15 Most Promising Stocks to Buy According to Analysts
In this article, we will take a look at the 15 most promising stocks to buy according to analysts. To see more such companies, go directly to 5 Most Promising Stocks to Buy According to Analysts.
The international financial system is yet again wavering amid the banking sector problems. Analysts are now processing the possibility of the current turmoil spreading to other banks. European Central Bank Vice President Luis de Guindos told finance ministers last week that EU banks could be vulnerable to rising interest rates. On the other hand, The European Central Bank, defying expectations, went ahead with a planned half-point increase in interest rates. Some analysts believe the consistent rise in interest rates could hammer other European banks, creating a risk of a wider economic turmoil.
Keeping a long-term investment outlook in this environment becomes extremely difficult. But if history is any guide, having a long-term perspective during stock investing is exactly what makes successful investors stand out. A BlackRock report analyzes stock returns from 1928 through 2022 to evaluate the performance of long-term investing. The report shows different scenarios on the basis of the time period of investments in the stock market. The results were extremely clear and proved that importance of staying invested in the stock market despite volatility. For example, staying invested for a 10-year period would have given you positive returns 94% of the times. On the other hand, if you just remain invested for one year, you enjoy positive returns just 75.1% of the times.
The BlackRock report said:
“The stock market can be volatile in the short term. It can decline substantially in a single day, creating fear amongst investors. But if you stay calm, you’ll find that the likelihood of a positive return grows higher the longer you stay invested.”
“Business Pickers, Not Stock Pickers”
Almost everyone emphasizes the importance of long-term investing, but few have practiced this investment philosophy better than Oracle of Omaha Warren Buffett. In his latest investor letter, Warren Buffett reiterated the importance of long-term investing.
“Our goal in both forms of ownership is to make meaningful investments in businesses with both long-lasting favorable economic characteristics and trustworthy managers. Please note particularly that we own publicly-traded stocks based on our expectations about their long-term business performance, not because we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.”
For this article, we first used the Finviz stock screener to screen for stocks whose average analyst price estimate is 50% more than their current price targets. We sorted the resultant dataset in descending order of market cap and started choosing stocks for this article from the top. We skipped highly volatile and risky stocks in the current environment, including banks, and preferred high-growth companies with actual long-term growth catalysts. We checked these companies’ one-year average price estimates on their Yahoo Finance pages and picked 15 stocks with the highest upside potential from their current levels based on these price targets.
Most Promising Stocks to Buy According to Analysts
15. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 28
One-Year Average Price Estimate: $127.24
Sony Group Corporation (NYSE:SONY) is one of the most promising stocks according to analysts amid the Chinese company's increasing presence in entertainment, gaming and other sectors. In February, Sony Group Corporation (NYSE:SONY) posted its fiscal Q3 results. GAAP EPS in the period came in at ¥263.89. Revenue in the quarter increased by about 12.5% on a YoY basis.
Insider Monkey’s proprietary database of 943 hedge funds and their holdings shows that 28 hedge funds were invested in Sony Group Corporation (NYSE:SONY) at the end of the fourth quarter of 2022. The biggest stakeholder of Sony was Mario Gabelli’s GAMCO Investors which owns a $124 million stake in Sony Group Corporation (NYSE:SONY).
Aristotle Capital made the following comment about Sony Group Corporation (NYSE:SONY) in its Q3 2022 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of video games and consoles, image sensors, and music, as well as movies, was a major detractor for the period. The share price of the company has struggled this year following its strong performance in 2021. Signs of a slowdown in the gaming industry (as people seem inclined to take on outdoor activities as pandemic fears have subsided), combined with sales of its PlayStation 5 that have been held up by a global parts shortage, have led to gaming‐related software sales falling more than 20% year‐over‐year. Rather than focusing on short‐term demand dislocations, we focus on the company’s ability to continue migrating videogame users toward the firm’s subscription offerings, as well as its capacity to leverage content across its video, music and gaming platforms. We are also impressed with the expansion of Sony’s Music segment, which has been supported by the pervasiveness of streaming services. Management’s ongoing work to improve the company’s TV and film studios is bearing fruit as well, with sales growing 67% year‐over‐year for its Pictures segment as its regional strategy has taken hold, including recent progress made toward solidifying a merger plan with India‐based Zee Entertainment. All of this is to say we remain excited by the oligopolistic nature of the businesses Sony operates in, and the future prospects for the company given its leadership in image sensors, music publishing and gaming consoles.”
14. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
One-Year Average Price Estimate: $31.75
EV company Rivian Automotive, Inc. (NASDAQ:RIVN) is one of the most promising stocks according to analysts. Earlier this month, BofA started covering Rivian Automotive, Inc. (NASDAQ:RIVN) with a $40 price target and a Buy rating. The price target was less than BofA’s previous price target of $50, but nonetheless represents an upside potential from the current levels
Despite some headwinds and concerns, BofA believes Rivian Automotive, Inc. (NASDAQ:RIVN) remains one of the most viable EV stocks.
Baron Asset Fund made the following comment about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q4 2022 investor letter:
“Consumer Discretionary investments along with the lack of exposure to the strong performing Energy sector offset a portion of the above-mentioned gains. Within Consumer Discretionary, the underperformance of electric vehicle (EV) manufacturer Rivian Automotive, Inc. (NASDAQ:RIVN) coupled with lower exposure to this better performing sector hampered relative results. Rivian’s shares fell as investors fretted over the company’s unit economics and how macroeconomic uncertainty is impacting the EV industry.
Rivian Automotive, Inc. is an EV manufacturer producing vehicles for the consumer and corporate delivery van markets. Its shares were under pressure during the quarter. Investors remained focused on the company’s execution challenges, the implied unit economics for its vehicles, and near-term headwinds for the automotive industry stemming from a weaker global economy. Despite these headwinds, we are comfortable with Rivian’s liquidity position and its competitive position within the EV industry, which we believe will continue to grow at impressive rates. Rivian should also benefit from its positive product reviews, its integrated technology approach, and its industry partnerships.”
13. BioNTech SE (NASDAQ:BNTX)
Number of Hedge Fund Holders: 34
One-Year Average Price Estimate: $215.90
BioNTech SE (NASDAQ:BNTX) shares were trading at around $129 as of March 17, while its one-year average price estimate stands at $215. This shows a huge upside potential for BioNTech SE (NASDAQ:BNTX). Recently, the FDA announced that it has approved Pfizer (NYSE:PFE)/ BioNTech SE (NASDAQ:BNTX) COVID-19 vaccine for use as a single booster in children aged six months to 4 years who have received the regular vaccine.
BioNTech SE (NASDAQ:BNTX) saw a major spike in hedge fund sentiment during the fourth quarter. 34 hedge funds reported owning stakes in the company, up from 18 hedge funds in the previous quarter.
Artisan Partners made the following comment about BioNTech SE (NASDAQ:BNTX) in its Q3 2022 investor letter:
“BioNTech SE (NASDAQ:BNTX) is a leading biotech company focused on developing immunotherapies to treat cancer and other serious diseases. Over the past year, we trimmed our position significantly as we believed the stock’s valuation failed to reflect the windfall nature of COVID-19 vaccine cash flows. With the stock nearly 70% off its highs and, more importantly, at a reasonable discount to our PMV estimate, we view the valuation as opportunistic given its long-term profit cycle potential. BioNTech’s intellectual property in mRNA, and COVID funded manufacturing capacity leave it well-positioned to develop new mRNA vaccines and cancer therapies. In addition, the company has non-mRNA technology (e.g., cell therapy assets) and blue-chip partnerships offering additional optionality. While the company’s R&D pipeline beyond COVID-19 vaccines will take some time to mature, it is well funded by close to $20 billion in COVID-vaccine proceeds. We increased our position within the GardenSM as the stock declined.”
12. Zscaler, Inc. (NASDAQ:ZS)
Number of Hedge Fund Holders: 42
One-Year Average Price Estimate: $162.01
Cloud security company Zscaler, Inc. (NASDAQ:ZS) shares fell earlier this month despite posting fiscal second quarter earnings beat. Wedbush analyst Dan Ives, who is bullish on Zscaler, Inc. (NASDAQ:ZS), said the company’s billings of $493.8 million during the period was not “massive” as analysts were expecting. However, the analyst believes Zscaler, Inc. (NASDAQ:ZS)’s decline could be a buying opportunity for investors. Ives said that Zscaler, Inc. (NASDAQ:ZS) “remains a gold standard cyber name to own and we would be buyers on weakness for this high quality zero trust growth name going through a near-term uncertain macro."
