We begin the new year with a primarily unaltered macroeconomic background and an impending recession according to most stock analysts.
However, investors can maintain a healthy portfolio by keeping a longer-term perspective and blocking out all the noise. Against that backdrop, we begin 2023 with five stocks recommended by Wall Street’s top stock analysts.
STAAR Surgical Services
STAAR Surgical (STAA), a medical technology company, is benefiting from strong global demand for refractive corrections (surgical adjustments for eye disorders).
Furthermore, according to BTIG analyst Ryan Zimmerman, positive demographic factors such as an aging population and an increase in myopia instances are fueling demand for STAAR’s goods.
Earlier in December, the company revealed that its president and CEO, Caren Mason, would be departing at the end of the month.
Mason will be succeeded by Thomas Frinz, who previously served as president of Abbott Medical Optics and as head of Johnson & Johnson’s vision unit. Frinzi’s appointment, according to Zimmerman, will reassure investors due to his 40 years of experience in medical optics.
The analyst is also optimistic about the demand environment for STAAR’s products over various time periods. “Next-generation lenses to new markets should drive near-term growth while expanding indications, presbyopia, and cataract companion should drive long-term growth,” Zimmerman said, reiterating his buy rating and $80 price target on the company.
Papa John’s Int’l, Inc.
The stock of Papa John’s (PZZA) has declined dramatically this year as a result of issues in the United Kingdom and inflationary pressures, but its long-term prognosis remains positive.
Lower-income customers are spending less on eating out, according to BTIG analyst Peter Saleh, when inflation is high and a recession is on the horizon.
As a result, Papa John’s value products such as Papa Pairings are drawing more lower-income customers.
When polling over 1,000 Papa John’s consumers, Saleh discovered that just a low-single-digit percentage of them think the menu prices are excessively high, even after the company raises prices three to four times in 2022.
As a result of these changes, stock analysts somewhat upped his 4Q22 domestic same-store sales forecast.
Saleh maintained his buy rating on the stock and set a price objective of $100. “We believe the new leadership has put in place the proper measures to engineer a turnaround; these efforts have already resulted in increased operating efficiency, stronger franchisee alignment, and higher net unit growth, which we expect to continue in 2022/23. We see many near- and long-term levers to build shareholder value that has begun to emerge and will allow Papa John’s to outperform peers again, prompting us to recommend a Buy rating “Saleh stated.
The next stock on our list is Alphabet (GOOGL), which has proven to be more resilient than its counterparts in the digital ad market this year, according to Monness Crespi Hardt analyst Brian White.
Furthermore, significant growth in Google Cloud could assist the corporation to manage the impact on its operations.
As “a hard year nears its end, but terrible headwinds linger in 2023,” Alphabet has begun to lower its spending in order to be better prepared, according to White.
“In our opinion, Alphabet is well positioned to capitalize on the long-term digital ad trend, participate in the shift of workloads to the cloud, and gain from digital transformation,” White said, supporting his outlook for Alphabet in 2023.
He maintained his buy rating on the stock and set a price objective of $135.
Over the last five years, Alphabet has achieved 23% annual sales growth and 27% operational profitability, according to stock analysts.
Along with a dominant position in search engines and digital advertising, White believes the stock should trade at a healthy premium to the technology sector in the long run.
Verizon Communications Inc.
Verizon (VZ) is another name on this week’s top-5 list. Verizon, one of Tigress Financial Partners’ 5-star stock analysts’ selections, is well-positioned to benefit from ongoing 5G wireless subscription growth as well as new growth potential in fiber and fixed broadband connectivity.
Feinseth anticipates that its “size advantage” and expectations for speedy deployment of high-speed 5G connection in the United States will drive an additional increase in wireless subscribers.
Verizon has a robust balance sheet and the ability to generate cash flow, which allows the company to engage in spectrum expansion and other growth efforts.
Furthermore, a strong financial position enables the corporation to maintain a competitive dividend yield and periodic dividend increases.
“VZ’s expected $54.53 billion in Economic Operating Cash Flow (EBITDAR) generation in the near term provides it with significant cash to fund its 5G high-speed network rollout, spectrum purchases, other growth initiatives, strategic acquisitions, and ongoing dividend increases,” said Feinseth
On VZ shares, the analyst reiterated a buy rating and a price target of $64 (down from $68).
MongoDB (MDB), a general-purpose database platform provider, is one of Feinseth’s buy stocks that we believe would be a good addition to portfolios this week.
Feinseth claims that the company’s “industry-leading open-source database software framework” brings in new clients.
Despite decreasing his price objective from $575 to $365, Feinseth believes the firm is well-positioned to profit from a gradual increase in enterprise IT spending as organizations adopt MongoDB’s highly flexible and scalable Database as a Service.
“The tremendous acceleration of hosted and hybrid cloud migration is growing demand for scalable, flexible, and developer-friendly database structures, which will fuel growth in MDB’s subscription-based revenue model. This would result in a continuous acceleration of Business Performance trends, which will result in a growing Return on Capital (ROC), resulting in large increases in Economic Profit and long-term shareholder value creation” Feinseth justified his position on MDB stock.
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