Stocks got off to a rocky start in 2022, and investors could be in for more turmoil.
That’s because the current macro environment has been one of the most volatile in recent memory. Inflation fears, labor shortages and the US Federal Reserve’s move to aggressively scale back its bond purchases are just some of the concerns on the minds of investors.
TipRanks, a financial data aggregation website, provides investors with the tools they need to navigate the market. Wall Street’s top analysts share their most optimistic ideas despite the harsh macro trends.
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The shift towards cloud-based solution platforms has coincided with the larger digital transformation accelerated by the pandemic. Software and intelligence provider Verint Systems (VRNT) should be one of the beneficiaries.
In a recent report, Jefferies’ Samad Samana outlined his direction for the stock, noting that “VRNT’s progress in modernizing and enhancing its technology stack and product portfolio continues to be underappreciated.” He highlighted the flexibility of Verint’s infrastructure, which “can be deployed across multiple cloud providers (AWS, Azure, Google Cloud) and private/hybrid data centers.”
Samana gave the stock a Buy rating and a price target of $62.
Additionally, the analyst noted that the company has the ability to serve both legacy and cloud-native customers, and that its cloud solution software can be easily customized for existing customers. This type of committed relationship is expected to lead to strong customer retention rates and prevent churn. (See Verint Systems hedge fund activity)
Additionally, Verint enables its vendors to aggregate data about their customer interactions, specifically with Agent Assist, an AI productivity driver. Through investments and mergers and acquisitions, the company has expanded its omnichannel capabilities, making it far more attractive to potential vendors.
On TipRanks, Samana is rated #363 by over 7,000 analysts. His stock picks were successful 57% of the time, earning him an average of 34.8% each time.
Amazon
The slowdown in consumer spending and hard earnings comparisons have Amazon’s (AMZN) Shares. Now that supply constraints are expected to ease and Amazon’s investments in logistics and fulfillment infrastructure are likely to pay off, analysts are back in action. (See Amazon Risk Factors on TipRanks)
JPMorgan’s Doug Anmuth is one of the latest to release an upbeat report noting the re-acceleration in e-commerce trends and a largely successful holiday shopping season. Additionally, Amazon Web Services (AWS) still dominates the cloud computing market.
Anmuth gave the stock a buy rating and stated a price target of $4,350.
The analyst trimmed his estimates for Amazon slightly, but he believes lowered expectations “should help risk stocks again and AMZN becomes a cleaner story to own into 2022.” He expects the company’s e-commerce segment in particular to benefit this year due to years of expansion in transportation and delivery media.
Amazon has never been so close to so many of its customers.
The company, which is “well-positioned as a leader in e-commerce and public cloud,” could also increase Prime membership prices and fulfillment fees. These steps, in turn, will increase revenue. Amazon’s AWS growth is robust and considered “sustainable” by Anmuth.
Anmuth is rated #155 by more than 7,000 analysts. He has correctly rated stocks 62% of the time, and his ratings have each yielded an average return of 32.4%.
Tesla
Although Tesla (TSLA) is already considered a leading manufacturer of electric vehicles, the company is now grabbing market share from established OEMs. That means over the next two years it will be important to see where the company compares to legacy automakers — and less so compared to smaller EV companies, according to Jefferies’ Philippe Houchois.
The analyst is more concerned about Tesla’s future ability to succeed in this way. He believes ramping up production will be an important catalyst for the company. In fact, the company is expected to add significant supply with its new gigafactories in Austin and Berlin in February and April, respectively. (See Tesla Stock Charts on TipRanks)
Houchois gave Tesla a buy rating and a bullish target price of $1,400 per share.
The EV maker has seen its backlog grow to a sizeable level, prompting Houchois to add that “filling that capacity isn’t a given right now.” However, the long list of unfulfilled orders gives TSLA confidence in long-term demand and revenue.
Additionally, the analyst wrote that Tesla has a “business model that may be geared towards generating cash faster than the ability to add products and capacity.”
Houchois looks at Tesla’s quarterly results on Jan. 26. The company can validate its strong gains and provide updates for Cybertruck or for a cheaper sedan model.
The analyst is ranked 244th out of over 7,000 professional analysts. He has a 70% success rate and an average return on his tips of 41.9%.
Vmware
Indicators could point to a breakout for shares of cloud computing company VMware (VMW). (See VMware Earnings Date and Reports on TipRanks)
Monness’ Brian White explained several reasons why the stock could trend higher. He highlighted the company’s “unique value proposition in the cloud” as well as its attractive valuation.
He upgraded the stock to buy from neutral with a price target of $153.
White noted that VMware has “invested in organic innovation, completed acquisitions and formed cloud partnerships.” He believes these strategic moves will lay the groundwork for the next uptick in business performance.
While the company hasn’t been able to capitalize on the digital transformation that has benefited so many other software companies, the analyst believes VMW’s long-term prospects have been bolstered by the overall trend regardless. At the moment he is convinced of his market role.
VMware has found a niche where it is compatible with several established cloud players and has a flexible position as a third party “that sees itself as the ‘Switzerland of the industry,'” said the analyst.
White currently ranks 111th out of more than 7,000 financial analysts. His stock picks were successful 74% of the time, earning him an average return of 37.1%.
Walmart
Walmart (WMT) appears to have expanded its customer base since the start of the Covid-19 pandemic, and it may also have the capacity to continue operating despite rising fuel and inflation costs. (See Walmart Website Traffic on TipRanks)
Guggenheim’s Robert Drbul believes this to be the case, writing that Walmart is well positioned to continue benefiting despite the difficult consumer spending environment. He wasn’t worried about inflationary pressures, gas prices and other difficulties caused by ongoing Covid variants. However, he pointed to “lapping stimulus benefits and the phasing out of child tax credits” as possible negative catalysts.
Calling it one of his “top ideas,” Drbul gave the stock a “buy” rating and a price target of $185.
He said if gas costs increase for shoppers, they could simply consolidate their trips to Walmart locations into larger purchases or shop online. He sees Walmart’s physical footprint and online presence as a “winning combination.” When costs go up, shoppers can try to save even more by purchasing a wider variety of products from the retailer.
The analyst believes in Walmart’s “robust business model” that “can withstand any potential downturn in consumer spending.” He believes in the company’s isolation from disruptive macro forces and trends and sees the stock price as one with a favorable risk/reward tradeoff.
Drbul is ranked 89th out of over 7,000 analysts by TipRanks. His success rate is 70% and his stock picking has earned him an average of 29.8% each.