At the end of the fourth quarter of 2022, 42 hedge funds had stakes in Zscaler, Inc. (NASDAQ:ZS). The biggest stakeholder of Zscaler, Inc. (NASDAQ:ZS) was John Overdeck and David Siegel’s Two Sigma Advisors which owns an $81 million stake in the company.
Artisan Global Discovery Fund made the following comment about Zscaler, Inc. (NASDAQ:ZS) in its Q4 2022 investor letter:
“Zscaler, Inc. (NASDAQ:ZS) provides cloud-based Internet security solutions. In the quarter, it announced 54% revenue growth and expected growth of nearly 40% in 2023 (ahead of expectations). Despite solid fundamental momentum, shares have underperformed this year as investors have grown concerned about slowing demand for enterprise software as the broader global economy slows. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a more remote workforce (versus pre-pandemic) make operating IT infrastructures increasingly complex. Give the attractive long-term outlook and depressed valuations, we added to the position.”
11. Cenovus Energy Inc. (NYSE:CVE)
Number of Hedge Fund Holders: 46
One-Year Average Price Estimate: $23.96
Canadian oil and gas company Cenovus Energy Inc. (NYSE:CVE) ranks 11th in our list of the most promising stocks according to analysts. Earlier this year, National Bank analyst Travis Wood upped Cenovus Energy Inc. (NYSE:CVE)’s price target to C$39 from C$36 and kept an Outperform rating. CIBC analyst Dennis Fong, on the other hand, lowered Cenovus Energy Inc. (NYSE:CVE)’s price target to C$31 from C$32 but kept an Outperform rating for the stock.
At the end of the last quarter of 2022, 46 hedge funds had stakes in Cenovus Energy Inc. (NYSE:CVE). The biggest hedge fund stakeholder of Cenovus Energy Inc. (NYSE:CVE) was Eric W. Mandelblatt’s Soroban Capital Partners which had a $1 billion stake in the company.
10. Marathon Oil Corporation (NYSE:MRO)
Number of Hedge Fund Holders: 48
One-Year Average Price Estimate: $34.07
Marathon Oil Corporation (NYSE:MRO) is getting hammered recently amid recession fears. However, Marathon Oil Corporation (NYSE:MRO) could be a long-term play as sooner or later the economy will turn the corner. Marathon Oil Corporation (NYSE:MRO) is committed to returning about 40% of its cash flows to shareholders in 2023.
In February, Benchmark analyst Subash Chandra upgraded Marathon Oil Corporation (NYSE:MRO) to Buy from Hold with a $32 price target after Marathon posted its Q4 results. The analyst highlighted a "potent" buyback potential.
9. Coupang, Inc. (NYSE:CPNG)
Number of Hedge Fund Holders: 49
One-Year Average Price Estimate: $21.95
South Korean e-commerce company Coupang, Inc. (NYSE:CPNG) ranks 9th in our list of the most promising stocks according to analysts. Earlier this month, Deutsche Bank analyst Peter Milliken upgraded Coupang, Inc. (NYSE:CPNG) to $20. The analyst said in a note that Coupang, Inc. (NYSE:CPNG) has “stepped ahead” of the competition “again” and praised the company’s growth posted for the fourth quarter. The analyst thinks Coupang, Inc. (NYSE:CPNG)’s profit growth "will get investor attention given its strong franchise.”
During the fourth quarter, Coupang, Inc. (NYSE:CPNG)’s GAAP EPS came in at $0.06, beating estimates by $0.02. Revenue in the quarter jumped about 4.3% on a YoY basis to reach $5.3 billion, missing estimates by $70 million.
Here is what Baron Funds specifically said about Coupang, Inc. (NYSE:CPNG) in its Q3 2022 investor letter:
“Coupang, Inc. (NYSE:CPNG), the largest e-commerce platform in South Korea, contributed after reporting a sizable beat on second quarter earnings and raising annual EBITDA guidance. Upside was concentrated in e-commerce, where Coupang is now driving sequential margin expansion while maintaining a growth rate that is triple that of the industry average, lending credence to the investment case that Coupang will consolidate the fragmented e-commerce industry in Korea across both general merchandise and grocery, with healthy long-term margins to follow.”
8. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 52
One-Year Average Price Estimate: $226.64
Moderna, Inc. (NASDAQ:MRNA) recently jumped after TD Cowen upgraded the stock to Outperform from Market Perform. Cowen’s analyst Tyler Buren said in a note to investors that expectations for Moderna, Inc. (NASDAQ:MRNA) in 2023 are “reasonable.” He estimates that Moderna, Inc. (NASDAQ:MRNA)’s COVID-19 vaccine sales could come in between $7 billion to $8 billion this year, much better than the company’s outlook of $5 billion.
As of the end of the last quarter of 2022, 52 hedge funds reported owning stakes in Moderna, Inc. (NASDAQ:MRNA). The total value of these hedge funds’ stakes was about $3.1 billion. The biggest hedge fund stakeholder of Moderna, Inc. (NASDAQ:MRNA) was Philippe Laffont’s Coatue Management, with a $1.1 billion stake.
ClearBridge Select Strategy made the following comment about Moderna, Inc. (NASDAQ:MRNA) in its Q4 2022 investor letter:
“Moderna, Inc. (NASDAQ:MRNA) became a household name during the pandemic as one of the first developers of a COVID-19 vaccine. But the stock sold off sharply as COVID momentum, including high expectations for booster shots, began to wear off, causing investors to slash its fiscal 2023 earnings estimates by two-thirds over the last year. We believe those downward revisions clouded the prospects for the company’s fully funded pipeline of platform opportunities, including cancer, RSV and flu. The cash-rich company also recently expanded its partnership with Merck to improve cancer treatments.”
7. Match Group, Inc. (NASDAQ:MTCH)
Number of Hedge Fund Holders: 54
One-Year Average Price Estimate: $62.77
Match Group, Inc. (NASDAQ:MTCH) ranks 7th in our list of the most promising stocks to buy according to analysts. Recently, Barclays upgraded Match Group, Inc. (NASDAQ:MTCH), citing limited risks and some upside catalysts. Barclays increased its rating on Match Group, Inc. (NASDAQ:MTCH) to Overweight from Equal Weight and maintained its $52 price target.
As of the end of the fourth quarter of 2022, 54 hedge funds reported owning stakes in Match Group, Inc. (NASDAQ:MTCH). The total worth of the stakes was $730 million.
RGA Investment Advisors made the following comment about Match Group, Inc. (NASDAQ:MTCH) in its Q4 2022 investor letter:
“Match Group, Inc. (NASDAQ:MTCH), a long-term holding of ours offers an important illustrative example of these effects. Tinder grew reported revenues 6% year-over-year, accelerating a debate about whether this particular asset has reached a plateau in its growth curve; however, revenues grew 16% on an FX neutral basis. Has this asset stalled or is it a mid-teens grower? Other factors will determine the one true answer to this question, though FX and the stated headline make the answer seem obvious when it is not. When foreign exchange movements are modest, people tend to focus more on FX neutral assuming those changes will normalize over time, yet when movements are extreme the headline takes prominence.”
6. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 56
One-Year Average Price Estimate: $47.79
Energy company EQT Corporation (NYSE:EQT) was trading at around $28 as of March 16. EQT Corporation (NYSE:EQT)’s one-year average price target is $47.70. Recently, Mizuho analyst Nitin Kumar kept a Buy rating on EQT Corporation (NYSE:EQT) but decreased his price target to $48 from $62.
At the end of the fourth quarter of 2022, 56 hedge funds reported owning stakes in EQT Corporation (NYSE:EQT).
Here is what ClearBridge Investments Mid Cap Strategy has to say about EQT Corporation (NYSE:EQT) in its Q3 2022 investor letter:
“We also added natural gas company EQT (NYSE:EQT) in the energy sector. As one of the lowest-cost domestic producers, EQT stands to benefit from its position as a leading supplier of natural gas to a world suffering from critically low energy reserves. The Russian invasion of Ukraine and threats to hold natural gas exports hostage have spurred a surge in European energy prices, generating long-term agreements by European countries to purchase U.S. natural gas.
This strong demand and elevated prices have helped EQT strengthen its balance sheet and position it to take advantage as opportunities emerge for natural gas to plug the gaps in the global energy transition from fossil fuels to renewables.”
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Disclosure: None. 11 Most Promising Stocks to Buy According to Analysts is originally published on Insider Monkey.