Prime analysts like these shares most in a tumultuous begin to 2021
A United Parcel Service employee delivers parcels in New York City.
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The volatility has found its way back to Wall Street. In the past few weeks, the trading frenzy regarding GameStop and AMC Entertainment has made headlines after a group of retail investors joined forces to raise the share prices of these severely shortened names, sparking the most extreme short squeeze in the past 25 years was observed years after Goldman Sachs.
"The passions generated by these events also create significant concerns about the wider implications for other areas of the market that may be overfunded," noted Michael Hewson, chief market analyst at CMC Markets UK.
In these uncertain and volatile times, one approach to finding compelling investment opportunities is to follow the activities of experts with a proven track record. TipRanks 'analyst forecasting service tracks financial analysts' ratings to find the professionals with the highest success rate and average return per rating.
Here are the top performing analyst stocks amid this recent volatility:
Video game maker Electronic Arts is up 34% over the past year, and Needham top analyst Laura Martin believes there is even more fuel in the tank. To this end, it reiterated a Buy recommendation and a price target of USD 165 on February 3 (17% upside potential).
For the most recent quarter, EA posted GAAP net sales of $ 1.67 billion, up 5% year over year. Although GAAP earnings per share were down 39% year over year from $ 0.72, earnings exceeded Martin's estimate by 18%, largely due to the growth in live services.
Most notable for Martin was the fact that EA released FIFA 21, Madden NFL 21, Medal of Honor: Over and Over Need for Speed Hot Pursuit Remastered and NHL 21 in the quarter, and paid subscribers hit 13 million, which is a source of income for retirees. "
"We like EA's annual release schedule for FIFA and Madden Sports Games, which we believe is an annuity stream business with a well-established base of annual and predictable users. This annuity stream positioning reduces risk of EA versus its hit-driven video game competitor, "the analyst said.
Looking ahead, management anticipated net bookings of $ 6.1 billion for full year 2021 and year-over-year growth for full year 2022.
Martin highlights four growth drivers that could continue to drive higher, including the 35 new games slated for Fiscal 22, Apex Legends, as well as the FIFA expansion and Sims and Madden.
Since Martin has achieved a success rate of 70% and an average return of 35.7% per rating, she lands in the top 50 analysts recorded by TipRanks.
The resurgence of demand at NXP Semiconductor has confirmed the bullish thesis of Needham analyst Rajvindra Gill. As a result, the five-star analyst left its buy recommendation unchanged. In another sign of optimism, he raised the target price from $ 200 to $ 223. That puts the upside potential at 28%, with stocks already rising 39% last year.
Accelerating sequential demand in the automotive, IoT / industrial, and communications infrastructure industries could result in seasonal strength, according to management.
"WiFi and China continue to drive IoT / Industrial and GaN products and offer 21 new sales potential in the second half of the year, while the demand for mobile devices from Mobile Wallet and UWB remains strong," Gill recently wrote in a press release.
Nonetheless, Gill admits that NXPI has been hampered by supply chain restrictions and has limitations on available foundry capacity and price increases in some areas.
"The semi-industry had two unusual years, first after the China trade war and then after COVID-19, which suppressed demand. As of the beginning of 2021, demand returned, creating challenges with supply constraints. NXPI is aggressively expanding capacity to accommodate the Satisfying demand and supply conditions could fade when we enter 2022, "explained Gill.
In summary, Gill stated, "… we believe the inventory correction that has affected the half-cycle since October 2018 is largely over and we believe we are nearing a bottom."
Currently, Gill has a 65% success rate and an average return of 13.6% per review.
According to Susquehanna analyst Christopher Rolland, semiconductor company Cirrus Logic also had some delivery bottlenecks in the last quarter. Despite these obstacles, it provided "great results and guidance as increasing content across the Apple lineup helped increase revenue + 30% year-over-year".
This prompted Rolland to repeat its buy rating on February 2nd. Though stocks are up 43% since Aug. 31, Rolland sees upside potential of 33% based on its street high price target of $ 115.
Cirrus already noted "solid traction" for amps, true wireless codecs and haptics with Android customers back in 1H21, "which may signal a surge in content for Samsung this spring," Rolland said.
