Top Wall Street analysts say buy Caterpillar and Salesforce
Jim Umpleby, CEO of Caterpillar Inc.
Adam Jeffrey | CNBC
This year has already been difficult, and 2023 does not look much better, with economic growth expected by the Federal Reserve at only 1.2%. Given this bleak outlook, investors will need to choose carefully where to put their money to work.
To pick the right stocks, staying on top of what Wall Street analysts are saying can help. Here are five pro-chosen stocks that are at the top of their game, according to TipRanks, which ranks analysts based on their performance.
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Mining equipment manufacturer Caterpillar (CAT) is handling supply chain challenges and cost pressures like a champ. Cost reduction and pricing actions help the company improve revenue and bottom line, even when end markets remain volatile.
The North American housing market has slowed considerably, with the adverse effects affecting demand for construction equipment. However, Cowen analyst Matt Elkott believes end markets like housing should show improvement in 2023 and will recover more significantly in 2024. (See Caterpillar stock chart on TipRanks).
Elkott also expects revenue to pick up in late 2023 once the Biden administration’s infrastructure bill takes effect. The revenue benefits of the bill are also expected to be significant in 2024. Additionally, Elkott is optimistic about the growth of Caterpillar’s service segment.
“The company’s services revenue growth is on track to meet the goal of doubling by 2026 to $28 billion. The new state of global energy insecurity is expected to support oil and gas CapEx, from less at the moment,” the analyst noted. .
Elkott has a buy rating and price target of $225 on the stock. He holds the 782n/a position among nearly 8,000 analysts followed on TipRanks and has a success rate of 52%. Each of its ratings has averaged returns of 12.5%.
National Instruments (NATI) has a resilient business developing automated test and measurement systems to facilitate research and validation of new technologies. Earlier this year, the lockdown in Shanghai and the suspension of operations in Russia hurt the company’s business.
Nonetheless, Goldman Sachs analyst Mark Delaney is bullish on the company. (See National Instruments dividend date and history on TipRanks).
National Instruments operates in industry-specific business units (BUs), which depend on secular trends, and a portfolio of BUs that are exposed to macroeconomic factors. The company is now focused on achieving its goal of generating at least 74% of its revenue from its industry-specific BUs by 2025. This transition should make the company more resilient to market cycles in the years to come.
Strong upward trends in emerging technologies like ADAS (Advanced Driver Assistance Systems), electric vehicles and 5G lead Delaney to believe the company can weather an economic downturn better than many, “because parts of its business are linked to end markets in secular growth” which have characteristics.
The analyst has a buy rating on NATI shares with a price target of $49.
Delaney, who is ranked No. 765 among nearly 8,000 ranked analysts on TipRanks, was successful with 56% of his ratings. An average of 9.8% returns were generated on each of its ratings.
Plug Power hydrogen fuel cell developer (PLUG) is a major beneficiary of the Inflation Reduction Act (IRA), which was signed into law last month. According to the law, a production tax credit of $3 per kg will be granted to developers producing green hydrogen (hydrogen produced with electrolysers from clean energy).
HC Wainwright analyst Amit Dayal believes the IRA helps taxpayers in the hydrogen industry “stack credits and enable the transfer of hydrogen tax credits”. To this end, Plug Power has already entered into several partnerships with large companies, including Amazon (AMZN), to supply green hydrogen and electrolysers, and Dayal expects more such deals to be signed in 2023. (See Plug Power Blogger Opinions & Sentiment on TipRanks).
“We believe the IRA should support Plug’s goal of expanding its green hydrogen production network to 70 tonnes per day (TPD) production by the end of 2022, 500TPD in North America by by 2025 and 1,000TPD globally by 2028,” Dayal noted. .
Dayal also wants Plug Power to start increasing and absorbing its first upfront capital costs, as it would boost its short-term financial performance by improving its operating costs and margins. The analyst expects the company to generate operating profits in 2025.
“We believe the business should be able to grow its gross margins from negative levels today to 15.7% in 2023 and then to around 35.0% by 2030 as revenues continue to decline. ‘increase,’ projected Dayal.
Interestingly, Dayal is a five-star rated analyst on TipRanks and is ranked #27 among nearly 8,000 analysts tracked on the platform. About 42% of its evaluations were successful and generated 44.9% average returns per instance.
As its symbol suggests, Salesforce (RCMP) is a giant of customer relationship management software, which benefits from the increasing digitalization of industries. Last week, the company provided an upbeat forecast for medium-term earnings and margins, which drew more investors to its shares.
The company’s addressable market expansion, geographic spread and customer base are key growth catalysts that help it navigate the pessimism surrounding tech stocks with finesse. (See Salesforce stock investors on TipRanks).
Monness Crespi Hardt analyst Brian White predicted that the current headwinds, including recessionary concerns, inflationary pressures and growing geopolitical issues, will prevent Salesforce from realizing its full growth potential over the next 12 to next 18 months.
Still, White is one of Salesforce’s bulls, who has strong convictions about the company’s long-term prospects. Although White acknowledged the problems that could arise with a recession (which seems almost impossible to avoid, for now), he said that Salesforce is “in a unique position” to benefit from accelerated digital transformation in the long term. .
“Salesforce has demonstrated an ability to weather turbulent times better than most software companies, which is a testament to relentless innovation, acquisitions, excellent execution and strong secular trends,” White said.
The analyst reiterated his buy rating on Salesforce. It has a price target of $215. White holds a rank of 484 among nearly 8,000 analysts tracked on TipRanks. Fifty-seven percent of its odds were profitable, each generating average returns of 10.4%.
Adobe (ADBE) recently disappointed investors with a shortfall, and its recent signing of a deal to acquire collaborative product design platform Figma for a whopping $20 billion has unnerved investors. Adobe’s price targets have been reduced and the company has even been downgraded by a few.
Yet Goldman Sachs analyst Kash Rangan decided to go against the grain and reiterate his buy rating on the stock with a price target of $540. “We see Adobe investing in a market transition that can access broad TAM and drive accelerated growth,” Rangan said, discussing the prospects for the Figma acquisition. (See Adobe Hedge Fund Trading Activity on TipRanks).
Expressing faith in the company’s decision, the analyst recalled how Adobe’s acquisition of Macromedia in 2005 and the transition of its business model in 2011 expanded its growth potential.
Additionally, drawing comparisons to other major acquisitions, Rangan noted that bringing Figma into Adobe would attract more developers, expanding its market opportunity much as LinkedIn and Github increased Microsoft’s (MSFT).
“Based on the level of innovation Adobe has brought to each strategic transaction it has completed, we believe it can extend Figma’s $16.5 billion TAM,” observed Rangan, who is rated 769e among approximately 8,000 analysts on TipRanks.
The analyst has profitability ratings of 55%, with each rating generating average returns of 7.1%.