Assets Under Management AUM

Top analysts say buy stocks like Alphabet & Micron Technology

Sanjay Mehrotra, CEO, Micron Technology

Scott Mlyn | CNBC

Stock market volatility appears to be far from over.

Market turnover is still very high in a context of high inflation and a worrying economic outlook. Although the short-term outlook can be hazy, investors can achieve healthy long-term returns if they choose stocks with strong long-term prospects and allow them time to grow.

Here are five stocks that some of Wall Street’s top pros have singled out, according to TipRanks, which ranks analysts based on their performance.

Alphabet

Tech stocks have been particularly hard hit by this year’s downturn. However, Google’s parent company, Alphabet (GOOGL) has managed to hold its own, buoyed by the rapid adoption of cloud computing and the popularity of its search engine.

Monness Crespi Hardt analyst Brian White acknowledges that regulatory headwinds, a volatile stock market and the unpredictable geopolitical situation call for a cautious stance on near-term equity performance prospects. However, he thinks strong long-term trends in digital ads, secular growth in the cloud space and steady stock buyback bode well for Alphabet.

White notes that Apple’s groundbreaking privacy initiatives (AAPL) last year had a minimal impact on Alphabet’s advertising business (with the exception of YouTube ads, which were slightly impacted), compared to other digital advertising players. This year, the economic downturn could affect digital ad spend budgets across all industries, which could spell bad news for Alphabet’s ad revenue. Nonetheless, the company’s diversified portfolio will help spread risk and mitigate the impacts of headwinds. (See Alphabet Hedge Fund Trading Activity on TipRanks)

White said Alphabet has generated sales and operating profit of 23% and 27% annually, respectively, over the past five years. During this time, the company also maintained its dominant position in the search engine space. This led White to believe that “Alphabet should trade long-term at a healthy premium to the market and the tech sector.”

Keeping near-term pressures and a gloomy outlook in mind, White reduced his price target for Alphabet to $2,900 ($145 adjusted for the 20:1 stock split, which is expected to end after the close of the company for the day of July 15), against $3,500.

However, he reiterated a buy rating on GOOGL, showing his optimism about the long-term prospects of the second-largest company by market capitalization and the world’s largest digital advertising player.

On TipRanks, White is ranked No. 423 out of nearly 8,000 analysts. He passed 57% of his 313 stock ratings and earned an average return of 10.9% on each.

Micron

Memory and storage giant Micron Technology (MU) had been battling a shortage of components even before the economy deteriorated this year. Like most other companies, Micron’s near-term outlook has been clouded by various macroeconomic pressures,

Additionally, the continued decline in demand for PCs and smartphones over the past few months has led to an inventory correction on DRAM and NAND memory semi-components. This has hurt Micron, and Evercore ISI analyst CJ Muse expects it to continue to hurt the company through the second half of the year before recovering in 2023. (See Micron’s risk factors on TipRanks)

Although Micron lacked revenue estimates in its recently released quarterly results, Muse noted that earnings power and free cash flow generation capacity looked strong for Micron for this year. In addition, other inventory optimization initiatives should help the business once the situation stabilizes. “Micron is also reducing its planned spending on WFE (wafer fabrication equipment) in FY23 to reduce bit production with inventory reduction plans to meet CY23 demand,” Muse noted.

Additionally, management noted that MU’s stock is trading well below intrinsic value (a measure of a stock’s value through an objective calculation rather than the current market price), and the company expects to participate in more aggressive share buybacks in the current quarter. . This is a positive sign for the future course of action.

With these observations, Muse confirmed a buy rating on the stock with a price target of $90. Notably, Muse is ranked #663 among nearly 8,000 analysts tracked on TipRanks. Moreover, 55% of its ratings were successful and each generated 14.5% returns on average.

Seagate Technology

Seagate technology (STX) offers hardware and software solutions for data storage and transfer. The company’s HDD products address mission-critical and near-line applications in enterprise servers and storage systems. Like most other tech companies, Seagate has also battled a lot of headwinds this year.

