A Dollar General store in Creve Coeur, Illinois.
Daniel Acker | Bloomberg | Getty Images
How to find top stocks primed to outperform during this notably volatile period? Here are a few of the names the best-performing Wall Street analysts are betting on.
With reopening optimism tempered by concerns of a second coronavirus wave, it could make sense to follow the stock picks of analysts with a proven track record of success. Here we used TipRanks analyst ranking service to pinpoint Wall Street’s best-performing analysts.
Here are the best-performing analysts’ five favorite stocks this week:
Shares in Canadian e-commerce enabler Shopify have rocketed 105% this year. And according to top RBC Capital analyst Mark Mahaney, SHOP still has further room to run. He reiterated his buy rating on the stock on June 17 while ramping up his price target from $825 to $1,000.
“Despite a doubling in its share price, we believe the market still underappreciates three things about SHOP: its TAM [total addressable market], its Take Rate Potential, and its Operating Margin potential…and hence its EPS power” the analyst explained.
Although he admits that at 28 times enterprise value/sales valuation is a significant risk, Mahaney believes SHOP deserves a premium multiple “given it has the fastest revenue growth on the largest base vs. our 13 highest-growth comps.” In fact, the RBC analyst estimates SHOP could reach $25 billion in annual revenue by 2028, making it one of the largest platform companies.
Several catalysts could accelerate revenue growth, says Mahaney, including the Shopify Fulfillment Network (SFN), Shopify Capital, next-generation Point-of-Sale (POS), and international expansion, among others. Plus the coronavirus has pulled forward e-commerce adoption, with U.S. Online Retail sales accelerating to 31% year-over-year growth in May.
With a 16.3% average return per recommendation, Mahaney comes in at #121 out of 6,700 analysts tracked by TipRanks.
Five-star Oppenheimer analyst Rupesh Parikh reiterated his positive stance on Dollar General with a $205 stock price forecast following a “very upbeat” presentation from senior management. The analyst walked away from the event bullish on the company’s short- and longer-term prospects.
“[We] continue to rank DG as a top food retailing/ discounter pick” Parikh told investors on June 17. Although the consumer environment remains uncertain, he believes “DG feels well positioned to benefit even in a more stressed consumer environment.”
Key takeaways from the event include: buy online and pick-up in store is ready for full scale rollout with commentary suggesting very positive early reads; the company continues to see about 12,000 real estate opportunities for the dollar store channel; and management commentary suggests confidence in resuming share buybacks again soon.
What’s more, Parikh believes DG appears well positioned to retain recent customers with digital now an additional potential retention tool. Shares in DG are currently trading up 22% this year
Cloud communications business RingCentral is soaring right now. Shares have exploded 62% this year, and five-star Northland Securities analyst Michael Latimore believes further growth lies ahead. He boosted his RNG price target from $242 to $290 on June 18 citing the company’s multiple expansion and strong execution and technology.
The analyst recently hosted a group meeting with RNG’s Chief Security Officer, Michael Machado, who has been with RingCentral since before it went public in 2013. According to Machado, the work-from-home movement further highlights RNG’s core value-add in enabling cloud- and mobile-first work-from-anywhere.
And the analyst agrees. Work-from-home seems to be another nice boost to the UCaaS (unified communications as a service) market and RNG, says Latimore, and “RNG’s platform enables work-from-anywhere, and work-from-home is just a subset of that.”
“Overall, we believe RNG is seeing more business as companies realize on-prem systems are not suited for virtual, mobile workforces” the analyst writes. He notes that new logos in the month of April increased 40% year-over-year, and RNG saw some accelerated upsell. Thanks to his strong stock picking track record, Latimore is ranked #170 out of 6,703 analysts by TipRanks.
There’s a new bull in town for Amazon. Five-star Needham analyst Laura Martin has just initiated coverage on the e-commerce giant with a buy rating and bullish $3,200 price target. Despite AMZN stock rallying 43% this year, her June 16 stock price forecast still shows upside potential of 21%.
Moreover, Martin has calculated several forms of valuation that conclude that AMZN is worth $4,500 to $5,000/share longer term. According to the Needham analyst, Amazon boasts multiple hidden value multipliers, focusing around its market size, ecosystem and significant services offering.
For instance, she sees “$5,000/share based on AMZN’s track record of TAM-expanding decisions that elongate its growth runway, drive higher profitability, and lower shareholder risk via revenue-stream diversification.”
According to Martin, the best way to value Amazon is holistically, as an ecosystem- which suggests AMZN is worth approximately $4,500/share. “We estimate that adding media assets such as Video, Twitch, Music, etc and groceries to the Prime bundle lowers churn, keeps users in the AMZN ecosystem for an extra 3 years, and increases the lifetime value by $3,437 per user” the analyst writes.
Martin is ranked #105 out of over 6,700 analysts by TipRanks, with a 19% average return per transaction.
HC Wainwright analyst Ram Selvaraju, one of the Top 50 analysts tracked by TipRanks, is betting on Danish biotech Genmab right now. He reiterated his GMAB buy call on June 15 with a $40 stock price forecast (26% upside potential) following a number of encouraging developments.
First, the drugmaker reported impressive results from its Phase 3 Andromeda trial of Darzalex in AL amyloidosis at the European Hematology Association virtual conference. This is the most common type of systemic amyloidois in the US, with about 4,500 new cases diagnosed every year. As amyloid proteins builds up in an organ, nerve or tissue, it gradually causes damage and affects their function.
“In our view, [GMB’s] Darzalex is likely to be established as a key component of a potential new standard-of- care regimen in AL amyloidosis based on the evidence from the Andromeda trial, providing another long-term catalyst to revenues” cheered Selvaraju.
Plus Genmab has just inked a high-profile collaboration arrangement with AbbVie for three of its bispecific antibody programs. According to Selvaraju, the arrangement should meaningfully accelerate Genmab’s progression into a fully-formed commercial-stage entity with a rich product portfolio.
With AbbVie, “Genmab gains access to a partner with significant commercial infrastructure in the hematological malignancy space and extensive development expertise” the analyst writes. Shares in Genmab have climbed 42% this year.