A Citibank sign in front of one of the company’s offices in California.
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Investors just can’t seem to find a trough in this bear market, and are struggling to hold on to any optimism amid growing concerns of a possible recession.
However, the key to surviving a bear market successfully is to calmly wait for the market to recover, meanwhile taking advantage of the current discounts on the right stocks.
It makes sense now more than ever to closely follow what top Wall Street analysts are saying about stocks. Here are five stocks chosen by the some of the finest analysts on Wall Street as per TipRanks, which ranks analysts according to performance.
Electric vehicle (EV) maker Nio (NIO) is suffering from the repercussions of the general weakness in consumer buying trends (in response to the inflation); and this weakness is expected to remain an overhang at least for the rest of this year.
Moreover, the lockdown in China due to resurgence of COVID-19 has been a woe till now, but with the easing of the restrictions, Nio is expected to see a boost in growth. (See Nio Hedge Fund Trading Activity on TipRanks).
Recently, Mizuho analyst Vijay Rakesh slashed his revenue estimates for the June quarter and full year. Moreover, he also cut his price target on the stock to $48 from $55, keeping the near-term pressures in mind, most of which are beyond Nio’s control.
Nonetheless, strong EV demand kept Rakesh’s longer-term outlook on Nio, buoyed. Additionally, Rakesh sees the supply-chain disruptions that have persisted since the beginning of the pandemic, easing in the second half of the year. The second half of the year is also expected to bring more capacity in foundries to help EV and other automakers ramp up production smoothly.
Overall, Rakesh maintains a bullish stance on the company over the medium to long term, with a reinforced Buy rating.
Rakesh holds the 131st spot in the list of almost 8,000 analysts followed by and ranked on TipRanks. Moreover, 56% of his stock ratings have been successful, returning an average of 19.5% per rating.
Another EV and automobile accessories maker that is on Vijay Rakesh’s radar is Rivian (RIVN). Granted, the company has been a victim of circumstances, particularly supply chain disruptions and chip shortages, but growth is expected to gain traction soon after the clouds clear.
Notably, Rakesh is upbeat about battery EVs (BEVs) prospects for the second half of the year. “Despite elevated macro risks, BEV could see strong 2H ramps as China re-opens and demand improves, with BEVs potentially up >55% 2H (over) 1H,” noted Rakesh, speaking in general about the EV industry. (See Rivian’s Stock Chart on TipRanks)
Therefore, despite lowering his production estimate for Rivian for the June quarter, the analyst is upbeat about the company achieving economies of scale supported by “a well-laid-out path towards further vertical integration giving more control to production and delivery of vehicles.” Rakesh factored the near-term headwinds into his price target and trimmed it by $10 to $70 per share.
“We see RIVN as a pure-play and strong early mover in the EV market with a focus on the higher-growth SUV/light truck market and a strong commercial vehicle roadmap with Amazon,” explained Rakesh while reiterating a Buy rating on the stock.
Microchip Technology (MCHP) is a leading developer and manufacturer of microcontrollers, memory and analog, and interface products for embedded control systems (small, low-power computers designed for specific tasks). Like its peers, the company has also been facing the consequences of global supply chain shortages, which are leading to increased lead times and manufacturing constraints.
Recently, Stifel Nicolaus analyst, Tore Svanberg, found various upsides to the business and upgraded the MCHP stock from Hold to Buy. He also raised the price target to $75 from $70. (See Microchip’s Insider Trading Activity on TipRanks)
Svanberg believes that Microchip has proved its business to be resilient in the previous downturns. Moreover, he also noted that the current valuation of a 9.8 times price-to-earnings on estimated non-GAAP EPS of CY23, is near Microchip’s lowest traded valuation in the past five years. This makes the stock even more attractive right now.
“MCHP has established a highly diversified, high-performance analog & embedded computing business model, with an impressively diverse revenue base across multiple metrics,” opined Svanberg, who holds the 28th position among almost 8,000 analysts followed on TipRanks. Moreover, his stock ratings have been successful 66% of the time, returning an average of 22.5% per rating.
The banking sector is one of those which stands to benefit most from the high-interest rate situation, and Citigroup (C) is one of the largest players in this area.
As RBC Capital Market analyst Gerard Cassidy pointed out in a recent research report, Citigroup is sensitive to assets, meaning net interest revenue will steadily rise throughout the monetary tightening period. “Higher net interest revenue levels that are generated through rising interest rates fall right to the “bottom line” and can have a meaningful impact on EPS, in our view,” he said.
Cassidy was also upbeat about Citigroup’s longer-term prospects. More than half of the firm’s revenues come from outside North America, placing the company in a strong position to benefit from the growth in emerging markets.
Importantly, Citigroup, and most of the industry players, experienced below-normal credit losses, which seems like a good thing from the surface, but is not a sustainable trend according to Cassidy. Although there are chances of credit losses increasing to normal levels in the second half of 2022, the analyst believed them to be “manageable for C but could lead to increased volatility in its stock price.” (See Citigroup Risk Factors on TipRanks)
These observations made Cassidy reiterate a Buy rating on the C stock reflecting his long-term bullishness. His short-term concerns were factored into the price target, which he slashed from $65 to $60.
Gerard Cassidy ranks No. 30 among almost 8,000 analysts tracked by TipRanks. Moreover, he has a history of 67% successful ratings and 22.7% returns on each rating.
Public Storage (PSA) owns, develops, and operates self-storage facilities in the U.S. Encouragingly, a large part of Public Storage’s customer base prefers not to move their stored items around, making it easier for the company to raise its monthly fees. Moreover, the recent sale of its Business Parks unit to Blackstone, which is expected to be completed in the third quarter this year, is expected to bring in $2.7 billion in proceeds for Public Storage.
Recently, Stifel analyst Stephen Manaker reiterated his positive stance on the storage operating environment, backed by strong and sustained demand.
Manaker also pointed at Public Storage’s strong balance sheet, as its ample cash reserves are expected to have the company covered for any expenditure in 2022. The analyst assumed that $400 million of the net proceeds from the Business Parks sale will be retained by the company (and the rest will be paid via cash dividends). This apart, $941 million cash balance was already present at the end of the first quarter. Moreover, $500-800 million is also expected to be retained in cash flows this year. This puts PSA in a strong position of liquidity. (See Public Storage Dividend Date & History on TipRanks)
Now, Manaker recalled that PSA has a bond of $500 million maturing this year. Moreover, according to the guidance provided by the company, $1 billion is the budget for acquisitions for FY22. The above assumptions and calculations done by Manaker deduced that PSA may not even have to raise any additional capital to repay its bond and make the acquisitions. This is good news in times of high interest rates.
These strong upsides led the analyst to reiterate a Buy rating on the stock. However, the increasing interest rates led Manaker to cut his price target to $360 from $410, even though he assumes lower interest expenses.
Notably, Stephen Manaker holds the No. 42 spot among nearly 8,000 analysts tracked on TipRanks. Interestingly, 75% of his ratings have been successful, and each of his ratings have delivered an average return of 19%.