We thought our readers might like to see some high conviction stock buys from top ranking sell-side analysts. All of the following seven picks are rated a “strong buy” by top ranked analysts and have price targets 20% or more above the current price. The picks come from a wide variety of sectors and include: Turtle Beach (HEAR), Alibaba (BABA), Cigna Corp (CI), Marathon Petroleum (MPC), Amarin Corp (AMRN), and Teladoc Health (TDOC).
FINSUM: These are diverse picks both in terms of geography and sector. Amarin and Alibaba are the most interesting for us. The former because of buyout rumors by Pfizer, and the latter because of its strong growth characteristics.
Top Wall Street analysts have just published updated outlooks on the best growth stocks. This piece looks at top ranked analyst recommendations. The top 5 growth stocks for this year are: cloud communications platform Twilio, athletics apparel retailer Lululemon, cloud stock MongoDB, Amazon, and healthcare stock Sarepta Therapeutics.
FINSUM: The big question in growth stocks is whether they will continue to outperform value, as they have for several years. We think the trend is your friend here.
Amazon has had two rough patches following its last two earnings releases. The stock fell in October after its third quarter earnings release, and again last week after its fourth quarter numbers. December as a whole was a rough patch too. However, all this presents a good buying opportunity, says one equity research analyst. “Amazon typically experiences some downside follow-through over the day and week after a move lower on earnings, but over the next one and three months, these moves lower have presented very good buying opportunities”, says the analyst, from Bespoke Investment Group.
FINSUM: This is not arguing that Amazon is suddenly some kind of value stock, but if you are thinking of going long anyway, the current environment may represent a good buying opportunity.
BAML has put out a report chronicling a new outlook for stocks, and it isn’t pretty. The report shows that investors have the worst views on the markets in a decade. Investors are pessimistic about global growth and corporate profits, the combination of which makes them expect a weak equity market. Here is a summary of Bank of America’s report: “A poll of asset managers showed a net 60 per cent of those questioned think growth in gross domestic product will weaken over the next 12 months, the worst outlook on the global economy since July 2008 and below the trough in January 2001”.
FINSUM: So it is important to note that these are asset manager opinions, not individual investors. Accordingly, it may not be as much of a contrarian indicator as usual.
It has been a long time since value stocks have performed well. For about a decade, growth stocks have handily outperformed growth. However, the stage may be set for a long awaited rebound in value shares. One thing that may help is that shares fell so much to end the year, which has put many even strong companies in significantly discounted positions. The sign that may show it is time for value to shine is that the valuation gap between the market’s most expensive and cheapest stocks has reached its highest since 2008. This is a good indicator that value stocks are likely to rise.
FINSUM: Many analysts have been calling for a resurgence of value stocks for years and it has not happened. That skepticism aside, we do feel more positive about the possibility this time around.