Following last week’s heavy selling, the market moved sharply higher at the start of this week. “Earnings season is coming up. I think that’s going to be the catalyst for the equity markets to trade back up to new all-time highs,” commented Raymond James’ Jeffery Saut. He doesn’t see the recent ‘minicrash’ as implying that anything has changed about the market’s fundamental health. “The trading pattern today has been a multi-swinging pattern between up and down and that’s usually how bottoms are formed,” the chief strategist told CNBC. But in the midst of this volatility, how do you know which stocks to turn to?
Answer: see which stocks top analysts are betting on right now. We turned to an October 16 investing report from Oppenheimer, highlighting their top stock picks for each industry. Here we take a closer look at 6 stocks which are set to outperform over the next 12 months. We dive into the investing thesis on each stock so you can see just what merits the stock’s inclusion. Two key points to note 1) all the analysts have a five-star rating; and 2) all of these stocks have a ‘Strong Buy’ consensus on TipRanks. This is based on the last three months of ratings. With that set out, let’s take a closer look:
1. Lowe’s (LOW)
Lowe’s (LOW – Research Report) is the second-largest home improvement specialty retailer in the US. So far shares are up 14% year-to-date. “For a long while, we have looked favorably on the Home Improvement Retail sector and its leading chains including Lowe’s” writes Brian Nagel.
But why LOW in particular? “We believe LOW represents a very well-positioned chain in a sector benefiting from some of the strongest demand growth in retail” the Oppenheimer analyst explains. Furthermore, his Street-high price target of $140 indicates 32% upside potential from current levels.
With 19 recent buy ratings vs just 1 hold rating, the ‘Strong Buy’ stock holds an average price target of $123. See what other Top Analysts are saying about LOW.
2. Monolithic Power Systems (MPWR)
If you haven’t heard of Monolithic Power (MPWR – Research Report) before, this is a leading supplier of high-performance power management solutions. It is also the top stock pick in the chip market for Rick Schafer. He sees shares in this semiconductor spiking 27% to $150.
A deep product pipeline and steady flow of design wins have steadily diversified MPWR. Now the company is moving away from traditional consumer products and into the more lucrative communications, industrial, automotive and networking markets.
Meanwhile, the transition to BCD4 and BCD5 buoys gross margins and gives MPWR a sustainable cost advantage over the competition.
“MPWR sets up well to outperform the broader semiconductor market with both an improving margin profile and an accelerating top-line outlook, in our view. We would be long-term buyers” the analyst says.
Bear in mind this is a stock with 100% Street support. In the last three months, six analysts have published MPWR buy ratings with a $154 average price target (30% upside potential). See what other Top Analysts are saying about MPWR.
3. UnitedHealth Group (UNH)
This healthcare giant has just reported a stellar set of Q3 earnings results. Adjusted EPS of $3.41 (GAAP: $3.24) easily smashed Street estimates of $3.29. Adj. As a result, UnitedHealth (UNH – Research Report) shares are now up 6% on a three-day basis, taking the stock’s total year-to-date gain up to 24%.
Following the results, Oppenheimer’s Wiederhorn ramped up his price target from $276 to $295 (8% upside potential).
“Overall UnitedHealthcare trends were strong, with management suggesting cost-trend is stable, while the Medicare Advantage outlook remains robust” commented Wiederhorn- and most excitingly he believes these trends should only continue for the foreseeable future.
Notably, UNH’s IT arm Optum continues to hit on all cylinders, with earnings +20% to $2B driven by 60 bps of margin expansion, as all three of its businesses generated double-digit growth.
“Given its strong track record, elite management team and well-positioned business model, we maintain our Outperform rating and would continue to be long-term buyers of the stock” he concludes.
Out of 7 recent UNH ratings, 6 are a buy and just 1 a hold. This is with a $303 average analyst price target (11% upside potential). See what other Top Analysts are saying about UNH.
4. Salesforce (CRM)
Salesforce (CRM – Research Report) calls itself the world’s #1 customer relationship management (CRM) platform. Its purpose is to help companies understand their customers’ needs and solve problems – all on one single platform. Shares are up 44% year-to-date and top analysts see a long growth runway ahead.
“We consider CRM one of the healthiest long-term growth stories in our SaaS/applications software universe” cheers Top 10 analyst Brian Schwartz. He has a $180 price target on the stock (22% upside potential).
According to Schwartz, CRM is a proven market share taker that possesses disruptive products and is led by a visionary CEO. What’s more, business fundamentals are robust and could get even better as adoption of SaaS and data analytics technologies expands.
Net-net: “We are attracted to the dominant market positioning, rapid innovation, strong execution, fast organic growth, and the ability to enter new markets, which likely set the stage for steady, ongoing upward revisions beyond the current consensus.”
Turning to the Street, this is a ‘Strong Buy’ stock with 27 recent buy ratings vs only 2 hold ratings. See what other Top Analysts are saying about CRM.
5. Verint Systems (VRNT)
Cybersecurity stock Verint (VRNT – Research Report) provides software-based solutions for everything from communications interception to digital video security and surveillance.
Shaul Eyal sees three key reasons to be bullish on the stock, namely:
- Strong position in key markets
- Strong analyst capabilities (“an increasingly important competency”)
- Key drivers ahead including: corporate compliance and risk management, enterprise efficiency, and global anti-terror/anti-crime
His $58 price target indicates a 25% upswing lies ahead- and mirrors the average analyst price target. All three recent ratings on Verint are a Buy. See what other Top Analysts are saying about VRNT.
6. Evolent Health Inc (EVH)
Last but not least we have IT healthcare stock Evolent. This stock is the number 1 pick for Oppenheimer’s Mohan Naidu (EVH – Research Report) and the recipient of no less than 10 recent buy ratings.
Evolent provides technology and services to aid healthcare providers (physicians and hospitals) in the shift to value-based payments and population health. Naidu sees 18% upside ahead to $31.
The company’s recent New Century Health acquisition was a savvy move says Nadiu. “We like expansion into fast-growing MA [Medicare Advantage] market, seen nearly doubling EVH’s MA lives to >1M of >3.5M total, focus on high-cost areas (oncology) and PMPM [per member per month] upside potential.” See what other Top Analysts are saying about EVH.
Enjoy Research Reports on the Stocks in this Article:
Evolent Health (EVH) Research Report
Monolithic Power Systems (MPWR) Research Report
Salesforce (CRM) Research Report
UnitedHealth (UNH) Research Report
Verint Systems (VRNT) Research Report
You can research more potential investments with TipRanks’ stock screener tool. The screener covers more than 5000 stocks and offers a range of filters to refine your search. It’s everything you need to get the best information for smart investing. Go to the Stock Screener now.
