It has been a hectic week for investors with the Federal Reserve’s interest rate increase, new economic data, and a torrent of earnings from tech companies.
Because the market can be so unpredictable, it’s important to keep a long-term view and refrain from basing judgments on quick changes in stock prices.
Check out these five stocks that TipRanks, a website that evaluates analysts based on their performance, claims Wall Street’s best professionals have highlighted for their long-term potential.
Provider of payment processing solutions is Block (SQ). The corporation has faced rough waters over the last two years, and its experiences in 2022 will only make matters worse. Block is experiencing huge revenue losses as a result of escalating competition and declining customer spending in an atmosphere of stagflation.
However, the company is managing to stay afloat because to the Cash App it is offering. The second quarter of 2022 for Block is expected to be meaningfully profitable, according to Deutsche Bank analyst Bryan Keane. The results are expected to be announced on August 4. The analyst cites “improving new product attach rates and positive changes in pricing” as two elements fostering the growth of the Cash App industry.
“We remain constructive on Cash App and believe the segment has the potential to surprise to the upside in 2Q22 above our gross profit organic growth rate estimate of 18% (velocity of spend will remain resilient in an economic slowdown in our view),” said Keane.
According to the analyst, the purchased Afterpay, a pioneer of the “buy now, pay later” business model, should have positive synergies that will help the bottom line develop.
Keane maintained its buy rating and $155 price objective on the SQ stock. The analyst is presently ranked No. 601 out of approximately 8,000 analysts in the TipRanks database. Her ratings have produced an average return of 8.7%. With 59% of the scores, he has been successful.
Starbucks (SBUX), a high-end coffee chain, has a strong brand and excellent financial standing, making it a great prospect for a robust rebound.
Before the company’s third-quarter fiscal 2022 results, which are expected to be released on August 2, Evercore ISI analyst David Palmer seemed upbeat about the business. According to the expert, China’s recent increase in subway usage may have helped the nation’s same-store sales rise.
Palmer is also optimistic that Starbucks will make significant updates to its dated bar setups, equipment, and technology, which will increase the chain’s opportunity for transaction growth in FY23. “We see upside to consensus FY23 estimated North America transaction growth,” said Palmer. “We also envision these changes boosting partner morale and ultimately minimizing unionization risk.”
These findings led the analyst, who is ranked No. 657 out of nearly 8,000 analysts assessed on TipRanks, to reiterate a buy rating and a $95 price target on Starbucks. Each of the analyst’s 60 percent successful evaluations has brought in an average return of 5.9 percent.
Keane is also excited about the future of Fiserv, another provider of financial technology services (FISV). Despite the macroeconomic headwinds that are impacting the company’s operating margin, it is exhibiting optimistic growth trends.
Despite accounting for the risk of a recession, the company increased its FY22 sales and profits per share (EPS) growth estimate in its most recent second-quarter earnings report. This was a great move that strengthened Keane’s belief in the stock.
The analyst also noted that the company’s revenues are being greatly increased by new contracts, the growth of current agreements, and a strong worldwide presence, particularly in Latin America.
The analyst upgraded his forecast for Fiserv’s EPS growth in the fiscal years 22 through 24. He also raised his prediction for the company’s sales growth in FY23. Keane maintained a buy recommendation on the stock with a $135 price objective.
Top analysts trust software provider Datadog (DDOG). The company aids businesses in effortlessly analysing their complete stack by using their platform for real-time data monitoring. The company may not be immune to macroeconomic headwinds, but given the favourable climate for IT spending, it is quite likely to recover swiftly and effectively.
In spite of cutting the 12-month price objective to $130 from $160 due to the macro losses, Monness Crespi Hardt analyst Brian White maintained his stance on Datadog with a buy rating before to the release of the company’s quarterly earnings reports on August 4.
In White’s opinion, faster digital transformation has sparked a secular growth trend in the cloud that will continue to fuel demand for Datadog’s products over the long run. “Given Datadog’s rapid growth, the strong secular tailwinds in the observability market and the company’s cloud native platform, we believe the stock will command a premium valuation relative to other next-gen software vendors,” said White.
The analyst added that when the company reaches maturity, Datadog has enormous long-term potential to become profitable.
With a success record of 57 percent and an average return of 9.9 percent per, White’s ratings have been successful for him. The analyst is ranked No. 524 out of the almost 8,000 experts that TipRanks follows.
Domino’s Pizza is another business on Palmer’s purchasing list (DPZ). Domino’s, like the majority of other businesses in the food and quick-service restaurant sectors, suffered from high input costs, a decline in consumer discretionary spending, and a labour scarcity.
However, despite the challenges, the company is able to extend its operations thanks to its effective supply chain management, solid brand recognition, reasonably priced products, and technological innovation capabilities.
Palmer is enthusiastic about the efforts being made by the pizza business to internalise the control of delivery orders and reduce delivery restrictions in order to boost labour capacity. “To this end, the company is striving to share best practices in labor scheduling, it is pushing more orders to labor-efficient mobile order & pick up ($7.99 value is helping), and it is likely testing technology to allow drivers to more easily ‘opt-in’ as drivers,” said the analyst.
As “stagflationary forces grow,” Palmer also sees a great chance to increase market share in the carryout industry. Another element that can continue the development of same-store sales is the business’s digital offering of a big pizza for $7.99 with the possibility of a mix and match.