How to pinpoint top stocks primed to outperform during this uncertain time? Here are a few of the names the best-performing Wall Street analysts are betting on right now.
As we move into the second half of the year, it could make sense to follow the stock picks of analysts with a proven track record of success. Global markets may be moving higher in a tech-powered rally, but prolonged gains are still far from guaranteed. Coronavirus cases continue to surge to record levels, jobless claims are still high, and tensions with China remain elevated.
We used TipRanks analyst forecasting service to pinpoint Wall Street's best-performing analysts. These are the analysts with the highest success rate and average return measured on a one-year basis- and factoring in the number of ratings made by each analyst.
With that in mind, here are the best-performing analysts' five favorite stocks:
Five-star Oppenheimer analyst Rupesh Parikh termed warehouse retail chain Costco a 'Top Pick' on July 8, citing the company's 'monster global June delivery.' This came alongside a new Street-high stock price forecast of $355 (12% upside potential), up from $335 previously.
Specifically, US core same store sales increased 13.6% in the US, easily beating consensus of +7.6%- making this the first month that traffic was positive in the US since March. Plus the company also registered surprising strength in international markets.
Two-year US comp trends improved to 18.9% growth from 13.6% growth in May, while e-commerce momentum also remained robust (up 86.7% in June vs. 108.1% in May). "We look very favorably upon the well above expectation global comp delivery from COST in June" commented Parikh.
And with COST shares lagging since the March market lows, the analyst continues to see the potential for a catch-up trade from here. What's more, a special dividend is also increasingly likely in 2021, says Parikh, following the recent debt issuance.
According to TipRanks, Parikh is ranked at #268 out of over 6,700 tracked analysts.
On July 8, Top 25 RBC Capital analyst Alex Zukin reiterated his buy rating and $38 stock price forecast on workplace messaging service Slack Technologies. He made the move after Slack announced the acquisition of Rimeto, a modern business directory.
Traditional company directories offer names, phone numbers, locations, and emails. However, Rimeto goes a step further by integrating data from various sources to deliver rich employee profiles including skills, experience, projects, birthdays and location.
In a Work 2.0 world, where everything in a company needs to be remote-compatible, Zukin believes that "Rimeto provides a powerful cultural tool that can help strengthen employees to each other, their work, and their company… and will add significant contextual data to Slack's offering."
Longer-term, the deal should further develop Slack's position as the modern operating system for the enterprise. "We believe data is the key factor behind the acquisition – employee data, specifically" Zukin writes, stating: "Slack as not just a communication platform, but also a source of employee data that can be embedded into other applications."
With a strong 71% success rate, and 20.2% average return per rating, the RBC analyst comes in at #5 out of all the analysts tracked by TipRanks.
Shares in molecular diagnostics company GenMark have already exploded by 290% year-to-date. But according to Canaccord Genuity's Max Masucci the stock still has further room to run. He boosted his GenMark price target to $20 (from $17) following a preliminary Q2 update, featuring revenues that beat the Street by ~+28%.
Due to strength in coronavirus test sales and instrument placements, GNMK delivered Q2 preliminary revenues of $40.1M, surging 118% year-over-year, driven by ~$16.9M in SARS-CoV-2 testing revenues. That's as the company placed 71 net instruments in Q2 (90% included interest in coronavirus testing).
"GNMK is firing on all cylinders and rising to the challenge of a global pandemic, and we expect near-term catalysts to translate into long-term growth opportunities" cheered Masucci on July 8. He believes that the duration of GNMK's coronavirus testing opportunity is underestimated, and expects "COVID-driven instrument placements to seed the market for product launches and menu expansion beyond the global pandemic."
For instance, on June 29, GNMK launched its multi-target respiratory pathogen panel (RP2), which can identify 21 respiratory disease-causing pathogens, including SARS-CoV-2, from a single sample. Multi-target tests that can differentiate between flu and coronavirus are likely to be in high demand during the upcoming flu season, the analyst notes.
Top Rosenblatt Securities analyst Kevin Cassidy is now taking a more positive approach to hardware company Synaptics, following its savvy $250 million acquisition of Broadcom's wireless Internet of Things (IoT) business.
"We are upgrading SYNA to Buy from Neutral based on our estimated $0.45 - $0.55 accretion to our FY21 non-GAAP EPS estimates that the Broadcom wireless IoT connectivity business can provide" the analyst wrote on July 7.
He also ramped up his $66 stock price forecast to $73, arguing that with management's focus on IoT, the acquired $65mn/year revenue can grow roughly 5% - 10% annually. Shares in SYNA spiked 13% on the deal.
Along with revenue, margin and earnings accretion, Cassidy likes the acquisition for three key reasons: 1) Broadcom's wireless connectivity products are best-in-class; 2) Synaptics can cross-sell these products and open new markets/customers; 3) wireless products can create large competitive barriers to entry.
"Our Neutral rating on SYNA had been based on concerns for the mobile display business' low competitive barriers. This deal helps lower the company's dependence on the mobile display business" the analyst explained. He is ranked #157 out of 6,769 tracked analysts.
Digital marketplace ANGI Homeservices has just received the thumbs up from Wells Fargo's Brian Fitzgerald. On July 7, Fitzgerald raised his ANGI forecasts and ramped up the stock price forecast to $18 from $11 citing improving consumer demand outlook and higher market multiples.
Indeed, recent comScore visitation data and data points from hardlines retail and the building products sector suggest a significant/ongoing rebound in consumer demand. And according to Fitzgerald, households which remain employed are likely to plow some of their savings from childcare, commuting, travel and food/entertainment into home improvement and repair.
"We also view some continuing slack in the pro market as a positive for ANGI, likely, in our view, to drive a "goldilocks" scenario that should help drive strong service provider engagement with the platform and improving service request match rates" he wrote.
Plus significantly higher than typical cooling degree days, and a pause in state re-openings are likely positives for HVAC [heating, ventilation, aircon] service/repair trends over the summer months, says Fitzgerald, which he sees as another positive for ANGI.
This five-star analyst one of the Top 25 analysts tracked by TipRanks due to his strong success rate and 19.3% average return per rating.