"We were pleased to see that the company 'High Performance Mixed Signal Non-Audio' breaks out with 19% of sales. We expect this segment to grow significantly faster than the company as a whole and possibly the main growth driver in the Marge Will We believe Cirrus may move from an audio company to a mixed-signal company, a thesis that is overlooked by most on the street, "added the analyst.
Citing strengthening its position in audio, diversifying beyond smartphones, and expanding mixed-signal products for non-audio applications as growth vectors, Rolland believes investors are "concerned about the short-term heightened sentiment and the flawed bear- Thesis of the customer concentration risks should look beyond and in the long term no growth from non-Apple. "
Furthermore, the analyst sees the relationship with Apple as "high quality" and "growing" and argues that "a scenario exists where the relationship between the two companies becomes so big and close that Apple is ultimately forced to bid." . " Cirrus … "
With a success rate of 75% and an average return of 22.3% per review, Rolland ranks 71st in the TipRanks ranking.
UPS is among the main beneficiaries of the COVID-19 pandemic. Shares rose 57% over the past year.
For Scott Schneeberger from Oppenheimer, UPS has even more room to grow. Based on his price target of USD 186, which was reiterated along with his buy recommendation on February 2, the five-star analyst sees an upside potential of 16%.
In a report entitled "Strong end to 2020 with momentum in 2021", Schneeberger explains his case for the parcel delivery company. Adjusted EPS for the fourth quarter of 2020 was $ 2.66, slightly beating the analyst's estimate of $ 2.06. In addition, total sales increased 21% year over year, with operating income reaching record highs in all three of the company's segments.
All of this prompted Schneeberger to raise its adjusted EPS estimate from $ 8.88 to $ 9.06 in 2021, "mainly due to UPS's significant outperformance in the fourth quarter of 20".
The analyst added, "We expect continued momentum in B2C volume / pricing, a B2B rebound, an increase in international activity / margin and efficiency initiatives in favor of 2021E and 2022E, where our adjusted EPS rose from $ 9.50 to $ 9 . $ 66 (+ 7% Yo;; $ 9.46 consensus). "
In the valuation, Schneeberger's price target is 20.5 times its adjusted EPS forecast for 2021, which is at the upper end of UPS's 11 to 22 times historical FTM EPS range. He believes this is warranted as he expects "solid EPS growth by 2021E due to a 2020E COVID-19 lull on B2C volume / pricing, B2B advancement and benefits of the operational efficiency initiative". The analyst also notes that he is "drawn to UPS 'industry leading ROIC / solid balance sheet / dividend with a yield of 2.5%".
As evidence of his stock picking skills, Schneeberger has a 63% success rate.
BofA Securities analyst Jason Kupferberg said there was a lot to like in PayPal's fourth quarter earnings release. The analyst therefore repeated a buy rating on February 3. Despite the fact that shares were up 116% over the past year, Kupferberg's target price of $ 282 indicates additional upside potential of 12%.
Kupferberg was not "surprised" that PayPal shares saw better than expected pressure and "very positive initial data points to accommodate new growth initiatives that, along with the momentum in core business, should offset the expected 4% on eBay headwinds in 2021."
According to management, initiatives such as in-store / QR codes, Crypto and Pay in 4, which later became the buy-now pay product in the US, have exceeded expectations, with Pay in 4 doing particularly well. In its first quarter since the product was launched, Pay in 4 received over $ 750 million in total payments.
Furthermore, Kupferberg stated, "PayPal QR codes are now accepted in over 600,000 retail stores, including chains like CVS, Foot Locker and Nike. Merchants that accept QR codes have seen a double-digit increase in average basket sizes, while PYPL is at Bei Consumers using QR codes have seen their TPV rise 19%. Crypto trading has also got off to a very good start with trading volume far exceeding internal expectations. "
With this in mind, PayPal released its first outlook for 2021, which included organic nominal sales growth of 19% and non-GAAP earnings per share of $ 4.54, in line with consensus estimates.
"Given the typical conservatism of management, we see upside to the original outlook for 2021. Based on year-over-year earnings, Revs / EPS growth will be highest in the first quarter, followed by stable but more modest revenue growth in the second through fourth quarter, "said Kupferberg.
Kupferberg ranks 157th on TipRanks' list of top performing analysts, supported by a success rate of 71% and an average return of 17.6% per rating.