If you had to pick the best large-cap tech stock right now, which would you choose? Netflix, for example, is currently growing at an extortionate rate, while Twitter has exploded by over 50% in the last 6 months. But neither of these stocks feature for five-star RBC Capital analyst Mark Mahaney. He has just released a report highlighting 3 of his favorite stock picks right now: Facebook (FB), Expedia (EXPE) and Amazon (AMZN).
According to Mahaney, the recent Tech correction has created interesting entry points across the sector. For example, Facebook, Expedia and Alphabet are all trading near 52-week lows despite robust long-term fundamentals.
Mahaney explains: “FB and EXPE in particular seem compelling at these levels: premium growth at non-Premium prices for what we view as Internet Staples.”
With this in mind, let’s take a closer look at what makes these stocks so appealing to Mahaney right now- and if the Street consensus reflects this. But first, a crucial question: why should we listen to this analyst in particular?
Know who to trust
The answer is simple: TipRanks’ objective ranking-system reveals that Mahaney has a very impressive ranking of #30 out of almost 4,800 analysts for his precise stock picking ability. And if we extend the rating measurement from one year to two-years, his ranking improves even further.
The upshot: Mark Mahaney is a top analyst to follow for investing inspiration! So with this in mind, let’s dive in the outlook of his 3 top large-cap stock picks now:
Following the Cambridge Analytica scandal, we are now looking at a ‘truly attractive entry point’ into one of Tech’s best growth stories. Mahaney calls FB his No. 1 Long in Large Cap ‘Net Stocks and predicts that shares can spike to $250. With shares about $30 off their 52-week high, this translates into over 50% upside potential.
According to Mahaney, FB’s current low market shares— less than 20% of Global Online Advertising and a mid-single-digit % of Global Total Advertising — will help it to maintain premium growth for a long time. And FB still has several new large revenue growth drivers (Instagram monetization, Messaging Platform monetization, Camera/AR, AI, and Video) up its sleeve.
He adds, “Yes, Regulatory Risk is real… But we believe this is now more than fairly reflected in FB shares and reiterate our Outperform rating.” And it seems the Street feels the same. Overall, FB has received 30 recent buy ratings from top analysts vs 2 hold ratings and 1 sell rating. Their $217 average price target translates into 32% upside potential from the current share price.
You can click on the screenshot below for further Street insights. As you can see here we limit the results to only best-performing analysts:
Expedia represents an excellent play on the secular growth in Online Travel. “Buying the EXPE Dips” over the last five years has been a very good strategy for making $” argues Mahaney.
New management is now investing more aggressively in tech and marketing- and this should help EXPE catch up with industry leader Booking Holdings. Meanwhile HomeAway, EXPE’s answer to Airbnb, is still in its early days and boasts ‘a tremendous growth runway’ both domestically and internationally.
Mahaney explains: “We view EXPE’s Bookings and Room Night Growth rates to be largely intact, current investments as the right move, and with Street estimates recently reset twice, we see potential for both multiple re-rating and positive estimates revisions.”
Over the last three months, 14 top analysts have published buy ratings on EXPE with 6 analysts staying on the sidelines. On average these analysts see 27% upside potential from the current share price.
Amazon may not be President Trump’s favorite stock (see his recent anti Amazon tweets), but it certainly has top marks from the Street. Mahaney writes “”Presidential Obsession” is now an investment risk, but we continue to view the long-term growth outlook for AMZN to be the most robust in ’Net land given the very large TAMs [total addressable markets] AMZN is facing.”
He continues: “For ’18, we believe AMZN starts gaining traction in Marketing services (AMS), while Cloud appears to have hit a positive industry inflection point.” Indeed, AWS revenue contribution is still growing and should act as a meaningful, sustainable source of leverage for Amazon.
As you can see from the screenshot below, 34 top analysts are bullish on the stock with only 1 analyst publishing a ‘Hold’ rating in the last three months. These analysts see the stock spiking 19% to $1,706. This is just above Mahaney’s $1,700 price target.
How to find your own top stock ideas
Here we focused in on one analyst, but TipRanks also compiles all ratings from top analysts. This means you can immediately pinpoint the most popular stocks at any given time. To find these stocks simply go to ‘Analysts’ Top Stocks’ under Research Tools:
You can then select the investment criteria to fit your own personal investing strategy. For example, you can look for small or large cap stocks from specific sectors:
The best part is that you can sort the results by upside potential. This enables you to quickly find the ‘Strong Buy’ stocks with the best growth potential.