Wall Street’s top analysts bet on these stocks as economic uncertainty increases
Apple CEO Tim Cook presents the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, U.S. September 7, 2022.
Carlos Barria | Reuters
The market outlook is becoming increasingly uncertain, given unwieldy inflation and a slowing economy.
Stocks ended Friday with losses. They were ultimately unable to bounce back from a deep sell-off on Tuesday in which the Dow Jones Industrial Average shed more than 1,200 points.
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Against this backdrop, investors need to look past current turbulence as they choose their investments. To that end, here are five stocks chosen by top Wall Street pros, according to TipRanks, a platform that ranks analysts based on their performance history.
Apple (AAPL) needs no introduction. The iPhone-maker has been beating all odds and raging ahead with compelling product launches. On Sept. 7, the company held its big fall event, where it launched its widely-awaited iPhone 14 series, along with Apple Watches and AirPods.
Following the event, Monness Crespi Hardt analyst Brian White said that the product introductions enhanced “a portfolio that has never been stronger and a platform more ubiquitous.” (See Apple’s Hedge Fund Trading Activity on TipRanks)
White was cautious that the treacherous macro environment may make consumers hesitate to indulge in a new smartphone purchase. However, he was encouraged by the fact that the company did not hike the prices of the iPhone 14 smartphones.
White notes that Apple’s current price-to-earnings is above its average over recent years. However, looking at the long-term business model, the analyst was upbeat that Apple’s strong services business has created a solid foundation of consumer confidence.
The analyst, who is at the 470th position among nearly 8,000 analysts tracked on TipRanks, assigned a buy rating on AAPL stock, with a price target of $174.
White has a track record of a 57% success rate on his ratings, each rating generating average returns of 11%.
The growing demand for natural gas as an energy source is driving growth at EQT Corporation (EQT). Needless to say, the rocketing prices of oil and gas this year have also been taking EQT on a wild ride.
The company recently entered a deal to acquire shale producer Tug Hill. After the news, RBC Capital Markets analyst Scott Hanold reiterated a buy rating on EQT stock, with a $2 price target raise to $57. “Management’s recent comments during its 2Q22 conference call highlighted that acquisitions need to be more compelling than buying its own stock back and also additive to asset quality, including reducing the corporate break-even point and we believe this deal checks those boxes,” said Hanold, explaining his bullishness. (See EQT Blogger Opinions & Sentiment on TipRanks)
Per the analyst’s calculations, the Tug Hill acquisition can take EQT’s free cash flow to $6 billion in 2023, and also boost earnings per share by 10% to 15%. The additional FCF can be utilized toward a higher authorization for share buybacks, but Hanold thinks the company is more likely to use it to reduce its debt.
“We believe that EQT shares should outperform peers over the next 12 months. EQT is well positioned with a large asset base focused in the Appalachian Basin,” said Hanold, who is ranked No. 14 among almost 8,000 analysts followed on TipRanks.
In all, 66% of Hanold’s ratings have successfully generated 30.9% returns on average.
Another oil and natural gas exploration and production player, Devon Energy (DVN), is among the favorite choices of the best analysts in the market. The company’s favorable geographical location is driving most of its business. The rich basins of Delaware, Eagle Ford, Anadarko, Powder River, and Williston are the core areas of operation of Devon Energy.
Earlier this month, the company entered into a liquefied natural gas (LNG) partnership with Delfin Midstream. The deal involves an agreement between both parties for a long-term liquefication capacity (1 million tonnes per annum) in Delfin’s first floating LNG vessel, with the ability to add another 1Mtpa in the first project or in future vessels.
Following the announcement, Mizuho Securities analyst Vincent Lovaglio appeared bullish on the prospects of the deal, reiterating a buy rating on the company with a price target of $91. The analyst thinks that “investment downstream in liquefaction can connect otherwise price disadvantaged Permian natural gas to premium global markets, utilizing excess free cash flow today to convert a molecule once thought a potential liability into an asset.” (See Devon Energy Dividend Date & History on TipRanks)
Moreover, the deal could boost Devon’s annual dividend by around 30%. Lovaglio is ranked No. 1 among almost 8,000 analysts on TipRanks. Notably, 91% of his ratings have been successful, each rating giving average returns of 46.2%.
Semiconductor component manufacturer Broadcom (AVGO) has recently been focusing on incorporating high-margin software into its product portfolio with the help of organic efforts as well as strategic acquisitions. Therefore, Broadcom’s $61 billion purchase of virtualization software firm VMware caught the attention of several analysts.
Mizuho analyst Vijay Rakesh was one of those upbeat about the acquisition. “With VMware, we believe AVGO could follow a strategy similar to Symantec-CA where it kept key core assets and divested some low volume high touch markets,” he said, highlighting the company’s focus on higher margin growth. (See Broadcom Stock Investors on TipRanks)
The analyst believes that the acquisition will significantly drive Broadcom’s earnings per share. The analyst believes that the company’s shares can reach a price of $793, and reiterated a buy rating on the stock.
Broadcom’s strong market position in several domains, operating leverage and focus on acquisitions that boost its margins make Rakesh believe in its value-unlocking potential.
Ranked No. 128 among around 8,000 analysts on TipRanks, Rakesh has had success with 57% of his ratings. Moreover, each of his ratings has generated 20.2% returns on average.
Another of Vijay Rakesh’s top picks for this season is semiconductor behemoth Nvidia (NVDA). The company was recently in the limelight for guiding for a $400 million hit to revenue in the third quarter due to U.S. restrictions on sales of high-performance AI chips in China.
After speaking with top officials from Nvidia, Rakesh emerged bullish on Nvidia once again, reiterating a buy rating on the stock with a price target of $225. Rakesh was upbeat about the company’s high-end Hopper architecture, which is on track despite the ban. That’s because most of the development team is in the U.S. (See Nvidia Stock Chart, Price History & Graphs on TipRanks)
“We believe the Hopper ramp will not be affected by the export ban with the updated 8-K allowing for supply chain freedom through Hong Kong and China,” said Rakesh, who believes this loophole to be a significant breather for the company.
Moreover, more than 90% of all AI workloads in the data center world are supported by Nvidia. AI is likely to provide a key macro risk-resistant secular growth opportunity to the company.