NVIDIA President and CEO Jen-Hsun Huang
Robert Galbraith | Reuters
This past week revealed several key economic updates for July, including a strong labor market, cooler-than-expected inflation, and a lower budget deficit, all of which have kept market spirits high.
As cheerful as investors might be thanks to all the good news, a looming uncertainty still calls for making careful investment decisions, keeping a long-term perspective in mind.
Here are five stocks highlighted by Wall Street’s top pros, according to TipRanks, a service that ranks analysts based on their performance.
Nvidia (NVDA), one of the top players in the semiconductor market, specializes in designing graphics processing units for the gaming and professional markets. It also produces system-on-chip units for the mobile computing and automobile industries. Like its peers, Nvidia has also borne the brunt of chip shortages that have roiled the supply chain.
The company recently announced an update, in which it lowered its second-quarter fiscal 2023 expectations. Though this might have pulled back the stock’s price by about 8% following the announcement, Needham analyst Rajvindra Gill noted that the stock is still about 20% above its most recent lowest price, recorded in early July. (See Nvidia Hedge Fund Trading Activity on TipRanks)
Gill did, in fact, identify the various setbacks that Nvidia is facing at the same time, which are hurting its margins. For instance, GPUs, which are now on a fire sale, had been selling last year at two-to-three times more than the manufacturer suggested retail price.
Nonetheless, Gill tried to shut out the noise around Nvidia’s lowered estimates and look beyond the near-term obstructions. He found that Nvidia’s balance sheet is one of the strongest among its industry peers, which will help sustain the company through troubled times.
Moreover, with growing demand from data-center, Nvidia’s most important end market, the company is likely to see tremendous growth in the forthcoming years. “We believe data center, the end-market that we view as NVDA’s biggest growth engine, is experiencing a recovery as hyperscaler sales have ramped the past few quarters and visibility has improved,” observed Gill.
Gill reiterated a buy rating on the stock, with a price target of $185. Gill’s five-star rating, and 176th ranking among around 8,000 analysts tracked on TipRanks, make his convictions worthy of being considered. Each of his 252 out of 402 successful ratings has garnered an average return of 14.9%.
Micron (MU) is another one of the U.S.’s largest microchip companies. The company lowered its guidance, claiming weak end-demand and undesirable inventory conditions.
However, Mizuho Securities analyst Vijay Rakesh, another five-star rated analyst on TipRanks, pointed out that DRAM’s full-year revenue estimate provided by Micron’s management stands at mid-to-high single-digit-percent year-over-year growth; and that of NAND is at low-to-mid teens percent year-over-year gain. Nonetheless, the long-term view was encouraging. Micron expects DRAM’s long-term growth to be in the mid-teens percentile, and that of NAND to be around 28%.
Moreover, Rakesh was upbeat about Micron’s positioning to benefit from secular growth trends driven by cost declines in NAND and DRAM, as well as content growth in various emerging technologies. (See Micron Dividend Date & History on TipRanks).
Although the analyst slashed his price on the MU stock to $75 from $84, he reiterated his longer-term vision of the company with a Buy rating.
Rakesh has been ranked No. 94 out of nearly 8,000 analysts followed on TipRanks. Moreover, 59% of his ratings were profitable, with 22% average returns generated on each rating.
Wafer fabrication equipment provider ACM Research (ACMR) has significant operations in China, and is benefiting from the easing of lockdowns in the country. The company’s second-quarter performance was better-than-expected, and the earnings commentary indicated numerous upsides to the company’s growth prospects
According to Needham analyst Quinn Bolton, the reinforcement of its full-year sales forecast of $365 million-$405 million and the possibility of reaching the upper end of the range was “the most notable takeaway from the call.” (See ACM Research Stock Investors’ sentiments on TipRanks)
Bolton also noted that ACM Research is expected to ramp its shipments in the second half of the year, thanks to the lifting of Covid-19-led restrictions in China. This will help the company’s new products gain traction.
The analyst was also upbeat about the company’s progress in selling its products to non-China territories.
“Investors have been wary of ACMR’s high exposure to China, but we believe this thesis will change over time with ACMR’s globalization efforts. During 4Q21 alone, the company has announced design wins with four global IC manufacturers including one in the U.S.,” said Bolton.
Bolton reiterated a Buy rating on ACM Research with a price target of $25. With a No. 1 ranking among about 8,000 analysts tracked on TipRanks, Bolton’s opinions are highly regarded by investors. Moreover, the analyst has had success with 72% of his ratings, with each rating bringing in 45% average returns.
Video hosting, sharing, and services platform Vimeo (VMEO) has not been able to break a profit in the past year. Moreover, its stock price has fallen almost 78% during that period.
As beaten down as it seems, Wells Fargo analyst Brian Fitzgerald is strongly upbeat about the company. Satisfactory second-quarter results were accompanied by mixed guidance by the management. The company looks at a slowdown in revenue growth in the second half of the year, but also expects EBITDA to be higher than previously expected. (See Vimeo Blogger Opinions & Sentiment on TipRanks)
Vimeo’s focus on optimizing marketing spend is also a solid move, according to Fitzgerald. Though the company has curbed overt spending, management indicated that they will monitor several performance indicators to determine when and where to input additional investment. Fitzgerald believes that such operational discipline will finally lead to a positive EBITDA in 2023.
Moreover, Fitzgerald also expects this earnings season to be the last one with a slew of lowered forecasts.
The analyst reiterated a Buy rating on the stock with a price target of $12 (down from $16). Ranked at No. 141 among about 8,000 analysts on TipRanks database, Fitzgerald has managed to give 58% profitable ratings, with each rating generating an average return of 19%.
Take-Two Interactive Software
Interactive software provider Take-Two (TTWO) has big-banner video games in its kitty, including Grand Theft Auto and Red Dead Redemption. However, along with the rest of the broader market, the company has also lost quite a bit of its valuation, with its stock prices dropping almost 31% year-to-date.
Nonetheless, this company remains in the buy-list of Brian Fitzgerald. Take-Two’s recently released first-quarter fiscal 2023 results were quite encouraging, supported by recurrent customer spending.
Moreover, its recent acquisition of mobile games giant Zynga is expected to give a boost to its games portfolio, thus driving more revenues. (See Take-Two Stock Chart on TipRanks)
Going by TTWO’s positive earnings commentary, the analyst noted that the process of integrating Zynga into its operations appears to be going seamlessly. In fact, Fitzgerald recalled that “management expects to realize $100 million in annual cost synergies within two years post-close.”
“We remain confident in our view that the ZNGA acquisition will prove a smart one. TTWO now has the strongest catalog of mobile games of its peers, with plenty of levers to pull for margin expansion and the opportunity to expand its existing IP to the fastest-growing platform in gaming,” noted Fitzgerald, who reiterated a Buy rating on the stock with a price target of $185.