Top analysts say buy stocks like Apple & O’Reilly

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Apple CEO Tim Cook visits the Apple Fifth Avenue store for the release of the Apple iPhone 14, New York, September 16, 2022.

andrew kelly | Reuters

The fall rally seems to have regained momentum last week.

A better-than-expected reading from the consumer price index last week lifted investor sentiment and pushed the Dow Jones Industrial Average to a 1,200-point jump on Thursday. The gains continued on Friday and all three major averages advanced for the week.

Nonetheless, investors should keep a cool head and focus on the long term when selecting stocks for their portfolios.

Here are five stocks picked by top Wall Street pros, according to TipRanks, a platform that ranks analysts based on past performance.

Apple

In an unusual gesture, Apple (AAPL) announced that the company expects drop in production figures for the iPhone 14 following repeated lockdowns in China. True, Apple’s revenue should be hit in the next quarter or two, but the longer-term outlook for the company with multiple avenues for secular growth does not change.

JPMorgan Analyst Samik Chatterjee accepted. Acknowledging the downside risks for the next few weeks as Apple grapples with reduced capacity at its largest manufacturing site, the analyst believes brand loyalty will come into play to ease the pressure. Simply put, iPhone consumers are willing to wait longer for delivery. This will ensure that among all other Apple products, iPhones will face the least demand destruction due to supply shortages. (See Apple Financial Statements on TipRanks)

Chatterjee also shows how risks are spread over the long term, and short-term disruptions should not deter investors. “Supply chain challenges have been common over the past two years, and there is little evidence that delays in device shipments have impacted overall volumes for a product cycle (example: iPhone 12 or iPhone 13) over a period of several quarters,” the analyst said.

Chatterjee reiterated his Buy rating as well as his $200 price target on Apple. The analyst was ranked 724e from more than 8,000 analysts tracked on TipRanks. Additionally, 51% of its ratings were profitable, translating into average returns of 9.5%.

O’Reilly Automotive

O’Reilly Automotive (ORLY), a retailer of auto parts, tools, supplies, equipment and accessories, delivered what the Wells Fargo analyst Zacharie Fadem called a “Q3 Gem.” An EBIT margin of over 15.25% year-over-year was the best in the business in 2022.

Despite an uncertain outlook for the retail sector amid slowing demand and high inflation, Fadem remained bullish on the company’s prospects and even raised the price target to $850 from $800. , while maintaining a buy rating on the stock.

Sales for O’Reilly’s do-it-yourself business grew by a low single-digit percentage in the third quarter. The analyst observed that this growth suggests stable three-year DIY trends. (See O’Reilly Auto Stock Investors on TipRanks)

“As the broader retail business grows increasingly murky, ORLY delivered its best quarter of FY22, and given best-in-class execution, offensive/defensive characteristics and a new series of upside revisions, we like the 23-year setup,” the analyst observed.

Fadem is one of the top 100 analysts on TipRanks, ranked 81st. It has a success rate of 65%. Additionally, each of its ratings has generated an average of 18.2% over the past 12 months.

Cars.com

Supplier of automotive products and services Cars.com (CARS) attracts over 27 million unique users each month, making it a leading marketplace for car buyers and dealerships. The company also made a few strategic acquisitions such as CreditIQ and Accu-Trade, which helped Cars.com expand into areas such as auto finance and used car transactions.

The company recently released its quarterly results, which the Barrington Research analyst said Gary Prestopino says, “highlights continued progress despite a challenging environment.” (See Car hedge fund trading activity on TipRanks)

The analyst pointed to the momentum of the adoption of Cars.com’s Digital solutions. Importantly, he pointed out that the adoption rate the company is currently witnessing is only a fraction of its total potential, “because adoption of all digital solutions by a dealership can easily double the ARPD (average income by dealer)”.

Cars.com’s the financial results and long-term outlook continue to improve, but this improvement is not reflected in the stock’s valuation,” said Prestopino, who has a buy rating and a price target of $25. on CARS.

Rated 68e in a database of over 8,000 analysts on TipRanks, Prestopino provided profitable ratings 57% of the time. Each of his ratings returned 29.6% on average.

Veeco Instruments

Manufacturer of semiconductor processing equipment Veeco Instruments (VECO) is facing a slowdown in some aspects of its business due to sales of mobile software and hardware. Nevertheless, the Benchmark analyst Mark Miller highlights several strengths of the company that are hard to ignore.

Veeco’s laser annealing systems for logic applications are gaining traction with customers, as evidenced by increased orders during the third quarter.

Miller expects a $5 million revenue impact in the fourth quarter due to trade restrictions with China. Nevertheless, the company is confident that it will be able to ship most of its order book from China because “most of Veeco’s tools are used in high-end applications.” (See Opinions and sentiments of Veeco bloggers on TipRanks)

Despite the near-term headwinds that await Veeco over the next one or two quarters, Miller believes that VECO’s recent share price decline has fully discounted the likelihood of lower earnings in 2023 compared to 2022. .

The analyst reiterated a buy rating on the stock with a price target of $25. Miller ranks 254e among more than 8,000 analysts tracked on the platform. Over the past year, 51% of its ratings have been profitable, yielding 15.1% on average.

Starbucks

coffee giant Starbucks (SBUX) is enjoying strong same-store sales in the U.S. with its “affordable luxury that resonates with consumers,” says BTIG analyst Pierre Saleh. A return to normal was the theme that boosted the company’s revenue. The analyst believes that the momentum of customer traffic will continue to grow now.

Saleh is also optimistic about comparable store sales for Starbucks in China, which are expected to rise remarkably after a Covid-induced decline. “We believe this trajectory, coupled with the addition of a new store every nine hours, should unlock significant earning capacity over the year and in FY24,” the analyst said. . (See Starbucks stock chart on TipRanks)

Saleh has an interesting suggestion for the company to help cover Starbucks’ investments in salary increases and other benefits. The analyst believes that a little more aggressive menu pricing won’t affect sales much, and a mid-single-digit price hike could offset the aforementioned cost to the business.

Peter Saleh reiterated a buy rating on the stock with a price target of $110. The analyst ranks 445th among more than 8,000 analysts tracked on TipRanks. Its ratings were successful 62% of the time and each of the ratings generated average returns of 11%.

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