Wall Street analysts recommend these stocks as supply chain fears hit the economy

Published Sat, Sep 25 20218:05 AM EDT

Supply chain snafus continue to cause ripples with major companies like Nike , but Wall Street analysts this past week named some of their favorite ways for investors to profit from this ongoing fear. Analysts say these buy-rated stocks are relatively insulated from the supply chain concerns that are currently plaguing the economy. CNBC Pro combed through some of the top Wall Street research to find the best buying opportunities as the supply chain crunch rolls on. They include: Motorola , Steve Madden, Leslie's , Vizio and Enphase. Leslie's There's no supply chain fears for the swimming pool and supplies chain company, according to Stifel analyst W. Andrew Carter. The firm recently initiated coverage of the stock with a buy rating and says in fact, the company's "unique" supply chain is one of the biggest reasons for investors to be bullish. "Our outlook suggests the company's pricing power, advantaged supply chain, and private brands will facilitate continued EBITDA margin expansion with EBITDA up 23% over the next two years," the firm wrote. Carter noted that the pandemic has accelerated the company's growth and there's no signs of a slowdown. This could also make the company an attractive M & A candidate, Carter added. "While we have no knowledge of M & A, we believe Leslie's supply chain and direct consumer connection would offer significant value to large national retailers able to realize meaningful cost and revenue synergies," he wrote. Shares are down almost 21% this year but the stock is undervalued and a perfect buying opportunity, Carter added. Steve Madden "A supply chain winner with 30% potential upside" Jefferies analyst Janine Stichter said earlier this week. The firm upgraded its rating on the shoe company to buy from hold mainly due to the company's "best-in-class supply chain" which Stichter wrote is "an even bigger asset in an unprecedentedly difficult supply chain environment." "While short lead times and sourcing expertise have long been SHOO's key competitive advantage, we believe this is further amplified in the current environment of widespread supply chain bottlenecks," she added. In addition, very few companies have the inventory that Steve Madden does, according to Stitchter. "We see this driving greater visibility vs. peers and also accelerated share gains given relatively better ability to meet demand," Stitchter said. Shares are up 4% this month and the stock's valuation is also quite attractive, the firm said. "Shares trade at a discount to history/ many peers," she wrote. Vizio Meanwhile, Needham analyst Laura Martin said this week that she believes that the electronics maker has one of the most robust pipelines on Wall Street. "We expect 4Q21 Active Account adds to be above current consensus averages because we believe Vizio has solved many of the supply chain issues it identified as gating factors on its last earnings call," she said. Martin met with the company's management recently and says this should comfort investors as it gives the company an edge over peers. "The company believes its 20-year track record with supply chain and retail shelf space relationships will continue to be a material competitive advantage vs other OS (operating system) competitors, historical and new," she wrote. Additionally, Martin says Vizio has "leveraged strong relationships with its supply chain and shelf space allocations at retail to become the #1 leader in soundbar sales." Martin went on to say Vizio is a safer investment than Roku right now in part because Vizio is a newer company that will likely learn from and copy Roku's roadmap to profit growth. Shares of Vizio finished the week up just over 2%. Leslie's- Stifel, Buy rating "We believe LESL would offer significant value to national retailers - value likely to increase as the company executes its agenda providing added opportunity for the shares. ... . Our outlook suggests 23% EBITDA growth over the same period with Leslie's scale, direct vendor relationships, pricing power, & private brands growth facilitating continued margin expansion. ... .While we have no knowledge of M & A, we believe Leslie's supply chain & direct consumer connection would offer significant value to large national retailers able to realize meaningful cost and revenue synergies. Motorola Solutions- Jefferies, Buy rating "This business is clicking on all cylinders right now. Further, we see significant new catalysts with Federal stimulus dollars starting to enter MSI's sales funnel. ... .Safe(r) Haven From Supply Chain Issues? The company declined to state how much revenue is getting held up by supply chain constraints. We think it's fairly minimal, and it's centered on their PCR business. They noted that – given their position in Public Safety – component suppliers are prioritizing MSI for parts deliveries." Enphase- Piper Sandler, Overweight rating "We recently spent some time in Fremont, CA with ENPH. Our discussion primarily revolved around supply-chains and the evolving competitive landscape. The near-term outlook remains intact as ENPH continues to anticipate improving supply in 2H'21. ... . Competition within ENPH's sector is heating up; however, we believe the company possesses the building blocks for continued success. ... .ENPH remains our favorite solar name." Steve Madden- Jefferies, Buy rating "SHOO's best-in-class supply chain & proactive measures to circumvent disruption are an even bigger asset in an unprecedentedly difficult supply chain environment. We see this driving greater visibility vs. peers & also accelerated share gains given relatively better ability to meet demand. ... .SHOO's supply chain expertise is more important than ever. While short lead times and sourcing expertise have long been SHOO's key competitive advantage, we believe this is further amplified in the current environment of widespread supply chain bottlenecks." Vizio-Needham, Buy rating "We expect 4Q21 Active Account adds to be above current consensus averages because we believe Vizio has solved many of the supply chain issues it identified as gating factors on its last earnings call. ... Vizio has leveraged strong relationships with its supply chain & shelf space allocations at retail to become the #1 leader in soundbar sales, which has 2x higher margins than TV revs & has a high attach rate to many types of connected TVs (CTVs), not just Vizio TVs. ... .The company believes its 20-year track record with supply chain & retail shelf space relationships will continue to be a material competitive advantage vs other OS (operating systems ) competitors, historical and new."

Steve Madden store with shopper passing by.

Jeff Greenberg | Universal Images Group | Getty Images

Supply chain snafus continue to cause ripples with major companies like Nike, but Wall Street analysts this past week named some of their favorite ways for investors to profit from this ongoing fear.