The fourth quarter has just begun, and Wall Street analysts are picking out the companies they believe have potential for the long run.
From video game producers to vacation ownership companies, the experts have weighed in on these companies' stocks, and they are bullish.
TipRanks is a financial data aggregator that uses its dynamic system like a radar, picking up what Wall Street's analysts have to say about the current market atmosphere. The state of capital markets remains a tangled world of information for even savvy investors, but by using TipRanks' unique tools, one can gain a clearer perspective on what the professionals are saying.
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Let's take a look at what their hypotheses are on these five stocks.
If viewed correctly, short-term concerns have the potential to be transformed into long-term gains.
Nike (NKE) recently reported earnings, and while it showed increases in demand and strong underlying business fundamentals, the firm did admit to struggling with persisting supply chain issues. Sam Poser of Williams Trading, however, sees this as the time to open a bullish position. (See Nike stock charts on TipRanks)
Poser rated the stock a Buy, and declared a price target of $196.
The five-star analyst asserted that despite the supply chain challenges, "the global health of the Nike brand has never been better." He perceives the headwinds to be of short-lived concern for investors and the company, and expects Nike to outperform its peers in both the near and distant future.
In its earnings call, Nike lowered its guidance expectations, but Poser calculates that the apparel retailer is on track to meet 2025 targets.
The Covid-19 pandemic had initially dragged down brick and mortar store sales, but this metric has nearly rebounded to the status it held before the government-mandated lockdowns. In North America, in-store sales increased more than 50% quarter-over-quarter, indicating a "robust demand" for Nike merchandise.
In a pool of over 7,000 expert analysts, Poser is rated by TipRanks as No. 249. His stock ratings have earned him a success rate of 55%, and brought him an average return of 24.8%.
For SaaS companies, big data is the name of the game.
The power of processing billions of data points from millions of vehicles on the road has provided Otonomo Technologies (OTMO) with a promising business model. The data analytics firm recently went public, and analysts now see even more upside and opportunity for monetization of its product offerings. (See Otonomo stock analysis on TipRanks)
One of those bullish analysts is Jack Andrews of Needham & Co., who wrote that Otonomo operates a "linchpin technology" that unlocks revenue for original equipment manufacturer and connected car investments." From his calculations, the stock provides a "favorable risk/reward setup with material upside," if it is successful in capturing its full potential.
Andrews initiated a Buy rating on the stock, and determined a 12-month price target of $10 per share.
The top analyst explained that the company has created a bridge between two promising sectors: automotive data and its analytics. As connected car prevalence increases, so do the number of possible applications for the data they generate. He noted that beyond major car manufacturers, new revenue opportunities could arise from insurance companies and concierge platforms incorporating OTMO's data.
In addition to enterprise players, Otonomo provides intelligence for municipal governments about how to design safer and more efficient urban plans.
One concern for the firm is a potential regulatory shift toward consumer privacy of the information shared by the vehicles, which would disrupt OTMO's standards of data.
Out of more than 7,000 analysts on TipRanks, Andrews ranks as No.158. Of his ratings, he succeeded 63% of the time, and returned an average of 25.3% on each one.
The Covid-19 pandemic has proved a formidable foe for the travel and leisure industry. After repeated government mandated shutdowns, the delta variant arrived late spring and caused more disruption. Marriot Vacations Worldwide (VAC) survived the storm, and is remaining relevant even in the current dynamic climate.
David Katz of Jefferies asserted that the company is poised for upside, and is one of his top stock picks for the leisure industry. (See Marriot Vacations insider trading activity on TipRanks)
Katz rated the stock a Buy, and assigned a 12-month price target of $190.
This bullish target takes into account headwinds from Covid-19, as well as ongoing wildfires across the western U.S. He expects the built-up consumer demand for vacations and timeshares to lead the company toward recovering from its pandemic-induced losses.
While the entire industry is set to experience this strong demand, Katz believes that VAC's links to Marriot International (MAR) and its brand awareness set it apart from the competition. Additionally, this connection gives VAC "access to the largest loyalty program in hospitality," providing the firm with a massive installed base.
On TipRanks, Katz comes in at No. 418 out of more than 7,000 financial analysts. From his ratings, he was successful 62% of the time, and brought in an average return of 21% per rating.
Dell Technologies (DELL) recently held its pivotal investor day, and laid out a clear roadmap to increasing free cash flow, market share, and general direction for the company in the long-term. Share repurchasing schemes, a focus on premium consumer products, and potential upside in infrastructure projects, all point the multinational tech firm toward an eventual higher valuation.
Amit Daryanani of Evercore ISI reported on the conference, bullishly reiterating a Buy rating and a 12-month $114 price target.
Daryanani explained that Dell announced a share repurchase program worth $5 billion in stock, as well as a quarterly dividend. In an effort to increase free cash flow, the tech company will keep its investments in mergers and acquisitions at a less significant profile. The analyst said that the conference sentiment was on-par to above his expectations. (See Dell Technologies risk factors on TipRanks)
Dell's infrastructure and cloud-based storage facing businesses could see "substantial opportunity" in the long-term, such as in remote access solutions and telecommunications software. The Covid-19 pandemic and the work-from-home shift bolstered trends toward PCs and gaming hardware. Dell understands this and intends to focus on more premium products for everyday consumers.
Ranking No. 355 out of over 7,000 analysts on TipRanks, Daryanani maintains a 63% success rate on his ratings. His stock picks currently average out to a 16.6% return.
While individuals were under pandemic-induced lockdowns, many people picked up playing video games as a way to pass the time. The companies that produce these game franchises benefitted from the trend, and Activision Blizzard (ATVI) was no outlier. Now, the firm has a "wave of content" headed to consumers' consoles, and analysts are bullish on the strong pipeline.
Andrew Uerkwitz of Jefferies delineated his bullish hypothesis on the stock, stating that Activision has an "underappreciated portfolio of high-quality content in the fastest growing segment in entertainment."
Uerkwitz declared the stock a Buy, and assigned a 12-month price target of $120 per share.
After running several possible scenarios regarding release dates and consumer reception for its upcoming titles, the five-star analyst still finds it hard to imagine further downside, even in bearish cases. Uerkwitz calculated a situation wherein a particular title underperformed, and Activision Blizzard still exceeded estimates for FY2021 earnings per share. (See Activision Blizzard's earnings history on TipRanks)
The company maintains strong gross margins, which are providing it with significant operating leverage. Elaborating on Activision's options, Uerkwitz added that it has tools for growth, such as share buyback schemes and investments in content, and can explore inorganic expansion through mergers and acquisitions.
Activision recently came to a settlement with the Equal Employment Opportunity Commission regarding a sexual harassment case. In his opinion, Uerkwitz sees the $18 million deal with the U.S. federal agency as a speed bump in an otherwise smooth year. The settlement removes concerns over worse regulatory penalties, although a less-than-stellar work environment could prove as downside if talent is to be driven away.
On TipRanks, Uerkwitz maintains a rank of No. 122 out of over 7,000 expert analysts. His success rate stands at 62%, and per rating he averages a return of 27.7%.