and app-based payment systems. However, as trends slowed last quarter, coupled with a sell-off in tech and growth, SQ shares are down about 62% from their peak last August.
The fintech “super app” company recently completed its acquisition of “buy now, pay later” firm Afterpay, and JPMorgan’s Tien-Tsin Huang is optimistic about the possibilities. He is confident that the company’s integration will be used to monetize and increase gross profits, and will fit seamlessly between Block’s seller and cash app ecosystems.
Huang rated the stock as a buy with a price target of $200.
The analyst said the stock currently trades at an attractive discount compared to its super app peers, especially considering its “large and untapped addressable market, unique growth characteristics, and an equally unique mission and corporate culture” that all of its own justify assessment. (See Block website traffic on TipRanks)
Huang is optimistic about Afterpay’s capabilities, saying that allowing sellers to offer installment payments to their customers is “just the beginning”. He expects the two-way network will accelerate Cash App’s engagement, user acquisition on Cash Card and Block’s international footprint overall.
Huang is ranked #238 out of over 7,000 financial analysts in the TipRanks database. 66% of his stock picks were successful, earning him an average of 31.8% per share.