Jim Umpleby, CEO of Caterpillar Inc.
Adam Jeffery | CNBC
Investors caught a break last week as the big averages ended in gains on Friday, but volatility is likely to remain a central theme going forward.
Investors are not only considering the recently announced Federal Reserve rate hike, but also inflation and the war between Russia and Ukraine. It’s easy to get caught up in the stock market’s day-to-day swings, but investors need a long-term perspective to manage the turmoil.
According to TipRanks, which tracks top-performing analysts, the Wall Street pros have picked their favorite stocks, highlighting the names they believe have long-term potential.
Here are five names to watch this week.
Oracle (ORCL) looks more attractive to tech investors, according to Brian White of Monness, Crespi, Hardt & Co.
The huge tech conglomerate recently managed to report “respectable” earnings as well as “healthy” guidance for its future, he said. The analyst noted that ORCL’s revenue growth is currently the highest since the company moved to cloud-based solutions.
White assessed the stock as a buy and added a price target of $126.
The analyst wrote that “Oracle offers investors a high-value, value game with the opportunity to participate in an attractive cloud transformation.” The company’s relationships with TikTok and in healthcare continue to be a source of encouragement and there is strong momentum in its SaaS business.
However, White noted that the current volatility experienced by technology stocks may continue to weigh on ORCL stocks. In addition, it’s not so clear whether investors are excited about Oracle’s proposed $28.3 billion acquisition of health IT company Cerner.
White is ranked No. 265 out of nearly 8,000 analysts by TipRanks. His success rate is 60% and he has recovered an average of 25.2% from his stock selection.
Shares of Take Two Interactive (TTWO) fell recently after TTWO filed its S-4 form with the Securities and Exchange Commission regarding its acquisition of Zynga. Andrew Uerkwitz of Jefferies Group, however, views the resulting price action as exaggerated.
In a published report, the analyst claimed his bull case for Take-Two, stating that the stock “offers unprecedented value today.” In addition, he appreciates the strength seen in the video game publisher’s net bookings, which he expects to increase by FY24 and FY25.
Uerkwitz assessed the stock as a buy and assigned a price target of $231.
He said that despite TTWO management’s lenient guidance, these statistics have traditionally been conservative.
Take-Two has complemented its massive content pipeline with heavy investments in research and development, and more recently in sales and marketing. Uerkwitz wrote that the company “holds the highest quality content among US publishers” and that an “unprecedented wave of content” is expected to wash over the market. (See Take-Two Risk Analysis on TipRanks)
The analyst did not rule out a future positive revaluation of the stock – once the pipeline becomes more visible.
Out of nearly 8,000 analysts in TipRanks’ database, Uerkwitz ranks 152. He’s been successful at rating stocks 61% of the time, returning an average of 27.7% on each.
With employees returning to the office, there has been speculation that companies’ IT spending could also decline. However, Wall Street believes the secular tailwind will continue to boost ServiceNow (NOW).
Brian Schwartz of Oppenheimer & Co. argues the case in its recent report on the stock, noting that the “secular demand for modern cloud software, digitization of workflow, business continuity and analytics” aligns with NOW’s business model.
Schwartz assessed the stock as a buy, and he calculated a price target of $660 per share.
The analyst acknowledged the uncertainty and subsequent volatility surrounding high-growth and technical names, and emphasized short-term investment risk. However, Schwartz also hypothesized that ServiceNow’s industry peers are far behind the company in the sheer number of satisfied customers.
Despite rumors of declining IT spending, Schwartz expects a strong recovery for ServiceNow in back office deals and demand. (See ServiceNow stock charts on TipRanks)
The analyst maintains a No. 19 position out of nearly 8,000 analysts on TipRanks. His stock choices were correct 68% of the time and resulted in an average return of 48.5% each.
As the war between Russia and Ukraine continues, many expect an increase in cyber-attacks against the West. The need for greater cybersecurity has raised the profile of companies like SentinelOne (S).
Even before this development, SentinelOne maintained a position of the fastest growing company in the coverage of Alex Henderson of Needham & Co. The analyst recently said SentinelOne’s “purpose-built platforms designed to address this market have significant advantage and expect to gain market share.”
Henderson rated the stock as a buy, but stated a lower $50 price target of $82.
Despite the lowering of the projection, Henderson remained optimistic about the company’s prospects. He said the cybersecurity company recently released its quarterly results strongly and outperformed in areas such as customer growth and revenue.
Aside from operating margins that were tighter than one would like, Henderson emphasized the company’s technology in a competitive market. (See SentinelOne Hedge Fund activity on TipRanks)
In addition, SentinelOne management has not included the recently announced acquisition of identity detection software company Attivo in its guidelines. The merger’s contributions to SentinelOne will not be an added bonus until next quarter’s report.
Out of nearly 8,000 expert analysts, Henderson ranks 110. His success rate stands at 60% and he has achieved an average of 31% on his stock picks.
Russia’s war against Ukraine has contributed to rising commodity prices, especially given Moscow’s reputation as a mining exporter. This development has also increased the inventories of companies that facilitate extraction elsewhere, such as Caterpillar (CAT).
The world’s largest producer of mining equipment, engines and turbines is well prepared to absorb a significant portion of the industry’s higher spending. Stephen Volkmann of Jefferies Group noted that Russia will not be welcomed back into global markets anytime soon and operations within its borders cannot be relied upon.
Volkmann upgraded the stock to a buy, and he set a price target of $260.
The prominent company has historically been used by investors as an inflation hedge, and in a world of runaway rising costs, Volkmann expects a decade of reinvestment in its machinery.
The analyst said the war in Eastern Europe is “fundamentally reshaping global commodities markets, leading to structurally higher prices and diversification of supply in both the mining and oil and gas sectors.”
In addition to its core commodities business, CAT is also active in the commercial construction sector, which is vulnerable to the increasingly likely effects of stagflation. However, Volkmann sees potential losses as little more than a dent in Caterpillar’s valuation. (See Caterpillar Dividend Data on TipRanks)
On TipRanks, Volkmann is rated #231 out of nearly 8,000 analysts. He’s been right 67% of the time in stock selection, returning an average of 23.5% on each.
This post Top Wall Street Analysts Are Upbeat on Oracle & Caterpillar was original published at “https://www.cnbc.com/2022/03/20/top-wall-street-analysts-are-bullish-on-oracle-caterpillar.html”