Alphabet Inc.’s Google logo in front of the company’s headquarters in Beijing, China, 8 August 2018.
Thomas Peter | Reuters
With an ugly September in the rearview mirror, it’s tempting for investors to make impulsive decisions.
The three major indices ended the month with sizeable losses, shaken by rising bond yields and a Federal Reserve that will do whatever it takes to bring inflation down.
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As scary as these times are, it’s important for investors to take a long-term perspective and look closely for stocks that have potential beyond these turbulent times.
Here are five stocks picked by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their track record.
Pure contract logistics provider GXO Logistics (GXO) focuses on using technology to manage supply chains and warehousing. This firm addresses a vastly underserved area of e-commerce: reverse logistics, or the movement of goods from customers back to sellers. In the second quarter, 40% of the company’s new business profits came from reverse logistics.
Since debuting on the public markets in 2021 — a spin-off from XPO Logistics — GXO has managed to secure a billion-dollar deal to acquire leading reverse logistics service provider Clipper Logistics. This acquisition also solidified GXO’s strength in the reverse logistics market. (See Risk Factors of GXO Logistics on TipRanks)
However, macroeconomic headwinds from Europe and the UK are weighing on the company’s financials. Cowen analyst Jason Seidl recently lowered his short-term price target on GXO from $67 to $62 after pricing in headwinds that are likely to persist for some time.
Seidl noted that about 70% of GXO’s sales are in foreign currencies, mostly pounds and euros. Continued currency headwinds from Europe due to the Russia-Ukraine war had prompted GXO to forecast a $30 million revenue impact in 2023. However, the falling pound has led the analyst to expect further repercussions.
Nonetheless, the analyst maintains a buy recommendation, saying that GXO’s variable cost structure is able to mitigate any adverse impact on margins. For those who can stomach the near-term concerns, Seidl recommends buying the stock. “Given where GXO is traded, we see an attractive entry point for long-term investors looking for a quality transportation/logistics exposure that can weather the systematic storm in Europe,” said the analyst, ranked below nearly 8th 8,000 analysts were tracked on the platform.
Importantly, 67% of Seidl’s ratings were profitable, with each rating averaging 23.9% returns.
nova (NVMI) offers some heavy-duty measurement solutions for the semiconductor manufacturing market. The company’s balanced revenue mix between foundry and storage has helped it hedge its business against exposure to a single end market.
Recently, Needham analyst Quinn Bolton commented on Nova, reiterating a Buy rating and a $120 price target for the company. “We like Nova for its strong position in the foundry and memory markets and its consistent focus on developing new technologies to meet the metrology needs in semiconductor manufacturing,” the analyst said. (See Nova Measurement Stock Chart on TipRanks)
Unlike many other types of process control devices, optical solutions with critical dimensions do not face the risk of falling demand as wafer capacity increases. In fact, they scale linearly with it. Now, Nova has a roughly 70% share of the OCD market, giving it a strong runway for growth as wafer capacities increase with the proliferation of advanced technologies.
Bolton is also optimistic about Nova’s prospects in the X-ray technology market. The analyst expects the X-ray technology market to “grow in both front-end metrology and advanced packaging applications.”
“We believe Nova will be a measurement vendor of choice for the foreseeable future and believe that even on extremely conservative assumptions, Nova will easily meet the $1 billion target,” Bolton said.
Bolton is ranked #3 out of almost 8,000 analysts in the TipRanks database. Notably, 62% of their reviews successfully returned an average of 38% per review.
IT business process service provider TD SYNNEX (SNX) benefits from the high demand for teleworking and learning software as well as hardware solutions. In addition, the rapid digital transformation has kept the IT spending environment favorable for the company.
The company recently released its quarterly results, surpassing both the ceiling and the floor. However, like its other tech peers, TD SYNNEX is not spared from the economic headwinds. Barrington Research analyst Vincent Colicchio lowered his price target to $98 from $106 to reflect headwinds that will impact business in the coming months.
Nonetheless, Colicchio believes the combined forces of SYNNEX and Tech Data (with which it merged last year) will help the company realize solid revenue and cost synergies. This will support earnings growth over the next few years. (See opinions and opinions of bloggers from TD Synexx Corporation on TipRanks)
“The company’s revenue should grow faster than total IT spending as it increases its investments in fast-growing technologies. We are confident that management can meet or exceed the targeted $200 million in cost synergies given a solid track record of executing acquisitions.” Weighed in Colicchio.
The analyst reiterated a buy rating on the stock, saying the shares are trading at an attractive discount.
Colicchio ranked 581st among the nearly 8,000 analysts followed on TipRanks. The analyst has a 52% success rate, and each of his reviews has yielded an average return of 8.5%.
As the tech sector grapples with multiple economic setbacks, Alphabet (Google) has been working on new devices to be unveiled at the upcoming Made by Google event. (See Alphabet Class A Stock Investor Sentiment on TipRanks)
Ahead of the news, Monness Crespi Hardt analyst Brian White, a Google bull, maintained his buy rating on the stock. “We believe Alphabet is well positioned to capitalize on the long-term trend in digital advertising, participate in the shift of workloads to the cloud, and benefit from digital transformation,” White said, explaining his long-term bullish view of Alphabet.
Additionally, Alphabet’s strong AI capabilities give the company the upper hand to improve consumer experiences. Also, White is heartened by the fact that Apple held just 15.6% of global smartphone shipments in the second quarter of the year. This means that Android has the higher share of the operating system market.
White holding the 470th Position among nearly 8,000 analysts rated on TipRanks, kept its price target of $145 for GOOGL stock. The analyst has a 56% success rate and an average return of 9.6% on each of his reviews.
Energy company Edison International (EIX) has won its own battles amid mounting macroeconomic headwinds shaking every sector. The company has handled the recent heatwaves in the United States adeptly.
RBC Capital analyst Shelby Tucker is also optimistic that the electricity consumption load, which is likely to remain flat through 2030, is expected to increase thereafter. Management forecasts a load increase of about 60% between 2030 and 2045 as demand for electrification grows. (See Edison International Dividend Date & History on TipRanks)
“Higher consumption from electrification will likely be offset by distributed generation, batteries and energy efficiency measures,” Tucker said, before adding that Edison has more options on the storage side than the generation side.
Additionally, Southern California Edison’s wildfire mitigation plan has reduced the parent company’s wildfire risk by 65% to 70%, which is a boon for Edison. “We continue to believe that EIX is undervalued relative to the sector, despite a number of steps taken by the utility and California to address the wildfire challenges to the system,” Tucker said, underscoring the attractive opportunity for investors, EIX to buy stocks.
Importantly, Edison’s solution profile is purely electric, making it an “attractive pure option for investing in the electrification of society.”
Tucker reiterated a Buy rating on the stock with an $82 price target.
The analyst, ranked 140th out of nearly 8,000 analysts tracked on TipRanks, was successful with his reviews 67% of the time. Additionally, each of his reviews has generated an average return of 9.8%.