Shoppers walk past a Walmart store in San Leandro, California, United States, Thursday, May 13, 2021.
David Paul Morris | Bloomberg | Getty Images
As the earnings season draws to a close, investors’ eyes are focused on the look of the second half of 2021.
Whether it’s a contagious new variant of Covid-19 causing lockdowns, shifting e-commerce trends altering consumer behavior, or vacation seasonality determining the fate of the travel industry, factors affecting our financial futures are unpredictable. To gain the advantage, many investors take into consideration the ratings assigned by the top performing financial analysts. TipRanks makes this possible for the ordinary investor by organizing these up-to-date ratings in an easy-to-read format.
Some of the companies featured in this article have failed to meet analyst estimates, sometimes with poor second quarter earnings performance due to difficult comparisons to their incredibly strong first quarter results. Others, however, have gotten away with it and reported encouraging developments. These now remain as, or have been newly assigned, purchase ratings. Wall Street’s top performing analysts gave these ratings because of the companies’ long-term upside potential.
Let’s take a look at five stocks that top analysts consider long-term buys.
Particularly well positioned to face the deceleration of e-commerce trends, Walmart recently released quality earnings results. After Walmart beat Wall Street consensus estimates and raised its own forecast, Pierre Benoit of Robert W. Baird & Co. raised its price target from $ 160 to $ 170 and maintained its buy rating on the stock.
The five-star analyst praised Walmart’s diversification of revenue sources, including the acceleration of initiatives such as Walmart Connect. He also noted that gains had been made in the grocery and general merchandise sectors.
Walmart beat Wall Street’s earnings per share estimate of $ 1.51, bringing in $ 1.78. In addition, the retailer increased its international sales by 13% and reached a record level of Sam’s Club memberships.
The back-to-school shopping season is encouraging for Benedict, who said Walmart is “well positioned regardless of the macro environment” for the second half of the year. Stimulus payments have certainly helped Walmart’s past earnings, and now the analyst argues the business continues to pick up steam.
Unique data from TipRanks placed Benedict 34th out of more than 7,000 analysts. It has an 81% pass rate and an average return of 24.3% per grade.
As vaccination campaigns intensified in the first half of the year, the travel industry followed suit. Despite the company’s particularly precarious situation at the start of the pandemic, Airbnb was able to navigate rough seas and is now sailing smoothly. After another decline in second quarter profits, Brian Fitzgerald of Wells Fargo has forecast a strong second half ahead.
Fitzgerald valued the stock as a buy and raised his price target from $ 200 per share to $ 210.
The five-star analyst based her assumption that while long-term non-urban bookings have been the most important niche for the business, it is now seeing the increase in shorter, more urban bookings. This follows the opening of savings throughout the summer, as well as the start of the typical holiday season.
However, he expects more flexible travel trends to continue as consumers keep their increasingly hybrid work schedules. Airbnb has a large portfolio of domestic and international real estate options, and as such, Fitzgerald believes the company is in a particularly advantageous position to capture this trendy market.
Despite the Covid-19, things are going well for the company. Its Nights & Experiences initiative grew 197% year-over-year and the gross value of bookings increased 320% over the same period.
Airbnb has helped its supply and demand curve by attracting more guests, after many chose to lease their properties long-term to locals. It introduced better-optimized integration strategies for new hosts, reducing onboarding time by over 50%.
Fitzgerald remains optimistic for the third quarter, arguing that the guidance provided by ABNB is “conservative”. However, he warns that “the spread of Covid variants, local travel restrictions and slowing vaccinations are starting to negatively impact cancellations.”
On TipRanks, Fitzgerald is ranked # 36 out of over 7,000 total analysts. It has a 70% pass rate, with an average return of 32.9% per grade.
The semiconductor shortage in the first half of 2021 has caused a spiral of several industries, including automakers and computer makers. Now, with the supply of silicon chips slowly rising to meet high demand, it’s important to find the best company to invest in.
Vivek Arya of Bank of America thinks one of them is Advanced Micro Devices. He claims that even with the recent rise in prices, the stock is still trading at around 25% below its value.
Calling him a “top catch-up candidate,” Arya rated the stock as a buy and declared a price target of $ 135.
Not only AMD recently beat earnings per share expectations of over 20%, but the company is currently trading at a discount to its industry competitors. Arya said the company is poised to increase gross margins more than almost any other semiconductor producer.
Unlike Intel, AMD has “limited exposure to a smartphone, memory, [and] automotive / industrial demand. Intel still faces losses from Apple’s decision to produce its processors in-house, and its pipeline may be a generation behind AMD’s roadmap.
On TipRanks, Arya is ranked 71st out of over 7,000 total analysts. It has a 69% pass rate, while achieving average returns of 27.4% per note.
Even a feeling of less than stellar second quarter results can translate into a buying opportunity. For example, if a stock falls sharply, but the investor sees it as an overreaction, a buying opportunity arises. This is precisely the thought process of Brad Erickson from RBC Capital Markets, who wrote that the trends that have negatively affected Wix.com “seem transitory” and that the company itself is still a leader in web design.
Erickson reiterated his buy rating on the stock and assigned a revised price target of $ 270. While this goal is lower than its previous one at $ 315, it could still be a huge plus for anyone looking to make the trade.
The five-star analyst speculates that Wix’s B2B partnerships offer more benefits than not, as they have the potential to turn into recurring monetization opportunities. He interpreted management’s comments to mean that the transactions themselves can also “organically scale up to 4 times the minimum commitments depending on the conversion.”
While Wix provides services to individual web developers, its larger, more institutional e-commerce customers generate significantly more revenue for the business.
Finally, Erickson wrote that he sees “the increased pursuit of agency channels and the e-commerce opportunity as additional potential given the attractive size and recurring nature of these revenue streams.” In other words, as long as e-commerce trends continue to advance, Wix will benefit.
On TipRanks, Erickson is ranked No. 184 out of over 7,000 analysts. It has a 58% pass rate and an average return of 38.1% per grade.
If a business is able to weather a storm, it will be strong by the time the sky clears. Nio has mitigated the impacts of the global semiconductor shortage and is expected to perform even better once supply constraints ease. Vijay Rakesh of Mizuho Securities foresees this development path for the Chinese manufacturer of electric vehicles (EV).
After pricing the stock as a buy, Rakesh affirmed his optimism by raising his 12-month price target from $ 65 to $ 67.
VE company has posted mixed results, but Rakesh sees a longer-term game at hand. Nio has raised its forecast for third-quarter deliveries to 97% year-on-year and could increase production by up to 100%.
The five-star analyst wrote that Nio is “well positioned for growth with leadership in premium EVs, accelerating EV penetration in China, expansion in Europe in 2H21 and market offerings of potentially mass in 2022-2023 “.
The company expects to see its first Norwegian deliveries in September, signifying its position as a global presence and increasing brand awareness. In addition, Nio has invested heavily in an efficient infrastructure network, with a solid roadmap in anticipation of a growing number of charging stations.
Nio’s healthy track record shows its potential for prosperity once the current chip shortage subsides, allowing the company to grow to full strength.
On TipRanks, Rakesh is ranked # 97 out of over 7,000 analysts. Its success rate is 67% and an average return of 24.9% per note.