We enter the new year against an unchanged macroeconomic backdrop and a recession awaits us. However, investors can maintain a healthy portfolio if they maintain a long-term view, shutting out all distractions.
In that context, we start 2023 with five stocks selected by the top analysts on Wall Street, according to TipRanks, a service that ranks analysts based on past performance.
STAAR Surgery
A medical technology company STAAR Surgery (STAAA) benefit from strong demand for refractive correction (surgical correction of eye conditions) worldwide. Additionally, BTIG analyst Ryan Zimmerman believes favorable demographic trends, including an aging population and increasing cases of myopia, are also driving demand for STAAR products.
Earlier in December, the company announced that its president and chief executive, Caren Mason, would retire at the end of the month. Mason will be replaced by Thomas Frinzi, who previously served as head Johnson & Johnson’s vision unit and president of Abbott Medical Optics. Zimmerman said the appointment of Frinzi can appease investors, thanks to having 40 years of experience in medical optics. (See Staar Surgery Hedge Fund Trading Activity on TipRanks).
Analysts are also optimistic about the demand environment for STAAR products at various times. “Next-generation lenses into new markets should drive near-term growth, while expanded indications, presbyopia, and cataract companions drive long-term growth,” said Zimmerman, who reiterated a buy rating on the stock with a $80 price target.
Zimmerman ranks No. 861 among more than 8,000 analysts tracked on TipRanks. In addition, 44% of his ratings have been profitable, with each rating yielding an average of 7.2%.
Papa John
quick service pizza chain Papa John (PZZA) shares have weakened significantly this year due to challenges in the UK and inflationary pressures, but the long-term outlook remains resilient. BTIG analyst Peter Saleh notes that at a time when inflation is high and a recession is on the horizon, low-income consumers are spending less on food. Therefore, Papa John’s value offerings like Papa Pairings attract new low-income guests.
After surveying more than 1,000 Papa John’s customers, Saleh found only a low single-digit percentage who found the menu prices too expensive, even if the company raises prices 3-4 times in 2022. It is suggested by the trend, analysts. mildly raised expectations of domestic same-store sales 4Q22. (See Papa John’s International Insider Trading Activity on TipRanks)
Saleh reaffirmed a buy rating on the stock with a $100 price target. “We believe the new leadership has the right strategy in place to plan the turnaround; these efforts have translated into better operating efficiency, stronger franchisee alignment, and improved net unit growth, and we expect this to continue to build on in 2022/23. We see several near-term and long-term levers to drive shareholder value that have already started and will allow Papa John’s to outperform its peers again, leading to our Buy rating,” said Saleh.
Saleh is ranked 524th among more than 8,000 analysts on TipRanks. Each 59% success rating has yielded an average of 10.3%.
Alphabet
Next on our list are Monness Crespi Hardt analyst Brian White’s stock picks, Alphabet (GOOGLE), which has proven to be more resilient than its peers in the digital advertising market this year. In addition, companies can reduce the impact on their business with the help of strong growth in Google Cloud.
White said that while “challenging years are approaching, but headwinds remain in 2023,” Alphabet is starting to cut costs to better prepare. (See Alphabet’s Class A Stock Chart at TipRanks)
“In our view, Alphabet is well-positioned to capitalize on long-term digital advertising trends, participate in the shift of workloads to the cloud, and benefit from digital transformation,” White said, correcting his stance on Alphabet’s outlook for 2023. He reiterated his buy rating on the stock with price target $135.
Analysts note that Alphabet has generated 23% annual sales growth and 27% operating profit over the past five years. Along with its dominant position in the search engine space with leadership in digital advertising, White believes the stock should trade at a healthy premium to the tech sector over the long term.
White, a 5-star analyst on TipRanks, is ranked No. 71 among more than 8,000 analysts tracked. In addition, 62% of his ratings have been profitable, with each rating yielding an average of 17.2%.
Verizon
Wireless and wired communication services Verizon (VZ) is another name on this week’s top-5 list. One of the 5-star analyst picks of Tigress Financial Partners’ Ivan Feinseth, Verizon is well-positioned to benefit from continued 5G wireless subscription growth as well as new growth opportunities in fiber and fixed broadband connectivity.
Feinseth expects that “economies of scale” and prospects in the rapid deployment of 5G connectivity in the US should increase growth in wireless subscribers. (See Verizon Stock Investor sentiment at TipRanks)
Verizon boasts a strong balance sheet and the ability to generate cash flow that allows the company to invest in spectrum expansion and other growth initiatives. In addition, a healthy financial position helps the company maintain an attractive dividend yield and consistent dividend increases.
“VZ Generation’s expected $54.53 billion in Economic Operating Cash Flow (EBITDAR) in the near term provides significant cash to fund the rollout of 5G high-speed networks, spectrum purchases, other growth initiatives, strategic acquisitions, and continued dividend increases, ” said Feinseth, who holds the 283rd position among more than 8,000 analysts on TipRanks.
The analyst reiterated his buy rating and $64 price target (adjusted lower from $68) on VZ stock.
Interestingly, 58% of Feinseth’s ratings have produced a profit, and each rating has returned an average of 10.3%.
MongoDB
A common database platform provider MongoDB (MDB) is one of Feinseth’s buy stocks that he considers a big addition to his portfolio this week. Feinseth says the “industry-leading open source database software structure” is attracting new customers.
Despite lowering the price target to $365 from $575, the company could see incremental gains in its enterprise IT spending as the company uses its customizable and scalable MongoDB Database as a Service, Feinseth said. (See MongoDB Website Traffic on TipRanks)
“The rapid acceleration of hosted and hybrid cloud migration is driving increased demand for scalable, customizable, and developer-friendly database architectures that will continue to enhance MDB’s subscription-based revenue model. This will lead to continued acceleration in Business Performance trends, which will improve Return on Capital (ROC), which leads to significant gains in Economic Profits and the creation of long-term shareholder value,” said Feinseth, justifying his stance on MDB shares.