Despite the encouraging signs that the economy is throwing our way, the lingering fear of a recession occurring in 2023 has not left the market. Amid this uncertainty, a longer-term outlook will help investors decide the best course to build their portfolios. To help the process, here are five stocks chosen by Wall Street's top analysts, according to TipRanks, a service that ranks analysts based on their track record.
In the past few years, including 2022, DENTSPLY SIRONA (XRAY), a manufacturer of professional dental products and technologies, has been managed by a string of teams which have delivered suboptimal operational executions. This had a strong hand in the significant value depreciation of the stock this year, thus far.
Nonetheless, Barrington Research analyst Michael Petusky remains bullish on DENTSPLY. "While 2022 has been a semi-disaster both operationally and for shareholders, it is our view that several items are likely to be more favorable (or at least less awful) in FY/23 (and beyond) than they were in FY/22 including FX headwinds, supply chain challenges, China, and top-line comparisons (which will be far easier in FY/23 than in FY/22)," observed the analyst.
At first glance, DENTSPLY's balance sheet, given the third quarter cash and cash equivalents of $418 million against a total debt of $1.98 billion, looks highly leveraged. However, the company has reduced its debt from $2.03 billion on a sequential basis. Petusky expects further debt reduction, to about 1.4 billion, over the next 12 months. (See DENTSPLY SIRONA Dividend Date & History on TipRanks)
Based on his observations, the analyst reiterated a Buy rating on XRAY stock with a price target of $40.
Importantly, Petusky comes 871st among more than 8,000 analysts tracked on TipRanks. In the past year, 51% of his ratings have been successful and each rating has generated an average of 7.5% returns.
The next on our list is IT giant Oracle (ORCL), which reported strong results for second-quarter fiscal 2023 last week. The solid execution exhibited by the company against a difficult economic backdrop, especially for the tech sector, managed to impress several Wall Street analysts. Among the Oracle bulls was Monness Crespi Hardt analyst Brian White, who affirmed his Buy rating and $113 price target.
"In our view, Oracle offers investors a high-quality, value play with the opportunity to participate in an attractive cloud transformation and gain exposure to the digital modernization initiatives emerging in the healthcare vertical," said White, justifying his stance. (See Oracle Financial Statements on TipRanks)
The analyst is also encouraged by the long-term financial objectives that management at Oracle had set in October. The goals are to grow organic revenue to reach $65 billion by fiscal year 26, with a 45% operating margin, while achieving more than 10% annual earnings per share growth.
Interestingly, since the end of November, White has mostly been cautious in his stock ratings. Oracle is the only company to enjoy his bullish conviction during this period.
Ranked at Number 703 among more than 8,000 analysts, White has a success rate of 54%. Moreover, each of his ratings has generated 8.5% average returns.
According to BTIG analyst Peter Saleh, pizza chain owner and operator Domino's Pizza (DPZ) "is a secular market share gainer in the pizza category owing to the significant competitive advantages it has established on digital ordering, national marketing and value." The analyst thinks that these efforts have considerably boosted retail sales and market share in recent years.
Saleh expects comparisons for same-store sales to ease in the first half of 2023, which will be a major catalyst for top-line growth. Moreover, sales performance is expected to improve organically in 2023, fueled by an increase in the supply of drivers. (See Domino's Pizza Blogger Opinions & Sentiment on TipRanks)
Also, Saleh looks at higher pricing for Domino's $7.99 carryout offer next year. This will help the company "reclaim the $2.00 gap vs. the Mix and Match," and expand franchisee margins.
Saleh, who had previously been cautious about Domino's, upgraded the stock to a Buy from Hold, with a price target of $460. Giving us good reason to consider the analyst's convictions is his 370th position among more than 8,000 analysts followed on TipRanks. Additionally, 63% of his ratings have been profitable, generating average returns of $11.8%.
Canadian athletic apparel retailer Lululemon (LULU) is still reeling from a sell-off following weak guidance for the holiday quarter. Intensifying competition rises and weakening end-markets are keeping investors jittery about the stock.
Nonetheless, Guggenheim analyst Robert Drbul maintained his bullish stance with a Buy rating and a $475 price target. "We remain BUY-rated as we believe LULU stands to benefit from favorable secular tailwinds (health, wellness, casualization, and fitness, including at-home). We also favor the company's limited seasonality in its product offering, virtually no wholesale exposure, and a robust e-commerce business (all mitigating inventory risk)," explained the analyst.
The growth runway in Lululemon's Digital, Men's, and International collections is also solid, according to Drbul. The company is also on track to expand its international business by four times by the end of 2022, ensuring continued top-line growth and "structurally higher" operating margins in the forthcoming years. (See Lululemon Athletica Stock Investors sentiments on TipRanks)
That said, given Drbul's standing among more than 8,000 analysts on TipRanks, it makes sense for investors to follow his opinions. Standing at the 402nd position, 63% of the analyst's ratings have been profitable. Each of his ratings has garnered average returns of 8.3%.
Athletic footwear, apparel, accessories, and equipment maker Nike (NKE) remains the "Best Idea" for 2023, according to Robert Drbul. The company has been riding on the unexpected strength in consumer spending even amid supply-chain issues, inflation, and demand concerns. (See Nike Stock Chart & Stock Technical Analysis on TipRanks)
Drbul conceded that the fiscal year of 2023 does have several overhangs, including supply-demand imbalances and headwinds in the China market. However, he is upbeat about the "structural advantages of its Brand Equity, its massive Demand Creation war chest, a data heavy DTC and Digital business, and management talent to realign its business and progress towards its long-term financial goals in FY24."
The analyst is confident that in the long-term, Nike's brand will maintain its dominant market share, which he expects will grow significantly with the expansion of the Digital segment, flow of new product innovations, and investments in growth-driving efforts while peers adopt cost-saving measures.
The analyst reiterated his Buy rating on NKE stock with a price target of $135.