Over the past year, many Wall Street analysts have been forced to lower their price targets on a wide range of stocks. With macro headwinds caused by higher interest rates and recession fears working their way into expectations and the earnings of some firms, some analysts have even been pressured to lower their recommendations.
It’s hard to blame them with the list of uncertainties out there. With U.S. banks under pressure, there’s yet another thing for worrisome investors to hit the “sell” button over. Despite the bearish conditions and widespread downgrades, though, several analysts remain confident in a few high-quality names that have modest valuations and what it takes to persevere through the rest of this bear market.
Therefore, in this piece, we’ll use TipRanks’ Comparison Tool to look at three stocks that still sport “Strong Buy” consensus ratings.
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG)
Alphabet is a search giant that some may fear is losing its edge amid the rise of generative artificial intelligence (AI). Indeed, OpenAI’s ChatGPT really does seem like a game-changer. With an upgraded version in GPT-4 on the way, Alphabet has the right to be worried as it feels the pressure in the early innings of the AI race. Nonetheless, I remain bullish.
AI is handy just about anywhere on the web. With Bing AI beckoning in Search users while other firms get aboard the GPT bandwagon, Alphabet has no time to waste if it’s to protect its economic moat around Search and AI.
Compared to other tech stocks that have rebounded furiously, Alphabet still seems to be stuck in a rut, likely because of concerns over AI. For instance, shares of Alphabet lost nearly 44% from peak to trough before bouncing back partially. Today, shares are still down around 34% from their 2021 peak.
Nonetheless, Alphabet has its own AI named Bard. Further, it can slap AI alongside its other software offerings. AI will play nicely with Search and Google’s Workspace applications. As OpenAI evens the playing field, though, the big question is whether loyal Google users have enough reason to switch.
Ultimately, the smarter and faster AI will determine who wins and who loses in the AI race, and right now, it’s not looking good for Google. However, at 21.4 times trailing earnings, the price of admission is modest to play an underdog with what it takes to take the lead at some point in the future, which is why I remain bullish.
What is the Price Target for GOOGL Stock?
Alphabet has a “Strong Buy” rating, with 31 unanimous Buy ratings. The average GOOGL stock price target of $129.40 implies 29% upside potential.
Broadcom (NASDAQ:AVGO)
Broadcom is a semiconductor giant that took a 37% peak-to-trough hit as the tech sell-off took hold. Fast-forward to today, and the stock is off just 3% from its high. Indeed, it’s been a remarkable rebound for Broadcom, thanks in part to its strong earnings. I’m staying bullish on the stock.
Despite rallying substantially off its lows in a matter of months, analysts remain incredibly upbeat. Susquehanna analyst Christopher Rolland thinks AVGO stock has what it takes to be a winner that’ll keep winning. Earlier this month, Rolland hiked his price target to $685 from $650, citing the firm’s “strong allocation and integration strategy” and “economies of scale.”
I think Rolland is right on the money. Broadcom isn’t just a great integrator that’s used its size to its advantage. It’s known for making deals for innovative software companies at pretty reasonable prices. The act of M&A can produce mixed results, but as Broadcom continues building its higher-margin software business, I think it’s clear the firm knows how to create value from deals.
Broadcom is a standout performer, and its 21.3 times trailing earnings multiple still seems quite modest relative to big semiconductor rivals. The nearly 3% dividend yield is a cherry on top.
What is the Price Target for AVGO Stock?
Broadcom’s also a “Strong Buy,” with 12 Buys and three Holds. The average AVGO stock price target of $697.08 suggests 9.5% upside potential.
T-Mobile (NASDAQ:TMUS)
T-Mobile is another play that quickly recovered from the sell-off of 2021. Shares are just 9% away from hitting their highs. Ultimately, I think T-Mobile can continue to leave the rest of the market behind as it builds on its subscriber momentum. Therefore, I am bullish.
The incredibly well-managed telecom is using its lack of dividends and aggressive but smart capital allocation strategy to pull ahead of peers in the pack. When it comes to telecoms, it’s all about network quality and value. T-Mobile is on the cutting edge of 5G tech, and the stock has been rewarded.
Eventually, T-Mobile’s rivals may find a means to keep up. In the fourth quarter, the firm missed sales estimates, thanks partly to offers made by its top rivals. However, though the competition is making its presence felt, I still think T-Mobile has way more room to run as it keeps nibbling away at the share of incumbents. Also, despite mixed results in Q4, T-Mobile continued to add new subscribers.
At 70 times trailing earnings, T-Mobile is a premium company at a premium price. Still, given its history of having its way with competitors, I expect TMUS stock’s momentum will be hard to stop anytime soon.
What is the Price Target for TMUS Stock?
T-Mobile has a “Strong Buy” rating based on 12 Buys and two Holds. Further, the average TMUS stock price target of $181.75 entails a 28.4% gain from here.
Final Thoughts
The three firms outlined in this piece are quite exceptional despite macro headwinds. Most analysts are staying bullish on them for a reason. Of the three names, analysts expect the most upside from Alphabet stock.
