The market is looking treacherous right now to end September, but top analysts still believe there are compelling stocks out there with robust upside ahead.
Even in challenging economic times, there are still winners and losers. Indeed, some companies are benefiting from the current circumstances, while others continue to trade under-the-investor-radar. However, it's fair to say that it's best to pick your stocks wisely in case further volatility lies ahead.
One way to go about this is to follow the latest stock recommendations from analysts with a proven track record of success. TipRanks analyst forecasting service attempts 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 — factoring in the number of ratings made by each analyst.
Here are the best-performing analysts' six favorite stocks right now:
Ahead of Alibaba's Virtual Investor Day on September 28-30, five-star RBC Capital analyst Mark Mahaney has reiterated his buy rating on the Chinese e-commerce giant. That comes with a $300 stock price forecast- indicating 10% upside potential from current levels.
At the event, Mahaney will be listening for an update on the company's key business segments, including the recovery of Core Commerce, especially its Offline businesses like Local Consumer Services (Ele.me) and New Retail, which have seen the most disruption during the pandemic. He also expects updates on its fast-growing Cloud Computing segment, as well as Digital Media and Innovations.
"Despite the geopolitical headwinds, we continue to see Alibaba as intrinsically attractive, with shares trading at ~5x CY22E P/S and 18x CY22E EV/EBITDA on ~24% 3-yr estimated Revenue & EBITDA CAGR" cheered Mahaney on September 22.
He continues to believe the company remains one of the best plays on the growth of Chinese Internet. And with the majority (80%+) of Alibaba's revenue currently generated in China, BABA has significant room for international expansion going forward.
With a 21.2% average return per rating, TipRanks places Mahaney at #105 out of over 6,900 tracked analysts.
Top Northland Securities analyst Jason Wittes has just initiated coverage of medical tech stock NovoCure with a buy rating and $200 price target. From current levels, that suggests over 85% upside potential lies ahead.
Sparking this bullish outlook is NovoCure's promising Tumor Treating Fields (TTF)- a cancer therapy that uses electric fields tuned to specific frequencies to disrupt cell division, inhibiting tumor growth and potentially causing cancer cells to die.
According to Wittes, the company's TTF technology is already approved for GBM (glioblastoma) and MPM (malignant pleural mesothelioma), two of the most difficult to treat cancers. It has also demonstrated efficacy and safety in almost every solid tumor type and synergy with other therapies — a true fourth modality in the fight against cancer, says the analyst.
"2021 is set up with multiple late stage interim and final readouts, which should drive valuation as investors better account for a significant pipeline" he explained on September 23.
What's more, Wittes believes NVCR's pipeline is lower risk, because as long as the fields can get to the tumor, TTF works with a well understood mechanism. "Phase 2 results used to power the studies were encouraging and acceptance of TTF within the medical community continues to mount" he tells investors.
Tesla has just held its much-hyped Battery Day event. And while limited details may have frustrated some (shares dropped 7% in Tuesday's after-hours trading), top Oppenheimer analyst Colin Rusch liked what he heard.
He reiterated his buy rating on the controversial electric vehicle stock on September 23, and stuck to his $451 stock price forecast (19% upside potential).
TSLA outlined a robust reimagining of battery design, manufacturing, and performance including targeting a $25K vehicle in three years and 20x capacity increase by 2030, the analyst told investors.
"We are impressed with the ambition of the endeavor and believe this roadmap charts ongoing technology and cost leadership for TSLA enabling sales into the entire LDV market" Rusch wrote. Plus Tesla reiterated 30–40% delivery growth in 2020 (implied 478–515K) ahead of consensus estimates.
As a result, Rusch recommends buying on any weakness — arguing that TSLA could be a transformational technology company capable of delivering outsized returns.
"We believe the company's execution on Model 3 and Y volumes in the medium term and cost reduction, largely from a battery perspective, are critical to realizing positive incremental operating margin and cash flow necessary to support sustainable profitability" he explained.
A top 100 analyst on TipRanks, Rusch boasts a 29.4% average return per rating.
On September 22, Raymond James' Matthew McClintock boosted his price forecast on AutoZone from $1,300 to $1,500 (33% upside potential). "Want Turbo Fast Comps? They Got It!" the analyst exclaimed after the auto parts retailer reported a massive earnings beat.
Most impressively, AutoZone's comp sales increased 21.8%, easily beating the 10.8% consensus, while F4Q20 EPS surged 37% to $30.93- a whopping $5.78 above the $25.15 consensus.
"We believe AutoZone's improving parts availability, strong e-commerce fulfillment capabilities, and higher mix of DIY will lead it to gain further market share during the COVID-19 induced retail shakeout" the analyst commented post-print.
What's more, he believes AZO's favorable balance sheet metrics such as 1.9x current debt/ EBITDAR ratio could enable a quicker timeframe for potential resumption of buybacks (potentially during F1Q21).
"While some investors may be disappointed in lack of F1Q QTD commentary, AZO has a long track record of not providing QTD commentary, yet we believe this quarter provided more commentary than recent memory" McClintock added.
That's on top of an attractive valuation relative to its peer group, with AZO trading at 15x on the analyst's CY21 EPS estimate, reflecting a 24% discount to ORLY and a 7% discount to AAP.
Needham's Ryan MacDonald is one of the top 100 analysts tracked by TipRanks. That's thanks to his impressive 74% success rate and 33% average return per rating. And this week MacDonald has been singing the praises of cloud-based software stock HubSpot.
After attending HubSpot's virtual user conference, which saw strong year-over-year growth in attendance from 26k to 65k, MacDonald reiterated his HUBS buy rating and increased his price forecast to $325 from $275 (15% upside potential).
He cited increased optimism around the pace of recovery, due to strong adoption trends and positive commentary around retention heading into 2H20. For instance, CMS Hub has seen strong growth trends, with ARR (annual recurring revenue) of greater than $25M growing 45% Y/Y.
According to the analyst, INBOUND 2020 emphasized HubSpot's corporate segment with re-launches of Marketing Hub and Sales Hub Enterprise potentially reducing customer graduation rates and allowing HUBS to better grow with their customers.
While HUBS did not provide a guidance update, "management commented that the steps taken in the Spring resulted in a stabilization in retention and a tailwind to net new ARR growth since June" noted McDonald on September 23. "As such, we are confident that HUBS can return to pre-COVID growth levels while delivering margin expansion" he concluded.
Nike has just posted strong earning results, suggesting a significant rebound is underway. FQ1 GAAP EPS of $0.95 smashed consensus estimates by $0.47, while revenue of $10.6B beat by $1.45B. Management also guided to improving financial results in FY21 (May 2021).
Post-print, Guggenheim analyst Robert Drbul highlighted Nike as his 'Best Idea' out of all the retailers. He ramped his price target from $150 to a Street-high $165, highlighting an improving outlook, and high-margin digital growth.
Despite shares already soaring 25% year-to-date, the new stock price forecast suggests a further 30% upside potential lies ahead. Plus Drbul now expects FY21E revenue growth of 12.7% up from 7.7% previously- even with increased promotional activity during holiday season.
In short, Nike deserves a premium multiple, says the Guggenheim analyst as it is the leader in an athletic (and broader active/athleisure) industry with favorable secular tailwinds.
"Under the leadership of CEO John Donahoe, Nike is rapidly embarking on the next era of its company history; this will be digitally-led and likely defined by even greater separation vs. industry peers as well as from Nike's own historical rates of productivity, consumer engagement, and financial performance" he stated on September 23.