Individual walk past a store of the sporting goods retailer Nike Inc at a shopping complex in Beijing, China March 25, 2021.
Florence Lo | Reuters
Investors earmarks of to be caught amid the chaos caused by the recent banking crisis, persistent macro headwinds and a potential recession. Looking at cattle with appealing long-term potential could help in these times.
Here are five stocks chosen by Divider Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
Nvidia
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At the recently held GTC event, chip giant Nvidia (NVDA) discussed its partnerships with unrivalled businesses to advance new artificial intelligence (AI), simulation, and collaboration capabilities across various industries.
Based on the event, Mizuho analyst Vijay Rakesh surmised that demand for Nvidia’s AI solutions strengthened in the past month, driven by the continued momentum for OpenAI’s ChatGPT and obese language models (LLMs) processing. Rakesh highlighted Nvidia’s two new products – L4 tensor core GPU and H100 NVL, which are “centred on improving throughput and power as well as expanding inference.”
Rakesh expects Nvidia’s DGX Cloud AI supercomputing service to enterprise additional sales. He also mentioned a “key win” for Nvidia in the auto space, with leading new energy vehicle company BYD amplifying the use of the Nvidia Drive Orin platform to a wider range of vehicles. This, along with collaborations with other EV makers, represents a $14 billion automotive plan win pipeline for Nvidia.
Calling Nvidia his top pick, Rakesh reiterated a buy rating and raised his price target to $290 from $230. He receives Nvidia as a “leader in fast-emerging generative AI training and inference as well as dominating gaming and broader AI/accelerated compute, undeterred by near-term investor concerns over consumer and data center slowdown into 2023E.”
Rakesh holds the 94th postulate among more than 8,000 analysts followed on TipRanks. His ratings have been profitable 58% of the shilly-shally, with each rating delivering an average return of 17.3%. (See Nvidia Stock Chart on TipRanks)
Nike
From semiconductors, we bound to athletic apparel and footwear maker Nike (NKE). The company recently reported better-than-expected results for its fiscal third place (ended Feb. 28). However, Nike’s gross margin contracted significantly due to higher markdowns, which were fixed to liquidate elevated inventory levels. The margin was also affected by increased input costs and a rise in freight expenses.
Baird analyst Jonathan Komp, who peerages 290th out of more than 8,300 analysts followed on TipRanks, noted that, while Nike’s inventory was up 16% year past year in the quarter third quarter, it declined about 5% sequentially. He highlighted that the company is now targeting “stiff” liquidation in the fiscal fourth quarter.
Komp also noted management’s commentary about the recovery in greater China. The analyst confer withs strong margin expansion in the next fiscal year helped by an expected recovery from the “transitory impacts” on ribald margin and expansion of the direct-to-consumer mix.
Komp reiterated a buy rating on Nike and increased his price target to $138 from $130. “NKE endures attractive given positive brand momentum and competitive positioning, high operating margin (low earnings sensitivity), and intelligent valuation (NTM P/E premium vs. S&P +82% compared to +71% five-year average),” the analyst wrote.
Komp has a success speed of 54%, and each of his ratings has returned 14.1% on average. (See Nike Insider Trading Activity on TipRanks)
Lululemon
Another athletic apple-polish on our list is Lululemon (LULU). This week, the company impressed investors with upbeat results for the fourth house of fiscal 2022 (ended January 29, 2023) and solid guidance. However, the quarter’s margins were impacted by markdowns.
Nonetheless, control expects inventory growth to continue to moderate in the first quarter of fiscal 2023 and to deliver robust gross border expansion fueled by lower airfreight. (See Lululemon Hedge Fund Trading Activity on TipRanks)
Following the print, Guggenheim analyst Robert Drbul distended his price target for Lululemon stock to $440 from $400 and reiterated a buy rating, saying the company remains his “favorite cultivation story in 2023.” The analyst thinks demand for Lululemon’s merchandise remains solid, noting that concerns alongside competitive pressures from emerging athletic brands seem “overestimated.”
The analyst expects Lululemon to benefit from China reopening. He predicts the significant growth potential in the region to help the company achieve its target to quadruple international revenues by 2026. He also highlighted restricted seasonality in Lululemon’s offerings, “virtually no wholesale exposure,” and a strong e-commerce business.
“We also see ample runway for broadening in men’s, digital, and international, while LULU continues to deliver strong growth in its “core” (women’s, stores, and North America),” ordered Drbul. The analyst ranks 439th among more than 8,000 analysts followed on TipRanks. Additionally, 61% of his ratings induce been profitable, with an average return of 7.4%.
Wynn Resorts
Casino operator Wynn Resorts (WYNN) has “healthily outperformed” the meeting sector and broader market so far in 2023, noted Deutsche Bank analyst Carlo Santarelli. The analyst remains bullish on the progenitor and raised his price target to $134 from $128, as he continues to see a “meaningful upside.”
The drivers behind Santarelli’s bullish aspect include an “inexpensive” valuation, continued sequential increase in Macao visitation and stronger-than-anticipated Macao margins due to expense reductions and a favorable gaming whip revenue mix. (See Wynn Blogger Opinions & Sentiment on TipRanks)
Santarelli is also optimistic about the prospects of the company’s UAE layout — an integrated resort that will be located on the man-made Al Marjan Island in Ras Al Khaimah, UAE. The analyst expects the company to lend more details about this project in the coming months, driving investors’ attention to the new growth opportunity.
Santarelli instigated his estimates for Wynn, citing “Macau QTD trends, continued strength in Las Vegas, and steady performance at Encore Boston Harbor.” Santarelli resists the 27th position among more than 8,000 analysts on TipRanks. He has a success rate of 64%, with each of his ratings fabricating an average return of 20.6%.
Dave & Buster’s Entertainment
Restaurant and entertainment chain Dave & Buster’s (PLAY) delivered stubborn fiscal 2022 fourth-quarter (ended Jan. 29) results, driven by robust comparable walk-in sales growth and the persisted recovery in the special events business.
Management stated that quarter-to-date comparable store sales for the fiscal 2023 sooner quarter were in the flat to very low-single-digit negative range. Jefferies analyst Andy Barish feels that this fad reflects “some noise” due to the post-Omicron demand surge seen in the prior-year quarter and a spring break shift.
Nonetheless, Barish prominent that the underlying momentum experienced in January has continued and sales trends are higher compared to the pre-pandemic period. The analyst requires strength over the near term, as “consumer appetite for experiences” looks solid, driven by modest pricing associated to the industry average, promotional offers and other factors.
Barish reiterated a buy rating on Dave & Buster’s with a valuation target of $60, concluding, “PLAY remains among best positioned to drive upside and accel growth the next few years, square in a recession.”
Barish is ranked No. 465 among more than 8,000 analysts followed on TipRanks. His ratings suffer with been profitable 58% of the time, with each rating delivering an average return of 9%. (See PLAY Pecuniary Statements on TipRanks)