Joel Anderson, CEO, Five Below
Scott Mlyn | CNBC
The macroeconomic picture – and longer-term expectations for certain stocks – are becoming clearer as the earnings season continues.
To that end, some of Wall Street’s top analysts have high hopes for Toast, Apple, Five Below, Freshworks and IMAX, according to TipRanks, which tracks top-performing stock pickers. Indeed, Apple and IMAX are among the companies reporting in the coming week.
Let’s take a closer look at these stocks and see why analysts are fans.
These days, it seems like almost every aspect of life is moving towards cloud computing solutions, and for good reason. Many companies provide their customers with a means by which convenience and efficiency are increased, pushing businesses to their full potential.
This is also true for the restaurant industry, since Toast (TOST) has taken advantage of this relatively under-penetrated market to gain importance. (See Toast’s insider trading activity on TipRanks)
Mayank Tandon launched a cover on Needham & Co.’s stock, writing that Toast “operates a full restaurant. [point of sale] and a management platform that combines modern software and payment processing solutions to help restaurants grow and effectively manage day-to-day operations. ”
Tandon valued the stock as a buy and provided a price target of $ 70.
The five-star analyst claimed that the company has the potential to increase its market available in service to more than seven times its current size. He believes this is the case because the company has not yet started to go international and will most likely have new innovations on the road.
While Toast offers both software and hardware, Tandon expects the former to account for the majority of its revenue generation. After acquiring existing restaurants, TOST can cross-sell its âpayroll management, online orders and loyalty programâ. The analyst believes that this positioning is very advantageous for the company in terms of expanding and recurring revenues.
After resisting the Covid-19 pandemic by significantly expanding its pool of serviced restaurants, Toast is ready for a more economical reopening to help it with its ‘land and grow’ strategy.
On TipRanks, Tandon maintains a No. 99 position on over 7,000 financial analysts. His grades have so far been successful 67% of the time and have averaged 42.8% on each.
Apple (AAPL) has always had an enthusiastic following of followers, but now it appears that whenever the company launches new products, almost all forms of news cover it in one way or another. This type of free advertising drastically reduces Apple’s ad spend and increases margins. (See Apple News Sentiment on TipRanks)
Laura Martin of Needham & Co. mentioned this detail in her recent report, adding that the “rabid fandom” surrounding Apple has reached a point where the company can run hours of infomercials over a 30-day period while still benefiting from ‘such free coverage. This is a phenomenon that, according to her, is not experienced by any other company when it comes to brand awareness.
Martin is bullish on the title and has rated it as a buy. The highly ranked analyst decided on a price target of $ 170.
Additionally, during the main presentation, Apple once again focused on the benefits of its internal silicon chips, which have “improved the speeds, memory, graphics and editing capabilities, and lifespan of the machine. battery “of its products. Martin argued that vertical integration raises ditches around Apple and isolates it from competitors who use outsourced chips.
Apple’s penetration is also something that catalyzes confidence in the company, as iOS devices per user have fallen from 1.57 in early 2020 to 1.65 now. This “key leading indicator of AAPL’s bullish value” shows an anticipated decrease in churn rates. Additionally, the company has made it particularly difficult for consumers to leave its vast ecosystem, due to the rigidity of hardware and software ecosystems of accessories and extensions, pricing for family services, and financing options for iPhones. .
Out of over 7,000 analysts, Martin was ranked No. 191. His stock picks resulted in a 64% success rate and they returned an average of 43.4% per pick.
As transportation constraints impact businesses around the world, those that hedge against these headwinds could emerge on a stronger footing.
Value retailer Five Below (FIVE) mitigated the increase in transportation costs with fixed contracts and new distribution centers. As macro challenges increase, Five Below plans to expand its higher-priced segment, Five Beyond, to more stores, hoping to maintain strong inventory as a hedge against inflation.
