Jim Umpleby, CEO of Caterpillar Inc.
Adam Jeffrey | CNBC
Investors paused last week as major averages ended Friday with gains, but volatility is likely to remain a central theme going forward.
Not only are investors weighing in on the Federal Reserve’s recently announced rate hike, but they’re also thinking about inflation and the war between Russia and Ukraine. It’s easy to get caught up in the daily swings of the stock market, but investors need a long-term perspective to manage the tumult.
Wall Street pros picked their favorite stocks, highlighting names they think have long-term potential, according to TipRanks, which tracks top-performing analysts.
Here are five names to watch this week.
Oracle (ORCL) seems more attractive to tech investors, according to Brian White of Monness, Crespi, Hardt & Co.
The massive tech conglomerate recently managed to declare “respectable” earnings, as well as a “healthy” direction for its future, he said. The analyst noted that ORCL’s revenue growth is currently the highest since the company shifted to cloud-based solutions.
White priced the stock as a buy and added a price target of $126.
The analyst wrote that “Oracle offers investors a high-quality value play with the opportunity to participate in an attractive cloud transformation.” The company’s relationships with TikTok and in the healthcare industry remain a source of encouragement, and there is strong momentum in its SaaS business.
White noted, however, that the current volatility that tech stocks are experiencing may continue to weigh on ORCL stocks. Also, it’s unclear whether investors are excited about Oracle’s proposed acquisition of healthcare IT company Cerner for $28.3 billion.
White is ranked by TipRanks 265th out of nearly 8,000 analysts. His success rate stands at 60% and he has returned an average of 25.2% of his stock picks.
Actions of Take Two Interactive (TWO) recently declined after TTWO filed its Form S-4 with the Securities and Exchange Commission regarding its acquisition of Zynga. However, Jefferies Group’s Andrew Uerkwitz considers the resulting price action to be overdone.
In a published report, the analyst affirmed his bullish case for Take-Two, saying the stock offers “unprecedented value today.” Additionally, it appreciates the strength seen in the video game publisher’s net bookings, which it expects to increase by FY24 and FY25.
Uerkwitz rated the stock as a buy and assigned a price target of $231.
He said that despite the moderate advice provided by TTWO management, these measures were traditionally conservative.
Take-Two has supplemented its massive content pipeline with heavy investments in research and development, and more recently, sales and marketing. Uerkwitz wrote that the company “has some of the highest quality content among American publishers” and that an “unprecedented wave of content” is expected to hit the market. (To see Take-Two Risk Analysis on TipRanks)
The analyst did not rule out a positive future revaluation of the stock – once its pipeline becomes more visible.
Out of nearly 8,000 analysts in the TipRanks database, Uerkwitz ranks 152nd. He successfully priced stocks 61% of the time, and he returned an average of 27.7% on each.
Brian Schwartz of Oppenheimer & Co. made this case in his recent stock report, noting that the “secular demand for modern cloud software, workflow digitization, business continuity and analytics” is aligned with NOW’s business model.
Schwartz priced the stock as a buy and calculated a price target of $660 per share.
The analyst acknowledged the uncertainty and subsequent volatility surrounding high-growth and tech names, and he pointed to short-term investment risk. However, Schwartz also speculated that ServiceNow’s industry peers lag far behind the company in terms of the number of satisfied customers.
Despite a supposed slowdown in IT spending, Schwartz anticipates a strong recovery for ServiceNow in transactions and back-office demand. (To see ServiceNow Stock Charts on TipRanks)
The analyst maintains a ranking of No. 19 out of nearly 8,000 analysts on TipRanks. His stock picks were correct 68% of the time and they generated average returns of 48.5% each.
As the war between Russia and Ukraine continues, many anticipate an increase in cyberattacks against the West. The need for more cybersecurity has raised the profile of companies like SentinelOne (S).
Even before this development, SentinelOne maintained a position as the fastest growing company in Needham & Co.’s Alex Henderson coverage. of SentinelOne have a substantial advantage and expect them to drive market share gains.”
Henderson rated the stock as a buy, but declared a price target below $50 instead of $82.
Despite the reduction in projections, Henderson remained optimistic about the company’s prospects. He said the cybersecurity company recently released its quarterly results on a strong note, outperforming in areas including customer growth and revenue.
Along with its tighter-than-wish operating margins, Henderson has highlighted the company’s technology in a competitive market. (To see SentinelOne Hedge Fund Activity on TipRanks)
Further, SentinelOne management did not include in its guidance its recently announced acquisition from identity detection software company Attivo. Merger contributions to SentinelOne will be just an added bonus in next quarter’s report.
Out of nearly 8,000 expert analysts, Henderson is ranked No. 110. His success rate stands at 60% and he has returned an average of 31% on his stock picks.
Russia’s war on Ukraine has contributed to soaring commodity prices, especially given Moscow’s importance as a mining exporter. This development has also inflated the stocks of companies that facilitate extraction elsewhere, such as Caterpillar (CAT).
The world’s largest producer of mining equipment, engines and turbines is well positioned to capture a significant share of the increased spending in the sector. Jefferies Group’s Stephen Volkmann noted that Russia will not be welcome in global markets anytime soon and operations within its borders are unreliable.
Volkmann upgraded the stock to a buy and he assigned a price target of $260.
The leading company has always been used by investors as a hedge against inflation, and in a world of rising costs, Volkmann plans a decade of reinvestment in its machinery.
The analyst said the war in Eastern Europe is “fundamentally reshaping global commodity markets, leading to structural price increases and supply diversification in mining, oil and gas.”
Beyond its core commodities business, CAT operates in the commercial construction sector, which is susceptible to the increasingly likely impacts of stagflation. However, Volkmann doesn’t see the possible losses as much more than a dent in Caterpillar’s valuation. (To see Caterpillar Dividend Data on TipRanks)
On TipRanks, Volkmann is ranked No. 231 out of nearly 8,000 analysts. He was correct at picking stocks 67% of the time, and he returned an average of 23.5% on each.