A McDonald’s restaurant logo is seen in the window with a reflection of the Kremlin tower in central Moscow, Russia, March 9, 2022.
Maxim Chemetov | Reuters
Another month has passed and the market outlook shows no signs of improving.
August started on an optimistic note, but ended with all three major indexes falling. After a jobs report just below estimates, investors are looking to the next Federal Reserve meeting in September.
Now that the short-term economic outlook is looking hazy again, it would be a good idea to choose investment ideas with a longer-term perspective. To that end, here are five stocks picked by top Wall Street pros, according to TipRanks, a service that ranks analysts based on their performance.
Hub Group transport management company (HUBG) faced supply chain disruptions, high transportation costs and other headwinds.
A healthy balance sheet is a strength that allows Hub Group to innovate even in the face of difficulties. In its commentary on quarterly results, management said the company had approximately $300 million in cash without net debt. (See Hub Group Stock Investor Sentiments on TipRanks)
Recently, Hub Group acquired TAGG Logistics to expand its fulfillment solutions offerings. Cowen analyst Jason Seidl estimates the acquisition will bring in $200 million in additional revenue this year.
Additionally, Seidl observed that the acquisition or cost increases do not deter the company from its share buyback commitments. “Consistent with commitments made during their Q2 earnings call, HUBG repurchased $35 million of shares in early August and an additional $15 million upon reauthorization, bringing total repurchases to $50 million. for the quarter so far,” the analyst said, raising the price target to $121 from $119 and keeping his buy rating on the stock.
Ranked #8 among 8,000 analysts tracked on TipRanks, Seidl passed 70% of its ratings, generating an average return of 25.4%.
McDonald’s, the world’s largest fast food chain (MCD) is next on the list of analysts’ favorite stock picks for this year. The company has learned to weather the recession through ongoing collaborations and experimental menu upgrades to meet the needs of younger customers.
Tigress Financial Partners analyst Ivan Feinseth maintains his Buy rating on McDonald’s and even recently raised the price target to $320 from $314. Feinseth believes that continued growth initiatives will lead McDonald’s to compensate for the closure of its Russian operations.
The analyst also pointed out that MCD is “reinvesting its cash flow into new growth initiatives and enhancing shareholder returns through continued increases in dividends and share buybacks.” This helps in boosting customer retention, adding new customers and improves brand loyalty and recognition. (See McDonald’s dividend date and history on TipRanks)
Feinseth holds the 189e place among the 8,000 analysts in the TipRanks database. The analyst saw 61% of his ratings generate profits, bringing 12.4% return on average.
Working day (WDAY) provides enterprise cloud applications for corporate finance and human resources departments around the world. The software company recently released quarterly results. Additionally, the company maintained its full-year guidance despite factoring in current headwinds. This boosted investor and analyst confidence.
After the print, Deutsche Bank analyst Brad Zelnick remained on his buy rating on the stock and raised his price target to $230 from $225. “Management continues to recognize the uncertain environment and sees heightened scrutiny of larger transactions while affirming that business remains healthy for what Workday offers,” Zelnick said. (See Workday insider trading activity on TipRanks)
Zelnick is ranked #77 among the 8,000 analysts tracked on TipRanks. Notably, 69% of analyst ratings were profitable, generating 17.3% average returns per rating.
Another of Zelnick’s favorite stocks is tax preparation software provider Intuit (INTU). A steady focus on expanding its software capabilities and a strong business model have helped the company weather the current macroeconomic headwinds.
Intuit also bolstered investor confidence by raising the long-term growth prospects of its Small Business segment. In Zelnick’s words, this improved outlook underscored “its impressive scale expansion and likely shifted the company’s growth algorithm upwards in the eyes of many investors.” (See Intuit Hedge Fund Trading Activity on TipRanks)
However, Zelnick also pointed to a few possible setbacks that could affect stock appreciation in the near term. On the one hand, aggressive investments in growth initiatives are preventing Intuit from improving its margin growth potential. Even for FY23, Intuit has no confident margin growth expectation. Moreover, the guidance provided by the company does not effectively take into account the major economic downturn that is expected in the near future. However, according to history, Intuit has weathered the downturns.
“While Intuit is not immune to an increasingly weak macro environment, the forward guidance reaffirms our belief that product leadership, adherence and network effects across its platform will ‘cutting edge AI experts are enduring differentiators,’ Zelnick said, maintaining a Buy rating and lifting the price target to $560 from $525.
The final stock on our list is semiconductor mainstay Marvell Technology (LMRV). Semiconductor component shortages, which have long plagued the market, have made things difficult for Marvell.
Nevertheless, Marvell benefited from the demand for chips to support advanced and emerging technologies. The company’s products support the automotive/networking, data center, enterprise networking, consumer and transportation infrastructure markets. (View Marvell stock chart, price history and charts on TipRanks)
One of the Marvell bulls is Needham analyst Quinn Bolton. “With a strong track record of execution and through the expansion of its product portfolio targeting the high-margin, high-growth cloud/5G/automotive infrastructure markets, Marvell is now targeting one of the term among large-cap companies in the semiconductor industry,” Bolton said.
The analyst expects Marvell to achieve organic revenue growth of more than 30% in CY22 and around 20% in CY23, driven by further design gains for its 5nm platform. This growth should also be supported by increased chip supply from its main wafer foundry, substrate and assembly and test partners. Bolton points out that this growth expectation is the highest among Marvell’s large-cap peers.
The analyst also expects non-GAAP gross margin to reach 40% by the end of FY24. Needless to say, Bolton reiterated its buy rating on the stock, with a $66 price target.
The analyst is ranked #3 out of 8,000 analysts on the TipRanks database, and he has a 67% pass rate on his ratings. Additionally, each of its ratings generated average returns of 41.4%.