At several recent investor conferences, many large companies, including Seagate, pointed to weaker consumer sales in the June quarter, catalyzed by slowing demand for PCs and smartphones. It also led the company to issue a weak guidance for its fiscal fourth quarter, which ended June 30. (See Seagate Tech earnings date on TipRanks)

Benchmark analyst Mark Miller took these headwinds into account and lowered his near-term expectations. It also lowered its price target to $90 from $100.

Nonetheless, Miller maintained his bullish stance on Seagate’s long-term prospects. “As such, we are reducing our Seagate estimates for the June quarter and FY23. However, the expected continued strength of Nearline demand keeps us long,” the analyst said, reiterating the note. of the company on STX stock.

Miller is ranked #159 among nearly 8,000 analysts in the TipRanks universe. A total of 53% of its 427 ratings were successful, generating a return of 17.5% per rating on average.

TD SYNNEX Company

Despite the year’s challenges, business process services provider TD SYNNEX (SNX) benefited from a stable IT spending environment amid rapid digital transformation. The company recently released quarterly results.

Barrington Research analyst Vincent Colicchio reviewed the results and noted that the strength of the company’s core and high-growth businesses was a major strength. “The company has seen strong demand for technology products and solutions to enable hybrid working, foster collaboration, improve security and advance multi-cloud adoption. The distribution business saw revenue growth across all regions, including the Asia-Pacific region excluding the impact of a large government contract in the period to a year ago,” the analyst said. (See stock chart of TD SYNNEX Corporation on TipRanks)

Colicchio was also encouraged by the strong execution margin demonstrated by SYNNEX, amid the challenges of high costs and supply constraints. The analyst reiterated his earnings forecast for the company’s fiscal year 2023 and raised his estimates for fiscal year 2022.

Nonetheless, keeping the short-term challenges in mind, Colicchio reduced the price target for SYNNEX from $128 to $106. “Growth is expected to continue to be tempered by continued supply chain challenges throughout the year,” he said.

However, Colicchio has bolstered a buy rating on the stock, believing it to be undervalued and therefore offers an excellent entry point. “The outlook for revenue growth is expected to improve in fiscal 2023 and beyond as the company benefits from revenue synergies and supply chain conditions normalize. We are confident in management’s ability to achieve targeted cost synergies, given its strong track record of executing acquisitions,” said Colicchio. , justifying its long-term position.

Out of nearly 8,000 analysts on TipRanks, Colicchio is ranked #439. Additionally, 54% of the time his ratings were successful and generated an average return of 11.9%.

Northern Trust

Northern Trust Financial Services Company (NTRS) has weathered the headwinds this year, with support from its wealth management business.

Recently, RBC Capital analyst Gerard Cassidy compiled the main reasons for his optimism about the company’s outlook. One of the main reasons for its reiteration of a Buy rating on the stock was its strong balance sheet, which reflects its robust financial operations. “Although other banks claim to have ‘fortress’ balance sheets, we believe that NTRS not only has one, but has stood the test of time; it is one of only two Top 20 banks not to cut dividend in fiscal year 2008-09 crisis,” Cassidy said. (See North Dividend date and history on TipRanks)

Cassidy says a strong management team with a strong track record is also a strong point for Northern Trust. In addition, the steady growth of assets under management (AUM) and assets under contract (AUC), as well as improving market conditions, should ensure an increase in income.

More importantly, Cassidy is optimistic about the immediate tailwinds that Northern is poised to benefit from, in the form of high interest rates. “As the Federal Reserve prepares to raise short-term interest rates in 2022, possibly by as much as 200 basis points, NTRS revenue will increase through a reduction in money market fee waivers that were over $200 million annualized in 1Q22 and more net interest income,” the analyst said.

Still, Cassidy is concerned that volatility in stock and bond markets could keep Northern Trust’s core custody and wealth management businesses under pressure. This prompted him to lower his price target on the stock to $110 from $133.

Cassidy ranks 27th among nearly 8,000 Wall Street analysts on TipRanks. In addition, 66% of its marks are correct, with each mark generating an average return of 22.1%.