We’ve used TipRanks’ Top Analysts Stocks tool to search our database for the best stocks to buy in today’s highly volatile markets. While looking for investments with strong prospects for high growth and returns, we found companies with support from some of Wall Street’s top analysts.
So, let’s get to it. Here are four stocks that analysts believe have potential to bring in high profits for investors, even as recession fears mount. All four show indications of being undervalued in prevailing market conditions and show a high upside.
Amazon Stock Could Surge Back to $2,300
E-commerce titan Amazon (AMZN) is down more than 12% from its peak above $2,000 in the first half of July. The slip does not indicate anything fundamentally wrong with the stock, however; for the most part, Amazon shares have simply been caught up in the general selling that has characterized recent weeks.
The most important thing to realize about Amazon is that, despite the 1.15% earnings miss in the last quarter, the company showed a strong revenue beat; the $63.4 billion was higher than the $62.5 billion expected, 16.8% higher than Q1, and 20% higher than the year-ago quarter. The revenue gains come after Amazon spent $800 million during Q2 streamlining warehouse services and product delivery as part of a successful effort to ensure standard one-day shipping for all Prime customers. In short, Amazon prioritized sales growth over margins, accepting lower net earnings as the near-term cost of higher gross revenues.
As investors digest that, the stock is likely to recover. 4-star analyst Scott Mushkin of Wolfe Research writes of Amazon’s Q2 and future prospects: “AMZN’s quarter clearly demonstrated that there is a demand elasticity for faster shipping, and the difference between 1-day and 2day can be significant for customers. Our research suggests that this is particularly true for faster-turning consumable items, which represents a relatively underpenetrated $1.5 trillion market and a meaningful area of long-term growth for Amazon… AMZN has outperformed the market so far this year and our research suggests that it should continue to outperform for the remainder of 2019.”
In line with this bullish long-term view, Mushkin sets a Buy rating on AMZN shares, with a price target of $2,300, suggesting an upside of 30%. (To watch Mushkin’s track record, click here)
Mushkin’s outlook matches well with Amazon’s consensus rating, a Strong Buy based on a unanimous 30 buys, and an average price target of $2,283. Shares of Amazon are currently priced at $1,762, so the stock has an upside potential of 29%. (See AMZN’s price targets and analyst ratings on TipRanks)
Monetization Potential Trumps Privacy Issues for Facebook
Our second go-to stock is another tech giant, Facebook, Inc. (FB). The social media leader and innovator has had its ups and downs – the company’s issues with user privacy protections hardly need an introduction anymore – but it is still up 37% year-to-date, has shown positive user growth trends, and predicts revenue growth in the 15% range going forward. Even better, gross margins are stabilizing around 40%, and healthy number for any company.
Despite the privacy issues, Facebook’s apps remain popular. Instagram and other the other digital products in Facebook’s ecosystem continue to attract users, and ad revenue naturally follows. Facebook is pushing ahead with plans to increase monetization of Messenger, WhatsApp, and Stories, and the Libra initiative announced in June signals a drive toward both blockchain currency and e-commerce.
Susquehanna’s 5-star analyst Shyam Patil reiterates his Buy rating on Facebook, and raises his price target to $245, saying, “We still see FB as a reliable high-teens/low-20s percent top-line grower with potentially faster bottom-line growth over the next several years. Catalysts include continued strong quarterly performance, as the key drivers continue to play out, and successful product launches and monetization.”
Patil’s price target on FB suggests a 36% upside to the stock. Of the stock’s potential, Patil says, “FB is a must-own for the second half.” (To watch Patil’s track record, click here)
Facebook’s analyst consensus rating, Strong Buy, is based on 33 buys and 3 holds. The stock is trading for $179, and the average price target of $234 implies an upside of 30%. (See FB’s price targets and analyst ratings on TipRanks)
Popular Trucks and SUVs Keep GM in the Black
General Motors (GM), the largest of Detroit’s Big 3 automakers, delivered a happy surprise in Q2 by beating both revenue and earnings expectations. Dhivya Suryadevara, GM’s CFO, said, “We had a solid second quarter and expect the second half of the year to be stronger than the first half… based on our strong full-size truck rollout, other key launches and ongoing cost savings.”
In addition to a good Q2, management is bullish about prospects going forward. GM expects sales to improve in 2H19 on a strong mix of pickup truck and SUVs, along with high-end CUVs, and predicts a full-year EPS between $6.50 and $7, an improvement from 2018’s full year earnings of $6.54.
Writing from Barclay’s, analyst Brian Johnson says, “GM is making considerable progress in securing a role in a future world of Disruptive Mobility (shared autonomous driving)… With the rest of world stalled, and no Europe exposure to agonize over, the central engine of GM earnings power remains GMNA and within that its pickup, SUV and to a lesser extent CUV products. For 2019…, in pickups/SUVs, strength from a full year of ½ tons, a half year of ¾ tons more than offsets the headwind from the outdoing SUVs.”
Johnson raised his price target on GM stock by 6%, from $48 to $51. This suggests an upside of 37% for the automaker, slightly higher than the stock’s 34% upside based on the average price target of $50. (To watch Johnson’s track record, click here)
The stock is selling for $37, and the analyst consensus rating of Strong Buy is based on 7 buys and 1 hold assigned in the last three months. (See GM’s price targets and analyst ratings on TipRanks)
Sky-High Potential Makes Novavax Attractive
The fourth stock we’re looking at here, Novavax, Inc. (NVAX), is a biotech in the vaccine business. The company’s main product is a vaccine for respiratory syncytial virus, specially, a vaccine to protect newborn infants from the virus and the associated lung disease. The new vaccine, ResVax, failed its first Phase III trial, leading to a sharp drop in the company’s share price.
Novavax shares skyrocketed whopping 40% yesterday, and there’s just one reason why: Yesterday morning, investment banker H.C. Wainwright announced a big price target upgrade on NVAX. The reason? “We think Novavax keeps winning with NanoFlu.”
In line with his upbeat outlook, H.C. Wainwright’s Vernon Bernardino gives NVAX a $17 price target (up from $10), indicating confidence in an impressive 180% upside. (To watch Bernardino’s track record, click here)
Bernardino, writing of Novavax’s future prospects, says, “We made no changes to our models, as we previously believed the near-term focus would be completing an additional Phase 3 ResVax study… We look for share price appreciation to allow successful financings in 2020-2021, positioning Novavax to independently launch commercial NanoFlu worldwide. We think NanoFlu can achieve $1.7B in annual sales by 2028.”
Like many biotech firms, Novavax combines high upside with high risk. The stock is selling for just $6 per share – but the average price target is $29, giving the stock an eye-opening upside potential of 394%. The analyst consensus rating of Strong Buy is based on 4 buys assigned in recent days, after the company announced the second Phase III trial for ResVax.