A man walks past Alphabet Inc’s Google brand logo outside its office in Beijing, China, August 8, 2018.
Thomas Stone | Reuters
Earnings season may cause the markets to build up, and this time around it shows no signs of slowing down.
In tumultuous times like these, short-term bets can be dangerous. Instead, investors can weather turbulence better by taking a long-term perspective.
Some of Wall Street’s top pros have tuned out the noise and picked five stocks as ideal long-term investments, according to TipRanks, that suit top-performing analysts.
Here are five companies that analysts expect will do well going forward despite the current macroeconomic headwinds.
Instantaneous (BROKEN) is the social media company behind photo-sharing app Snapchat, which has over 330 million daily active users. The recently released first quarter results marked a “challenging” time for the company, according to CEO Evan Spiegel. (See Snap Hedge Fund holdings on TipRanks)
Brian Fitzgerald of Wells Fargo Securities believes that Breaking is one of the bright days ahead. In a recent report, the analyst noted continued growth in Snap’s viewership, engagement, and monetization. He sees growth accelerating as the macroeconomic environment improves.
Fitzgerald priced the stock long with a price target of $48.
The analyst said Snap’s conversion API and secure privacy tools contribute to better return on ad spend, which means the company is impressing its customers. Additionally, Fitzgerald observed that Snap manages its content and infrastructure costs well, explaining that these are some of the fruits of parent company Snapchat’s cloud computing deals with Amazon (AMZN) and Google (GOOGL).
Fitzgerald is ranked 78th out of nearly 8,000 analysts on TipRanks. The analyst’s stock ratings were corrected 60% of the time, with an average return of 23.7% per rating.
Microsoft (MSFT) reported strong quarterly results, fueled by strong performance in the cloud computing sector. The Windows software maker then provided an upbeat outlook for the current quarter and fiscal year as it expects its cloud business to continue to perform well. (See Microsoft News Sentiment on TipRanks)
Wedbush’s Dan Ives agrees that Microsoft’s cloud business lets it shine. In a recent report, the analyst pointed out that the company expected to report cloud revenue of up to $21.35 billion in the current quarter, compared to a Wall Street consensus estimate of $20.89 billion. of dollars.
Ives priced the stock long with a price target of $340.
Cloud services provided by Microsoft and others help businesses modernize their systems so they can operate more efficiently. According to Ives, businesses will continue to invest in their digital transformation despite Federal Reserve rate hikes and inflation concerns that will likely slow the economy. As a result, cloud spending is only accelerating, and Microsoft is well positioned to take advantage of it. Additionally, the analyst noted that Microsoft’s other businesses are also doing well.
Out of nearly 8,000 analysts in the TipRanks database, Ives is ranked 119th. The analyst’s stock ratings were accurate 61% of the time, with an average return of 21.6% per rating.
Alphabet (GOOG) fell after the company released its quarterly results which showed YouTube ad revenue growth below expectations. The Google parent company generated its revenue primarily through advertising, and YouTube is one of its biggest assets in this industry. (See Blogger Sentiment Alphabet on TipRanks)
While a slowdown in YouTube could be a problem for investors, analyst Raymond James Aaron Kessler believes there’s a lot to like about the GOOGL stock. First, Alphabet management explained that the problem with YouTube was the direct-response ad type, which faced a tough comparison to the same quarter a year earlier. However, the company believes there is still a big opportunity in the direct response category.
Kessler priced the stock long with a price target of $3,180.
The analyst sees long-term growth potential for Google Search, although the war in Ukraine could reduce advertising spending in Europe. In a recent report, he pointed out that the recovery in retail and travel received to drive gains in Google’s search business. Even at YouTube, the strong growth in YouTube Shorts user engagement is positive, Kessler said. YouTube Shorts receives over 30 billion daily views.
Kessler also observed that the cloud business is also a major bright spot for Alphabet, noting that the company is gaining momentum. Alphabet’s other bets, which include the Waymo self-driving unit, also have a bright future, according to the analyst.
Alphabet’s $70 billion increase to its stock buyback program also caught Kessler’s attention. The new plan comes on top of some $4 billion remaining under its previous buyback program, the analyst noted.
Kessler is ranked 88th out of nearly 8,000 analysts in the TipRanks database. Its stock quotes were corrected 65% of the time, with an average return of 19% per rating.
The Visa payment network (V) reported a strong second fiscal quarter, despite the consequences of suspending its operations in Russia. Although Visa expects the exit from Russia to reduce its second-half net revenue by 4%, the business is generally doing well. Management expects growth elsewhere to offset the loss of Russian revenue within a year. (See Visa Holdings Hedge Funds on TipRanks)
Wedbush analyst Moshe Katri agrees Visa’s business can continue to thrive despite the Russian headwind. The analyst rated Visa stock long with a price target of $270.
The global travel recovery is a boon for Visa. In a recent report, Katri noted that Visa’s cross-border travel volumes are improving, adding that it is a high-margin business for the company. Additionally, while inflation could be a blow to many businesses, Katri pointed out that it was actually tailwinds for Visa, as it meant high average ticket prices.
It also serves Visa well that affluent consumer spending is back in force in areas such as travel, dining and entertainment, as management explained. Pandemic-related lockdowns stopped affluent consumers from spending because they couldn’t go out, but now they’re back as vaccines give people more confidence to venture outdoors.
Out of nearly 8,000 analysts on TipRanks, Katri ranks 335th. The analyst’s stock ratings were successful 72% of the time, with an average return of 16.8% per rating.
Juniper Networks (the) manufactures networking products and also offers cybersecurity solutions. Although the company reported a beating from quarterly revenue estimates, JNPR stock sold off after management lowered the full-year 2022 gross margin outlook. (See Juniper Networks retail investors on TipRanks)
However, Needham analyst Alex Henderson said in a recent report that the gross margin adjustment is a minor issue. The analyst said Juniper’s underlying fundamentals appear strong and management execution is also likely to be better than comparable companies.
Supply chain disruption, particularly following lockdowns in China due to the resurgence of Covid-19, has been a major concern for investors. While that could be a problem, Henderson said Juniper has changed its supply chain and is now less dependent on China than in the past.
Henderson priced the stock long with a price target of $38.
Additionally, the analyst pointed out that Juniper’s $730 million software business is on track to more than double over the next three years. The software division’s momentum is also driving gains in the company’s other businesses, such as switching, routing and security.
Finally, Henderson said Juniper’s acquisitions of Mist, Apstra, 128 Technology and Netrounds would have helped accelerate the company’s portfolio growth.
Henderson is ranked 71st out of nearly 8,000 analysts on TipRanks. Its stock ratings were demanded 59% of the time, with an average return per rating of 23.7%.