Randal Konik of Jefferies demarcated his optimistic views on the company, writing that Five Below had “rapidly scaled up and invested in its supply chain.” He believes the company is better protected against rising shipping costs than its peers, and that the impacts are “probably pretty minimal.” (See five below Risk Factor Analysis on Tipranks)
Konik valued the stock as a buy and gave it a price target of $ 300.
The five-star analyst explained that Five Below recently opened a new distribution center in Arizona, which became operational in the currently undeclared quarter. Additionally, the company has announced plans for another center in Indiana, which is expected to open in mid-2022. This type of vertical integration gives Konik confidence that the company will have an even smoother delivery, with shorter lead times.
The implementation of Five Beyond has already taken root in over 270 stores and is expected to reach approximately half of Five Below stores by the end of 2022. Konik is delighted that Five Beyond has been established in so many stores ahead of the season. holiday shopping. begins to start for retail.
Financial aggregator TipRanks ranked Konik 415th out of more than 7,000 professional analysts. He was successful in his grades 63% of the time and averaged 22.1% on each.
When it comes to customer engagement technology, small and medium-sized businesses tend to be at a disadvantage. As the world moves towards digital life, a data-driven consumer relationship management tool is needed to gain an edge over the competition. For this service, some companies have turned to SaaS platforms developed by Freshworks (FRSH).
Brian Schwartz of Oppenheimer & Co. kicked off his coverage of the action, which wrote that Freshworks “has turned into a true full-scale platform success story with an accelerated growth trajectory.” He claimed the company can maintain a constant, industry-leading growth rate as small and medium-sized businesses using outdated technology move to its platforms. (See Analysis of Freshworks shares on TipRanks)
Schwartz valued the stock as a buy and calculated a price target of $ 50.
The analyst explained that Freshworks is poised to reach hundreds of thousands of customers who “are struggling to modernize and automate their customer engagement strategy.” Obviously, the company has a long ramp of potential organic growth.
Led by his strong management team, Schwartz added that Freshworks has experienced high levels of billing and revenue for years. He was enthusiastic about the company’s strong business performance and the company’s ability to significantly outperform its âoffice and serviceâ peers. The analyst expects a further rise as the company continues to reap the success of its innovations and initiatives.
Schwartz cautioned that stiff competition from established CRM players could pose a risk if they were to exert energy on small and medium-sized businesses. Plus, the company faces some tough comparisons ahead, having seen so much momentum in the past.
TipRanks’ calculations put Schwartz second among more than 7,000 financial analysts. His stock quotes were successful 88% of the time and earned him an average of 67.4% on each.
Even with the woes of Covid-19 lingering, a strong studio film list has brought consumers back to theaters. For IMAX (IMAX), box office sales have already returned to pre-pandemic levels, and October is poised to be the best ever. Moviegoers seem to have learned to live with the virus in mind, but some analysts believe the IMAX is being overlooked by investors.
Eric Wold of B. Riley Securities believes that while the company and the film industry as a whole are coming out of the pandemic better than expected, the stock has underperformed the market. He notes that stronger partnerships with studios, more theatrical releases and more screens may catalyze IMAX’s rise ahead of its next third quarter earnings report in late October. (See IMAX earnings results on TipRanks)
Wold rated the stock as a buy and gave it a price target of $ 30.
The five-star analyst explained that throughout the pandemic, several methods of film releases have been attempted, and it appears that the one that benefits IMAX also appears to be the best for the industry. The simultaneous release of films in theaters and on streaming services, or the âday and dateâ model, as Wold estimated, has not had the expected success.
Instead, Wold wrote, âall the major studiosâ¦ have agreed to implement exclusive cinema windows for their filmsâ. He was excited about the prospect of IMAX being called upon to push big movie releases into shorter, more demanding windows. With IMAX’s largest number of screens, the company is well positioned to seize this opportunity.
Wold is ranked by TipRanks as No. 209 out of over 7,000 other analysts. It was successful 67% of the time and has an average return of 35.1% per trade.