Tonight, we’ll all gather round and give thanks for the good things in life. A bit of perspective is useful here: the presence of friends and family at the table, a land of plenty where we have the freedom to clap or complain – these are the true blessings in our lives.
But the stock markets have done their part, too. We should all be grateful for the S&P 500’s record highs and a 25% gain this year. With that spirit – of willingness to risk, and look beyond uncertainty – we have built a firm base to continue forward.
Now , we’ve used the TipRanks Stock Screener to find three “Strong Buys” that fit a profile: a market cap over $50 billion; positive analyst opinions; powerful gains this year — far above the market averages; and continued upside potential. These stocks are proven performers, and we should be grateful – they have brought returns to investors. The companies are game-changing players in lucrative niches, and each has bright prospects going forward.
So, let’s dive in, and find out why these three stocks will make investors happy this holiday season.
In the world of cloud computing, subscription SaaS has become all the rage. Companies jostle for position by offering every service imaginable for businesses and individuals. ServiceNow has found success in the workflow niche, providing software for tracking and improving IT management, help desk functionality, and workflow efficiency. ServiceNow fills a vital need that can be seen from one raw number: the company did $2.6 billion in sales for fiscal 2018.
Looking at a few other numbers, we find that NOW beat Q3 earnings by 11%, showing 99 cents per share against the 89-cent forecast. Revenues were equally impressive – the $885.8 million reported for the quarter was 31.5% higher than the year-ago period. The strong revenue growth has helped push the stock to a 57% year-to-date gain.
In October, the company announced that both the CEO and CFO would be stepping down. However, their replacements are former SAP head Bill McDermott as CEO and Ingram Micro alum Gina Mastantuono in the finance slot. While the transition was announced after Q3 had ended, events at this level in companies of this size do not happen overnight; this had been in the works for a while. And NOW still performed. It goes to show that the new management takes over an efficiently running operation.
Writing from JMP Securities, 5-star analyst Patrick Walravens points out all of these factors. He details the strong quarterly print, notes the smoothness of the CEO transition, and writes, “We maintain our Market Outperform rating and $325 price target on ServiceNow, after the company hosted its 3Q19 earnings, which featured what appears to be a smooth hand-off from outgoing CEO John Donahoe to incoming CEO Bill McDermott…” Walravens’ price target implies a 16% upside for NOW shares. (To watch Walravens’ track record, click here)
Joel Fishbein, of SunTrust Robinson, published a short note on NOW as well following the CFO announcement: “ServiceNow continues to define and disrupt service management and we rate it Buy as we see several potential catalysts to drive the shares higher…” Fishbein gave NOW a $321 price target, showing confidence in a 14% upside. (To watch Fishbein’s track record, click here)
NOW shares are clearly attracting the bulls, as the stock’s consensus rating of Strong Buy is based on 18 bullish reviews and only 2 Holds. However, the stock isn’t cheap, at $281 per share, and the $298 average price target suggests a modest 6% upside potential. (See ServiceNow stock analysis on TipRanks)
The early innovator in social media, Facebook is familiar to all of us. The company is coming out of a difficult couple of years – its tale of woe made headlines around the world as it dealt with a series of major customer data privacy scandals. CEO Mark Zuckerberg’s attempts to finesse matters usually made them worse, and he was called to task by the Feds, testifying before Congress and paying a record-breaking $5 billion fine to the FCC.
The problems may be behind Facebook, at least for now. The company took a heavy hit to quarterly earnings earlier this year, when it paid the FCC fine in cash, but tech industry analysts took note of that, too. Facebook had the resources to pony up $5 billion and shrug it off. It was a graphic reminder that this company, even when facing ongoing PR disasters and declining share prices, was still grossing $55 billion annually.
A few numbers will show how Facebook as recovered. The stock is up 63% from is trough last December, and while it has not quite regained its all-time high level, it is within $15 of it. After the losses of 1H19, the company saw an earnings beat in Q3 and rising estimates for Q4. In short, Facebook has weathered a storm.
Wall Street’s analysts would agree. Lloyd Walmsley, 5-star analyst with Deutsche Bank, wrote at the end of last month, “We come away from Facebook 3Q earnings with increased confidence around engagement in the core Facebook app, prospects for stable revenue growth in 2020, and in the medium term operating and free cash flow margins. FB delivered better than expected 3Q revenue, a lower-than-feared 2020 opex and capex outlook, and gave us comfort that the business can see stable revenue growth in 2020.”
Walmsley raised his price target by 13%, to $260, showing that he sees a 28% upside to FB over the next 12 months. (To watch Walmsley’s track record, click here)
Writing from Morgan Stanley, Brian Nowak also raised his price target. He was especially cognizant of Facebook’s forward going profit potential, pointing out that the company has multiple apps, that the user base is still growing every quarter, and that marketers and advertisers are creating in tapping new modes of monetization. He wrote, to support his Buy rating, “We see the monetization roll-out of Instagram adding ~$16bn of incremental ad revenue in 2019. We are also positive on FB’s ability to continue to innovate and improve its monetization… Combined with high and growing engagement we see monetization upside going forward.” Nowak’s new $250 price target implies an upside potential of 23%.
Like the other stocks in this article, Facebook has a Strong Buy consensus – and it is based on an impressive 26 buy ratings given in recent weeks. There are 3 Holds and 1 Sell in the mix, as well, reminders of the company’s recent difficulties, but it’s clear that most analysts are bullish on FB. The shares have an average price target of $235, suggesting a 16% upside from the $202 current trading price. (See Facebook stock analysis on TipRanks)
Global Payments (GPN)
Founded back in 2000, Global Payments has grown into PayPal’s major competitor in the digital payment processing environment. GPN differentiates itself by focusing on seller end of transactions; the company offers services to merchants, for processing credit and debit cards. Additional supporting services, including analytics, are also available to sellers, and account for almost half of company revenues.
Payment processing by itself can be a profitable niche, and GPN realizes over $4 billion in annual revenues and $500 million in net income. But the company is branching out, and in recent months Global Payments has begun offering services to banks, offering its know-how to smooth out processing services in digital consumer payments. GPN announced in October partnerships with New York-based Citibank and with Quebec’s Desjardins.
Global Payments holds a secure position in its niche, and brings in solid returns for investors. Company earnings have been rising in 2019, and Q3 continued the trend. GPN reported EPS of $1.70, easily beating the $1.66 forecast and an 18% year-over-year gain. Quarterly earnings, at $1.31 billion, were up 28% from one year ago. It was a solid performance, in line with a stock that is up 75% this year.
The analysts are gung-ho on GPN, too. 5-star SunTrust analyst Andrew Jeffrey recently wrote, “While other leading Merchant competitors are positioned for above-market organic rev growth, none has the tech stack or continuity of local market offerings. We note several important growth drivers, incl today’s announced deal with Desjardins in Canada and Citibank… The bank channel could offer incremental distribution for Global’s leading software offerings.” Jeffrey’s $210 price target implies an upside of 16% for GPN shares. (To watch Jeffrey’s track record, click here)
Jeffrey’s opinion lines up with the analyst consensus. GPN has 13 recent reviews, of which 12 are Buys. This is a stock that financial experts clearly like. Shares are selling for $181, and the average price target of $197 suggests an upside of 9%. (See Global Payments stock analysis on TipRanks)
From Smarter Analyst to you, our best wishes for a happy Thanksgiving.