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RBC Capital: 6 ‘Top Stock Picks’ To Go Long

RBC Capital’s Mark Mahaney is one of the Top 25 analysts ranked by TipRanks. This is out of over 4,800 analysts. And he has now released a very valuable report setting out his top 6 Internet stock picks. These ‘Top Stock Picks’ are split between Top Large Cap Longs and Top Small Cap Longs- and the report has now been updated to take account of second quarter earnings results.

“The most notable trend year-to-date among Large Cap Internets continues to be Outperformance” writes Mahaney, before adding: “The Small Cap sector has had an even stronger performance than the Large Caps so far in 2018.” In fact, through August and post Q2 prints, Small Cap Nets have traded up a median of 27% YTD, outpacing the Russell 2000, which is up just 9%.

Bear in mind, on a one-year basis Mahaney is currently tracking an impressive 71% success rate and 26.3% average return. This means his ratings are certainly worth paying attention to. So let’s take a closer look at his top picks now:

Top Large Cap Longs

1. Facebook (NASDAQ:FB)

Social media giant Facebook is the firm’s No. 1 pick right now. “Over 35% Ad Revenue growth… on a ~$55B revenue run rate. We still think FB is among the Best Growth Stories in Tech despite the H2 outlook (which we view as overly conservative)” cheers Mahaney.

He adds that FB’s current low market share – mid-single-digit % of Global Total Marketing – will help it maintain premium growth for a long time.

With a price target of $225, Mahaney sees shares rising 30% from current levels. See FB Price Target and Analyst Ratings Detail.

2. Spotify Technology SA (NYSE:SPOT)

Word on the beat: “Spotify is the global leader in music streaming (with 40% of all Paid Subs) and has clear, sustainable business model advantages.” Indeed SPOT is a new top pick for Mahaney- beating out Expedia. This is because, post Q2, the surge in EXPE has surged makes its near-term risk/reward less compelling.

Mahaney believes fundamentals can inflect upward in 2H18 with accelerating revenue growth and expanding gross margins.

He sees shares spiking 15% to $215. See SA Price Target and Analyst Ratings Detail.

3. Alphabet (NASDAQ:GOOGL)

A pricey stock but for good reason. GOOGL has averaged 23% growth for 34 straight quarters & shows no signs of slowing, despite a $130B revenue run-rate, says Mahaney.

Plus: “We also believe the company’s investments in Cloud, IoT, and Autonomous Vehicles potentially set the company up for more years of premium growth & profits.” Most notably, the commercialization of Google’s self-driving unit Waymo in Phoenix by year end could cause a multiple re-rating of shares as investors start to appreciate the unit’s money-making potential.

With a bullish $1,400 price target, Mahaney is looking for 15% upside potential. See GOOGL Price Target and Analyst Ratings Detail.

Top Small Cap Longs

1. Pandora Media (NYSE:P)

“A clear momentum play in Small Cap” writes Mahaney on this powerful music discovery platform. “Fundamentals are inflecting up with revenue growth acceleration in the back half of ’18.”

Notably, the company is already benefitting from the roll out of Pandora Premium Access to appeal to Ad-Supported Streamers and the introduction of a Family Plan. However Mahaney is confident that many catalysts remain. Think partnerships with major players like AT&T, T-Mobile, Snap and the roll out of a savvy Student Plan.

His $10 price target suggests 24% upside potential lies ahead. See P Price Target and Analyst Ratings Detail.

2. LendingTree Inc (NASDAQ:TREE)

Online exchange LendingTree connects consumers with multiple lenders, banks, and credit partners who compete for business.

“We view TREE as a leading Online Consumer Finance Marketplace with a large/underpenetrated TAM [total addressable market], very strong secular tailwinds & a very consistent financial track record.” He is anticipating continued premium-growth for the Non Mortgage and calls the diversification a ‘clear positive.’

Indeed, Mahaney’s $325 price target indicates massive upside potential of 42%. See TREE Price Target and Analyst Ratings Detail.

3. Yelp Inc (NYSE:YELP)

A new entrant to the top pick group is crowd-sourced review platform Yelp. The company faces a huge market opportunity ahead. For example, in LA, Yelp’s most “mature” market, only 4-5% of small businesses are customers.

“We still see in Yelp a strong and improving Local solution – one that is morphing from a Local Marketing Platform to a Local Marketing AND Transactions Platform. Which means that the strategic value of Yelp is rising” explains Mahaney.

Given that the stock is currently trading at $45, Mahaney sees big upside potential of 18% ahead. See YELP Price Target and Analyst Ratings Detail.

Fresh Investing Inspiration From Top Analyst Ratings 

TipRanks’ Top Recommended Stocks tool factors in ratings made by the best-performing analysts. These are the analysts with the highest average return and success rate who get it right time and time again. The upshot: you can be confident that your investment decisions have the backing of true market experts.

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Harriet Lefton
Harriet Lefton, originally from the UK, began her career as a journalist specialising in the niche world of metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer. Now she has turned her attention to the world of financial blogging, covering US stocks, analysts and all manner of things finance-related.

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