Pedestrians walk past Lululemon stores.
Scott Millin | CNBC
Markets are tense, and May’s hot inflation report has worsened the situation.
The situation is frightening for investors, but it is important for them to take a long-term view and watch the volatility that is rocking the market right now. To that effect, top analysts pick stocks with attractive prospects, according to TipRanks, which ranks the best-performing Wall Street professionals.
Here are five stocks that are catching the attention of analysts.
Still, Credo has run into obstacles. The resurgence of COVID-19 in China has led to lockdowns in major cities, including Kunshan, forcing major suppliers to close their businesses and further damage supply chains in the semiconductor industry. Credo’s active power cable unit gets its materials from suppliers in Kunshan.
However, the company still managed to deliver better than expected quarterly results based on strong sales of its non-cushion products. Needham Analyst quinn bolton “We believe investors will see this as a sign of resilience. CRDO The non-AEC product absorbs the impacts related to the shutdown due to the strength in revenue.”
Bolton also pointed to key forces in the company’s business. He added that Credo’s strong expertise in analog and DSP design helps the company use the most appropriate technology combinations to deliver “low power and high performance design at low cost.”
The analyst believes this growth could propel the company to expand its total addressable market in data centers over the next three years, making it one of the fastest growing semiconductor companies.
Bolton ranks third among TipRank’s nearly 8,000 financial analysts. It has successfully rated the stock 72%, and its rated shares have given an average return of 45% each.
Semiconductor company Ambarella’s (ambaSystem-on-chips (SoC) brings together leading technologies to deliver superior quality videos and images with low power consumption. Its chips are rapidly gaining traction in markets such as autonomous vehicles and the Internet of Things.
Needless to say, semiconductor companies have suffered losses this year. As if the current supply-chain shocks weren’t enough, the Covid-led lockdown in China earlier this year further damaged the supply of components to the chipmaking industry. AMBA stock hasn’t been spared, and shares are down more than 60% this year. (See ambarella stock chart on TipRank)
Needham’s Quinn Bolton delved into the company’s earnings performance and explained that the headwinds it faced in the first quarter of FY2023 are expected to persist in the near future. However, the analyst believes that these are only short-term problems that are beyond the control of the company.
Worldwide shipping issues are leading to inventory build-up, making it difficult for Ambarella’s customers to purchase their orders. This is exacerbated by the lockdown in China, which has caused delays in orders which have hurt ambarella’s Performance in the first quarter of FY 2023. Fiscal second quarter guidance also indicated a slowdown in revenue growth.
However, Ambarella expects supply chain issues to calm down in the second half of the year. Bolton opted to go with fundamentals and business strength and look at short-term setbacks. Despite lowering the price target from $175 to $120, he repeated the buy on AMBA.
The analyst remains confident about Ambarella’s suite of computer vision (CV) processors, and believes the product holds the key to significant revenue as well as future share price growth. Bolton said, “We anticipate that Ambarella’s CVflow products will generate over 50% of annual revenue by CY23. While we anticipate Ambarella’s CV-based product sales to grow at a 10-year CAGR of 45%. ”
American Tower (amt), one of the largest infrastructure REITs, is an independent operator of wireless and broadcast communications infrastructure. Its business is spread over 22 countries around the world. The increasing use of 5G and other technology is supporting the demand for spaces to operate American Tower’s infrastructure and communications services.
Most recently, RBC Capital Markets analyst Jonathan Atkin Participated in a few meetings with AMT’s management, and compiled some important points for investors.
Atkin said management is optimistic about amtis in Europe and is confident of its major involvement and government support in that region, particularly in Germany, Spain and France.
Atkin believes that AMT growth in the medium term will be supported by national US wireless operators when they roll out mid-band 5G spectrum. (See American Tower Dividend Date and History on TipRank)
Among the challenges, the analyst sees slow growth in India due to COVID-19 and lower average revenue per unit, and in Brazil due to Covid-related disruptions. However, he expects AMT to manage these challenges once the leasing fundamentals stabilize in these markets after the economic recovery from COVID-19 effective.
Atkin is ranked 11th among the nearly 8,000 Wall Street analysts included in TipRanks. He has achieved 337 successful ratings out of a total of 437 ratings. In addition, they gave an average return of 45% on each stock rating.
Guggenheim Analyst robert drabuli There were some interesting insights into the company’s growth after the quarterly print release. He said Lululemon is navigating supply chain pressures around the world by using air freight to ship orders to customers, despite high freight costs.
Drbull points out that the company’s products are characterized by a limited season, which is a huge positive. Moreover, its strong e-commerce business and minimal risk in the wholesale market are a boon during the current situation of rising inventory. (See lululemon risk factors on TipRank)
Analyst reiterates buy on this Lulu The stock, encouraged by its medium to long-term trading outlook. “We believe LULU is on track to quadruple its international business by the end of fiscal 2012. It is expected to see continued strong top-line growth in the coming years and structurally high operating margins (over 40% range). digital operating margin in the U.S.), which in our view justifies the premium multiplier of the shares,” Drbull said.
Drubull is ranked 582 out of nearly 8,000 analysts tracking TipRanks. Notably, 59% of their ratings have been successful so far, with an average return of 8.2% per rating.
Shares of Viva (VEEV) has fallen in 2022, dragged down by widespread technical selloff. However, it is one of those companies which is not seeing any significant impact on its business. That’s because it is a cloud-computing company with a focus on two major industries: life sciences and pharmaceuticals.
Interestingly, hedge funds increased their positions in the company’s shares in the March quarter. (See Viva’s Hedge Fund Trading Activity on TipRank)
The company released quarterly results earlier this month, beating Street estimates for earnings per share and revenue.
Needham Analyst Ryan McDonald Viva’s biggest deal — a 12-product win with a top pharmaceutical firm — during the first quarter. McDonald said, “While VEEV sees this win as a one-time event in the near future, it has the potential to fundamentally change the conversation around a strategic roadmap with customers over time.”
The analyst is also confident that products like Compass and Link will start to gain momentum if investors address concerns around sluggish demand for Veeva’s core cloud-based customer relationship management platform.
McDonald’s maintains its momentum VEEV, with a buy rating on it, despite lowering the price target from $270 to $205. However, long-term investors need not worry, as the lower price target takes “industry-wide multiple compression” into account, according to McDonald’s.
Analysts were impressed by the fact that Veeva could raise its FY23 outlook despite current currency headwinds, as it “highlights the sustainable nature of the business in uncertain macros.”
McDonald’s ranks number 482 among nearly 8,000 analysts on TipRanks. Their rated stocks have given an average 14% return, with a success rate of 49% on their ratings.