Top Wall Street analysts name the best stocks to ride a market bear cycle – Reuters

With a bad month of September in the rearview mirror, it is tempting for investors to make impulsive decisions.

All three major indexes ended the month with significant losses, rocked by soaring bond yields and a Federal Reserve that will do whatever it takes to bring inflation down.

As scary as these times can be, it is essential that investors take a long-term perspective and look closely for stocks that have potential beyond these tumultuous times.

Here are five stocks picked by top Wall Street professionals, according to TipRanks, a platform that ranks analysts based on their backgrounds.

Logistics provider under pure-play contract GXO Logistics (GXO) focuses on leveraging technology to manage supply chains and warehousing. This company deals with a very underserved area of ​​e-commerce: reverse logistics, or the movement of goods from customers to sellers. In the second quarter, 40% of new contracts won by the company came from reverse logistics.

Since debuting in the public markets in 2021 – a spin-off from XPO Logistics – GXO has successfully completed a billion dollar deal to acquire reverse logistics leader Clipper Logistics. This acquisition also reinforced GXO’s strong position in the reverse logistics market. (See GXO Logistics risk factors on TipRanks)

However, macroeconomic headwinds from Europe and the UK are weighing on the company’s finances. After gauging headwinds that are likely to remain overhead for some time to come, Cowen analyst Jason Seidl recently cut his short-term price target on GXO to $62 from $67.

Seidl noted that around 70% of GXO’s sales are in foreign currencies, primarily pounds and euros. Sustained currency headwinds from Europe due to the Russian-Ukrainian war had led GXO to forecast a $30 million revenue impact in 2023. However, the fall in the pound led the analyst to expect an additional impact.

Still, the analyst remains firm on his buy rating, saying GXO’s variable cost structure is capable of mitigating negative impacts on margins. For those who can handle the short-term worries, Seidl recommends buying the stock. “Given where GXO is trading, we see an attractive entry point for long-term investors looking for quality transportation/logistics exposure that can weather the systematic storm in Europe,” said the analyst, who was ranked #8 among almost 8,000 analysts followed on the platform.

Importantly, 67% of Seidl’s ratings were profitable, with each rating generating returns of 23.9% on average.

New (NVMI) provides heavy-duty metrology solutions to the semiconductor manufacturing market. The company’s balanced revenue mix between foundry and memory helped it protect its business from exposure to a single end market.

Recently, Needham analyst Quinn Bolton weighed in on Nova, reiterating a Buy rating and $120 price target for the company. “We appreciate Nova for its strong presence in the foundry and memory markets and its consistent focus on developing new technologies to address the need for metrology in semiconductor manufacturing,” the analyst said. (See Nova’s measurement stock chart on TipRanks)

Unlike many other types of process control equipment, dimension-critical optical solutions do not run the risk of decreasing demand with increasing wafer capacity. In fact, they evolve linearly with it. Today, Nova has approximately 70% of the OCD market, giving it a solid avenue for growth as wafer capabilities increase with the proliferation of advanced technologies.

Bolton is also optimistic about Nova’s prospects in the X-ray technology market. The analyst expects the X-ray technology market “to grow in both front-end metrology and applications. advanced packaging”.

“We believe Nova will be a metrology vendor of choice for the foreseeable future, and believe Nova will easily hit the $1 billion goal, even with extremely conservative assumptions,” Bolton said.

Bolton is ranked No. 3 out of nearly 8,000 analysts on the TipRanks database. Notably, 62% of his ratings successfully returned an average of 38% per rating.

IT Business Process Service Provider TD SYNNEX (SNX) is benefiting from the strong demand for remote work and learning software, as well as hardware solutions. Additionally, rapid digital transformation has kept the IT spending environment favorable to the business.

The company recently released its quarterly results, beating the high and the low. However, like its other tech peers, economic headwinds are not spared TD SYNNEX. Barrington Research analyst Vincent Colicchio cut his price target to $98 from $106 to reflect headwinds that will affect the business over the coming months.

Still, Colicchio believes the combined powers of SYNNEX and Tech Data (which it merged with last year) will help the company achieve strong revenue and cost synergies. This will contribute to earnings growth over the next few years. (See the opinions and sentiments of TD Synexx Corporation bloggers on TipRanks)

“The company’s revenue is expected to grow faster than overall IT spending as it increases its investment in fast-growing technologies. We are confident in management’s ability to meet or exceed its targeted cost synergies of $200 million, given its strong track record of executing acquisitions,” Colicchio weighed in.

The analyst reiterated his buy rating on the stock, saying the shares are trading at an attractive discount.

Colicchio ranked at No. 581 among nearly 8,000 analysts tracked on TipRanks. The analyst has a 52% hit rate and each of his ratings has generated average returns of 8.5%.

As the tech sector grapples with multiple economic blows, Alphabet (GOOGL) has been working on new devices to launch at its upcoming “Made by Google” event. (See Alphabet Class A Share Investor Sentiments on TipRanks)

Ahead of the releases, Monness Crespi Hardt analyst Brian White, who is a Google bull, maintained his buy rating on the stock. “We believe Alphabet is well positioned to capitalize on the long-term digital advertising trend, participate in shifting workloads to the cloud, and benefit from digital transformation,” White said, justifying his long-term optimistic view. Alphabet term.

Additionally, Alphabet’s strong AI capabilities give the company the edge to improve the consumer experience. Additionally, White is encouraged by the fact that in the second quarter of the year, Apple held just 15.6% of global smartphone shipments. This means that Android has the highest share in the operating system market.

White, who holds the 470^e position among nearly 8,000 analysts rated on TipRanks, maintained its price target of $145 on GOOGL stock. The analyst has a 56% hit rate and average returns of 9.6% on each of his ratings.

Energy company Edison International (EIX) has won its own battles amid growing macroeconomic headwinds rocking all sectors. The company has coped with recent heat waves in the United States.

In addition, RBC Capital analyst Shelby Tucker is confident that the electricity consumption load, which is expected to remain flat through 2030, is expected to increase thereafter. Management expects a roughly 60% increase in load between 2030 and 2045 as demand for electrification increases. (See Edison International Dividend Date & History on TipRanks)

“The higher consumption of electrification will likely be offset by distributed generation, batteries and energy efficiency measures,” Tucker said, before adding that Edison has more opportunities on the storage side than on the storage side. production side.

Additionally, the Southern California Edison subsidiary’s wildfire mitigation plan reduced the parent company’s fire risk by 65% ​​to 70%, which is a boon for Edison. “We continue to believe that EIX is undervalued relative to the industry despite a number of actions taken by the utility and by California to address wildfire challenges to the system,” Tucker said, noting the attractive opportunity for investors to acquire EIX shares. .

Importantly, Edison’s solutions profile is electric-only, making it an “attractive pure-play option for investing in the electrification of society.”

Tucker reiterated a buy rating on the stock with a price target of $82.

The analyst, who ranks 140th out of nearly 8,000 analysts tracked on TipRanks, passed his ratings 67% of the time. In addition, each of its ratings generated an average return of 9.8%.