A man walks past Alphabet Inc’s Google logo outside its office in Beijing, China, on August 8, 2018.
Thomas Peter | Reuters
The earnings season may bring increased volatility to the markets and this time it shows no signs of slowing down.
In tumultuous times like these, short-term bets can be dangerous. Instead, investors may be better able to withstand the turbulence by taking a long-term perspective.
Some of Wall Street’s top professionals have tuned out the noise and selected five stocks as ideal long-term investments, according to TipRanks, which tracks the best-performing analysts.
Here are five companies that analysts expect to perform well in the future despite the current macro headwinds.
Snap (SNAP) is the social media company behind the photo-sharing app Snapchat, which attracts more than 330 million daily active users. It recently reported first-quarter results, a “challenging” period for the company, according to CEO Evan Spiegel. (See Snap Hedge Funds Holdings on TipRanks)
Brian Fitzgerald of Wells Fargo Securities believes Snap has bright days ahead. In a recent report, the analyst noted continued growth in Snaps audience, engagement and revenue generation. He sees growth accelerate as the macro environment improves.
Fitzgerald rated the stock as a buy with a price target of $ 48.
The analyst said Snaps Conversion’s API and privacy-enhancing tools contribute to a stronger return on advertising costs, meaning the company impresses its customers. In addition, Fitzgerald observed that Snap manages its content and infrastructure costs well, explaining that these are some of the fruits of the Snapchat parent’s cloud computing agreements with Amazon (AMZN) and Google (GOOGL).
Fitzgerald is ranked No. 78 out of nearly 8,000 analysts at TipRanks. The analyst’s stock ratings have been correct 60% of the time with an average return of 23.7% per share. rating.
Microsoft (MSFT) reported strong quarterly results, driven by solid performance in the cloud computing industry. The Windows software maker continued to provide positive outlook for the current quarter and fiscal year as it expects their cloud business to continue to perform well. (See Microsoft News Sentiment on TipRanks)
Wedbush’s Dan Ives agrees that Microsoft’s cloud business will continue to shine. In a recent report, the analyst pointed out that the company expects to report cloud revenue of as much as $ 21.35 billion in the current quarter, compared to Wall Street’s consensus estimate of $ 20.89 billion.
Ives rated the stock as a buy with a price target of $ 340.
The cloud services provided by Microsoft and others help companies modernize their systems so that they can operate more efficiently. According to Ives, companies will continue to invest in their digital transformation despite the fact that Federal Reserve interest rate hikes and inflation problems are likely to slow the economy. As a result, cloud costs will only accelerate, and Microsoft is well positioned to take advantage of that. In addition, the analyst noted that Microsoft’s other companies are also doing well.
Out of almost 8,000 analysts in the TipRanks database, Ives is ranked No. 119. The analyst’s stock ratings have been accurate 61% of the time with an average return of 21.6% per share. rating.
The alphabet (GOOG) stock fell after the company reported quarterly results showing lower-than-expected growth in YouTube ad revenue. The Google parent primarily generates its revenue from advertising, and YouTube is one of its most important assets in this industry. (See Alphabet Blogger Sentiment on TipRanks)
While a slowdown on YouTube may be a problem for investors to worry about, Raymond James analyst Aaron Kessler believes there is a lot to like about the GOOGL stock. First, Alphabet’s management explained that the problem with YouTube was the direct response type of ad, which faced a difficult comparison with the same quarter last year. However, the company believes that there is still a great opportunity in the direct response category.
Kessler rated the stock as a buy with a price target of $ 3,180.
The analyst sees a long-term growth potential for Google search, although the war in Ukraine may reduce advertising spending in Europe. In a recent report, he pointed out that retail and travel recovery will continue to make progress in Google’s search business. Even on YouTube, the strong growth in YouTube Shorts user engagement is positive, Kessler said. YouTube Shorts receives more than 30 billion daily views.
Kessler also noted that the cloud business is also a big bright spot for Alphabet, noting that the company is gaining momentum. According to the analyst, Alphabet’s Other Bets, which includes the self-driving device Waymo, also have a promising future.
Alphabet’s $ 70 billion boost to its share buyback program also caught Kessler’s attention. The new plan is a supplement to the approximately $ 4 billion left under its previous buyback program, the analyst noted.
Kessler is ranked No. 88 out of nearly 8,000 analysts in the TipRanks database. His stock ratings have been correct 65% of the time, with an average return of 19% per share. rating.
Visa Payment Network (V) reported a solid financial second quarter despite the framework of suspending its activities in Russia. Although Visa expects Russia’s exit to lower 4% of its tax revenue in the second half of the year, business is generally doing well. Management expects growth elsewhere to offset the loss of Russian revenue within a year. (See Visa Hedge Funds Holdings on TipRanks)
Wedbush analyst Moshe Katri agrees that Visa’s business may continue to boom despite the Russian headwinds. The analyst rated the Visa stock as a buy with a price target of $ 270.
The global travel recovery is a boon for Visa. In a recent report, Katri highlighted that Visa’s cross-border travel volumes were improved, adding that this was a high-margin business for the company. Moreover, while inflation may be a blow to many companies, Katri pointed out that it is actually a tailwind for Visa because it means high average fares.
It also serves Visa well that affluent consumer spending is back in force in areas such as travel, meals and entertainment, as management has explained. The pandemic shutdowns prevented wealthy consumers from spending money because they could not go out, but now they are back as vaccines give people more confidence to venture outside.
Out of almost 8,000 analysts on TipRanks, Katri ranks as No. 335. The analyst’s stock ratings have been successful 72% of the time with an average return of 16.8% per share. assessment.
Juniper Networks (JNPR) makes networking products and also offers cybersecurity solutions. Although the company reported a blow to quarterly revenue estimates, the JNPR share was sold after management lowered expectations for the 2022 full-year gross margin. (See Juniper Network retail investors on TipRanks)
However, Needham analyst Alex Henderson said in a recent report that the gross margin adjustment is a minor issue. The analyst said Juniper’s underlying fundamentals look strong and that management performance is likely to look better than comparable firms as well.
The supply chain disruption, particularly due to shutdowns in China due to the resurgence of Covid-19, has been a major concern for investors. While that may be an issue, Henderson said Juniper has diversified its supply chain and is now less dependent on China than in the past.
Henderson rated the stock as a buy with a price target of $ 38.
In addition, the analyst pointed out that Juniper’s $ 730 million software business is about to more than double over the next three years. The progress of the software division is also driving progress in the company’s other businesses, such as switching, routing and security.
Finally, Henderson said Juniper’s acquisitions of Mist, Apstra, 128 Technology and Netrounds should help accelerate growth across the company’s portfolio.
Henderson is ranked No. 71 out of nearly 8,000 analysts at TipRanks. His stock ratings have been accurate 59% of the time with an average return per share. rating of 23.7%.