Top Wall Street analysts say buy these stocks to protect against market uncertainty
Investors white-knuckled their way through last week as the major averages swung sharply, fueled by key inflation reports.
On Thursday, the Dow Jones Industrial Average leapt 1,500 points from its low of the session to the highest point of the day. The major averages did an about-face Friday, with all three indexes closing with losses.
To pick the right stocks to get through this tumult, investors will need to think far beyond day-to-day volatility and dig into the details to find the long-term winners.
Here are five stocks chosen by Wall Street's top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Meta Platforms
Facebook parent Meta Platforms (META) has been beset by challenges. These include lower ad revenues, elevated technology costs, increased borrowing costs and chip shortages. Nonetheless, its focus on the metaverse is keeping analysts hooked on the stock.
At its recent Meta Connect conference, the company announced several key VR innovations and professional integration partnerships. The conference grabbed the attention of experts, many of whom believe that the number of metaverse users has yet to reach a significant figure. (See Meta Platforms Stock Chart & Stock Technical Analysis on TipRanks)
Notwithstanding the speculations, Monness Crespi Hardt analyst Brian White remains optimistic. He believes Meta to be "the clear leader in VR." White recalled an IDC report which revealed that Meta had captured 90% of the global VR headset market in the first quarter of this year, thanks to its Quest 2 headset sales.
"After years of reports that Apple has ambitions in the AR/VR headset space, it will be interesting to watch the leading tech players battle it out in this nascent but promising market over the next decade," said White, reiterating his buy rating and $230 price target for the company.
White has been ranked No. 545 among almost 8,000 analysts tracked on the TipRanks platform. Moreover, 54% of his ratings have successfully generated 9% average returns each, over the past year.
Qualcomm
Wireless communications semiconductor and equipment manufacturer Qualcomm (NASDAQ:QCOM) is one of the companies leading the ongoing global 5G broadband network rollout. Further, with the growth prospects of the Internet of Things (IoT), the company stands to benefit remarkably over the long term.
Apart from IoT, the company also has significant opportunities to grow in the automotive technology market. The company's Snapdragon Digital Chassis is a suite of cloud-connected platforms that aid automotive technology like digital cockpits and advanced driver assistance systems, which are still emerging. (See Qualcomm Dividend Date & History on TipRanks)
Buoyed by these growth avenues, Tigress Financial Partners analyst Ivan Feinseth recently affirmed his buy rating on Qualcomm with a price target of $238. The analyst believes that 5G, IoT and automotive markets will accelerate business performance trends and drive long-term shareholder value.
Moreover, Feinseth believes that ample liquidity on Qualcomm's balance sheet allows investments in technical innovations and key growth initiatives, "further enhancing shareholder returns through periodic dividend increases and share repurchases."
Feinseth comes in as 333rd among nearly 8,000 analysts tracked on TipRanks. Moreover, 56% of his ratings have been profitable, each rating generating an average return of 9.5%.
Papa John's
Another of the top choices of analysts is pizza company Papa John's (PZZA). The company has been experiencing tough sales throughout summer, as negative customer sentiment regarding its former CEO's controversies still haunt the company. Nonetheless, after conducting a survey of several Papa John's franchises, BTIG analyst Peter Saleh emerged positive about the stock's prospects.
"We believe Papa John's is in the middle stages of its sales and economic turnaround after controversy and negative consumer sentiment weighed on the concept for over two years, pressuring unit economics and store closures and necessitating financial support from the company," said Saleh. (See Papa John's International Stock Investors on TipRanks)
The analyst highlighted the new leadership at the pizza company, which has assembled some strategies that could lead to an overall turnaround. These strategies have already improved Papa John's operating efficiency, net unit growth, and franchisee alignment, and Saleh expects these improvements to continue throughout this year and the next.
The analyst assigned a buy rating on Papa John's stock, but reduced the price target from $130 to $115 based on a reduced outlook for the next 12 months.
Saleh has a No. 606 rank among about 8,000 analysts tracked on TipRanks. His ratings have been successful 56% of the time, with each rating raking in an average of 8.8% return.
Chefs' Warehouse
Another one of Peter Saleh's top picks is food product distributor Chefs' Warehouse (CHEF), which caters to upscale restaurants, fine dining establishments, hospitality venues, and specialty stores. Saleh reaffirmed his buy rating and $48 price target on Chefs' following its recent release of benchmark data. The data indicated an uptick in the company's high-end dining category, Knapp-Track High-End Steak, in September.
The analyst believes that the reopening of offices and increased corporate travel during September supported this growth. Moreover, the fact that Chefs' raised its full-year guidance while reporting quarterly results, just five weeks after the last outlook raise, gave Saleh the confidence to be bullish on the stock. (See Chefs' Warehouse Insider Trading Activity on TipRanks)
Additionally, with normal seasonality returning after last year's omicron-led cancellations or postponements in events and corporate travels, Saleh expects the fourth quarter to be the strongest period of the year.
Furthermore, the attractively discounted valuation at which Chefs' is trading is another reason for Saleh to consider the stock a buy.
"Shares are currently trading at slightly less than 9.0x our 2023 adjusted EBITDA estimate, far below its three- and five-year historical average of 14.3x and 13.8x, respectively. While valuation has been pressured by general economic concerns, we believe a pessimistic scenario is more than factored into shares with valuation at the lowest level seen in the last two years," the analyst noted.
DHT Holdings
Omicron-led demand suppression and rocketing oil prices restricted ocean trade earlier this year, which led the crude tanker market to remain sluggish. However, crude oil tanker DHT Holdings (DHT) is still riding a streak of luck, thanks to a rise in the spot time charter equivalent (TCE) rates of medium-sized tankers.
Drewry analyst Nikesh Shukla appeared bullish on the stock in his recent company report update, where he reiterated a buy rating on the stock with a price target of $9. "The news of political uncertainty in China coupled with fears of a potential recession led to some correction in DHT's stock price over the past three weeks, but we expect it to trend upwards again in 4Q22 on the back of elevated VLCC (very large crude carrier) earnings and robust seasonal demand," said Shukla. (See DHT Holdings Blogger Opinions & Sentiment on TipRanks)
A strong balance sheet is another positive that keeps Shukla bullish on the stock. At the end of the second quarter, DHT's leverage of 47.3% was much lower than the peer average of 90.5%. The analyst sees an improvement in this area over the next two years as the company reduces its debt.
Shukla noted that DHT's total liquidity of $293.9 million, combined with a relatively low leverage puts the company in a favorable position to steer the business through rough patches in the crude tanker market.
Shukla holds the 989th rank among nearly 8,000 analysts followed on TipRanks. In all, 58% of the analyst's ratings are profitable, each of which have generated an average of 11.8% returns over the past 12 months.