In this article, we will take a look at the 5 most promising stocks to buy according to analysts. To see more such companies, go directly to 15 Most Promising Stocks to Buy According to Analysts.
5. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 58
One-Year Average Price Estimate: $57.13
Semiconductor company Marvell Technology, Inc. (NASDAQ:MRVL) is one of the most promising stocks according to analysts.
Recently, Morgan Stanley upped the company’s price target to $45 from $41 and kept an Equal Weight rating on Marvell Technology, Inc. (NASDAQ:MRVL). Morgan Stanley noted that following Marvell Technology, Inc. (NASDAQ:MRVL)’s quarterly results the stock has lost significant value. However, the firm has a “constructive” Equal Weight rating on Marvell Technology, Inc. (NASDAQ:MRVL). However, the firm said that it needs to have more visibility about Marvell Technology, Inc. (NASDAQ:MRVL)’s silicon Cloud business.
Earlier this month, Marvell Technology, Inc. (NASDAQ:MRVL) declared a quarterly dividend of $0.06 per share, in line with the previous dividend.
At the end of the fourth quarter of 2022, 58 hedge funds had stakes in Marvell Technology, Inc. (NASDAQ:MRVL).
Carillon Tower Advisors made the following comment about Marvell Technology, Inc. (NASDAQ:MRVL) in its Q4 2022 investor letter:
“Marvell Technology, Inc. (NASDAQ:MRVL) provides infrastructure semiconductor solutions. Investors are concerned about the semiconductor cycle and how demand for Marvell’s products will fare in a slowing economic environment. We remain confident that the company’s portfolio of products is highly important in parts of the datacenter server market and note that the company recently has secured strong wins with large technology companies to use its products. The company also benefits from 5G wireless infrastructure build-outs that remain on pace and are generally insulated from macroeconomic pressures. With supply chain issues easing, we believe Marvell remains in a strong position to post healthy growth in 2023.”
4. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 60
One-Year Average Price Estimate: $20.90
Entertainment giant Warner Bros. Discovery, Inc. (NASDAQ:WBD) is increasing its presence in the gaming industry. Recently, Warner Bros. Discovery, Inc. (NASDAQ:WBD) said that “Hogwarts Legacy” game has recorded 12 million units sold and touched $850 million in sales globally in its first two weeks of launch. The Harry Potter-themed game was developed by Avalanche Software and was published by Warner Bros. Discovery, Inc. (NASDAQ:WBD).
Artisan Value Fund made the following comment about Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q4 2022 investor letter:
“Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a global media and entertainment company that is the result of the 2022 merger of Discovery and WarnerMedia. Warner is known for its theatrical releases, networks (CNN, TNT, TBS) and pay television network HBO and related over-the-top streaming service HBO Max. The legacy Discovery business distributes content across US and international networks—such as HGTV, Discovery, TLC, Food Network and Animal Planet—as well as its own streaming service Discovery+. We believe the total portfolio of content and entertainment assets should provide a compelling direct-to-consumer offering to attract viewers and the scale to invest in original content. There is a lot of opportunity, but there’s also uncertainty related to the merger’s integration and realized cost synergies. These questions, in addition to a challenging macro environment for advertising and foreign exchange headwinds, have been overhangs on the stock price.
Further, media and entertainment stocks have come under pressure due to skepticism about the industry’s long-term economics. Our view is streaming is a scale and intellectual property business that will result in a few large winners, and we believe HBO Max will be among this group. WBD looks like a bargain, selling at a double-digit FCF yield.”
3. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 63
One-Year Average Price Estimate: $102.38
Despite recent headwinds, software company Datadog, Inc. (NASDAQ:DDOG) remains one of the promising stocks according to analysts. Earlier this year, BofA analyst Koji Ikeda decreased his price target for Datadog, Inc. (NASDAQ:DDOG) to $110 from $120 but kept a Buy rating on the stock. Datadog, Inc. (NASDAQ:DDOG) was trading at around $67 as of March 16. The average price target of $102 and BofA’s price target presents an attractive upside potential for Datadog, Inc. (NASDAQ:DDOG).
RiverPark Large Growth Fund made the following comment about Datadog, Inc. (NASDAQ:DDOG) in its Q4 2022 investor letter:
“We initiated a small position in Datadog, Inc. (NASDAQ:DDOG) during the quarter. As businesses have transitioned to cloud software infrastructure, much of which is in isolated data silos, it has become increasingly difficult for data engineers to monitor and analyze system performance. Datadog provides a SaaS software platform to monitor and analyze the performance of software applications and IT infrastructure.
The company has quickly grown its revenue from $100 million in 2017 to $1 billion in 2021 and, we believe, should continue to grow revenue at more than 30% annually as it penetrates its $40 billion and fast-growing market. Less than 10% of software applications are currently monitored. Datadog’s customer count has been growing rapidly, up 27% year over year as of 3Q22. Additionally, the company’s dollar-based net retention rate has been 130%+ as existing customers continue to use an increasing number of products and the company continues to add new features. For 3Q22, 80% of customers used 2+ products, while 16% of customers used 6+ products (up from less than 1% two years ago). As an extremely capex light software business, DDOG already has significant FCF (and a 24% FCF margin), which should continue to grow more than 40% for 2022 to $355 million, up from $1 million two years ago.”
2. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 70
One-Year Average Price Estimate: $113.52
CVS Health Corporation (NYSE:CVS) is one of the most notable healthcare stocks. It is also one of the most promising, according to Wall Street analysts. CVS Health Corporation (NYSE:CVS)’s one-year average price estimate stands at $113.52, while its current stock price as of March 16 is $75.
In February, JPMorgan reiterated its Overweight rating for CVS Health Corporation (NYSE:CVS), along with several other healthcare stocks, after the company said in a note to investors that it remains bullish on the managed care sector.
Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 113
One-Year Average Price Estimate: $146.75
Alibaba Group Holding Limited (NYSE:BABA) shares are trading at $80 as of market close of March 15 while its one-year average price estimate stands at $146.75. This shows a huge upside potential from the current levels.
In February, Alibaba Group Holding Limited (NYSE:BABA) posted its fiscal Q3 results, which were better than expectations.
Adjusted EPS in the period came in at $2.79, beating estimates by $0.39. Revenue in the quarter increased by 2% on a YoY basis to reach $35.92 billion, beating estimates by $40 million. Alibaba Group Holding Limited (NYSE:BABA) said that it expects improvement in consumer sentiment and economic activity in the near future.
At the end of the fourth quarter of 2022, 113 hedge funds reported having stakes in Alibaba Group Holding Limited (NYSE:BABA), up from 105 funds in the previous quarter, according to Insider Monkey’s database. This shows the smart money piled into Alibaba Group Holding Limited (NYSE:BABA) in the last quarter of 2022 amid the reopening of the Chinese economy
Polen Capital made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its October investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) is the leading e-commerce company in China. The stock was weak over the quarter as they reported a quarterly revenue decline. The company has been heavily impacted by the continued covid-19 lockdowns throughout China and the aggressive rate increases and deteriorating outlook for China’s economy have weighed heavily on the stock. The share price has also been under pressure due to the U.S. Securities and Exchange Commission’s plans to delist Chinese tech stocks in 2024 if they do not provide access to audit files.”
You can also take a peek at 12 Small Cap Stocks with Insider Buying and 12 Best EV Stocks To Buy For 2023.
