Top Wall Street analysts predict these stocks will offer the most significant long-term growth potential.
The Federal Reserve's plans to tighten monetary policy caused volatility in the stock market last week as investors tried to process the information.
The near-term investment outlook is uncertain due to the weighing of recession risk, supply chain disruptions, and the conflict in Eastern Europe. Additionally, the Fed's plans, as outlined in its March meeting minutes, provide more insight into how the central bank will reduce its balance sheet.
According to TipRanks, Wall Street's top pros have prioritized identifying companies with the greatest long-term potential, rather than focusing on short-term stock fluctuations.
Here are five names to look at this week.
Disney
Disney's (DIS) theme parks recently experienced a significant increase in revenues as the pandemic and its restrictions decreased.
Disney's theme parks generated 100% year-over-year revenue gains, according to Ivan Feinseth of Tigress Financial Partners, who is optimistic about the company's outlook. (See Walt Disney Company Stock Charts on TipRanks)
Feinseth gave the stock a buy rating and set a price target of $229 per share.
Disney has been generating revenue not only from its physical theme parks but also through its successful movie franchises and streaming platform, Disney+.
The top-ranked analyst asserted that "DIS is the King of Content" due to its "strong brand equity, innovative entertainment development capabilities, and ongoing investments in new digital media development initiatives," which will result in continued gains for the entertainment giant.
Feinseth anticipates that the company, which had previously stopped paying dividends and buying back shares to avoid economic uncertainties caused by the pandemic, will soon resume these shareholder value activities.
Feinseth is ranked No. 67 among TipRanks' almost 8,000 analysts. He has been correct in stock picking 68% of the time and has returned an average of 30.8% on each of his ratings.
Apple
Apple (AAPL) is consistently innovating across various areas, including its expanding payments business, which includes its Apple Pay platform. Some have suggested that the company may eventually become a chartered bank. However, Amit Daryanani of Evercore ISI believes that the current course is more advantageous.
Daryanani contended that AAPL is likely to expand its fintech division, focusing on developing a closed-loop payments system. The company would prioritize increasing its consumer base and the stickiness of its ecosystem rather than facing the stringent regulatory scrutiny associated with obtaining a bank license. (Check out Apple Hedge Fund Activity on TipRanks)
The analyst gave a buy rating to the stock and set a price target of $210.
Apple has recently acquired Credit Kudos, a British fintech firm, to enhance its open-banking infrastructure capacities. Additionally, Apple and Goldman Sachs (GS) are reportedly collaborating to offer "buy now, pay later" services to AAPL's users through the project Apple Pay Later.
Daryanani stated that Apple is bringing several other tools in-house, including payment processing, risk assessment for lending, fraud analysis, credit checks, and customer-service functions such as dispute handling.
Daryanani ranks 161 out of nearly 8,000 analysts, with a success rate of 68% and an average return of 29.7% on each stock pick.
Zscaler
Zscaler (ZS) may continue to exceed analysts' expectations and increase its guidance, making it a promising choice in the rapidly growing cybersecurity industry.
Alex Henderson of Needham believes that the firm will drive robust growth, improve margins, and facilitate a changing architecture for Enterprises to a Cloud Direct model. While near-term consolidation in the stock's valuation may be possible, the company has exceptional long-term value.
Henderson gave the stock a buy rating with a price target of $418.
The analyst predicts that ZS will maintain a 20% to 30% rate of strong operating margins, based on the company's history of such performance. (See Zscaler Earnings Data on TipRanks)
Zscaler Cloud Protection and Zscaler Digital Experience are two nascent products that Henderson emphasized as driving growth, improving user experiences and complementing the company's older Zscaler Internet Access and Private Access offerings.
Henderson labeled the company as one of the top growth names in their coverage and advised investors to purchase shares and "add on any weakness."
Henderson ranks No. 43 out of almost 8,000 analysts in TipRanks’ database, with a correct stock-picking rate of 71% and an aggregated average return rate of 39.3% per rating.
Spotify
Investors often struggle to identify the stocks that have the potential to recover after a decline, particularly when it comes to companies like (SPOT) that have been impacted by both the tech and growth sell-offs as well as concerns about their business model.
Despite not yet demonstrating its capacity to produce substantial profit margins, one analyst suggests that the solution lies in a crucial aspect of Spotify's offerings: its two-way marketplace.
Mark Mahaney of Evercore ISI stated in his recent report that Spotify is approaching a turning point. (See Spotify Risk Analysis on TipRanks)
Mahaney gave the stock a Buy rating and set a price target of $300 per share.
Spotify's "paid promotional tools" for artists and labels are essentially content-boosting options that integrate into algorithmic playlists and pop ups on users' accounts. These tools have shown success and Mahaney believes they can add substantially to the music streaming service's margins over the next two years.
The analyst predicts that the tools could increase their current contribution to SPOT's gross margins by 30% or more by 2024, representing about 15% to 20% of the total industry marketing spend. This is a year ahead of Wall Street's consensus and would result in a "material re-rating in SPOT shares," boosting valuation.
Out of nearly 8,000 professional analysts on TipRanks, Mahaney ranks 372nd. He has achieved success in stock rating with a 55% success rate and an average return of 25.3% on each.
Netflix
The streaming platform has recently experienced a significant sell-off from its 2021 highs due to increasing competition in the industry, which has caused investors to flee its shares. Despite this, the platform still holds a considerable market share, with one analyst seeing a high potential for further subscriber penetration.
According to JPMorgan's Doug Anmuth, Netflix has a significant opportunity for growth in several large markets, including Asia-Pacific and Europe, the Middle East and Africa, where the company currently holds a smaller percentage of global broadband subscribers. Anmuth's calculations indicate that Netflix currently accounts for about one-third of all global broadband subscribers. (Source: Netflix Website Traffic on TipRanks)
Anmuth gave the stock a buy rating and set a price target of $605, which would bring it nearer to its 2021 valuation.
The analyst stated that pockets of Eastern and Southern Europe, the Middle East & Africa, and Japan, India, and South Korea are largely underpenetrated in EMEA and APAC, respectively. Furthermore, he emphasized that APAC is the fastest-growing, yet largest untapped market, which Anmuth believes will be focused on localized content.
The analyst stated that NFLX is a key beneficiary and driver of the ongoing disruption of linear TV, with the company's content performing well globally and driving a virtuous circle of strong subscriber growth, more revenue, and growing profit.
Anmuth is ranked No. 227 out of nearly 8,000 analysts. He has been correct on his stock picks 58% of the time and has returned an average of 28.6% on each of them.
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