Stocks like Peloton, Plug Power & Rivian are long-term winners
A Peloton exercise bike is seen after the ringing of the opening bell for the company’s IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019.
Shannon Stapleton | Reuters
Inflation pressures, supply chain snarls and a resurgence of Covid are weighing on companies and shaking up stocks.
The latest bout of selling suggests that many investors would rather take losses and get their money out as quickly as they can.
However, Wall Street’s top pros are telling investors that the current market turmoil is an opportunity in disguise for those with a long-term perspective. The experts have picked their favorite stocks to buy now, according to TipRanks, which ranks the best-performing Wall Street professionals.
Here are five stocks that top analysts believe present a bargain opportunity.
RingCentral (RNG) is a provider of cloud-based business communications solutions to customers across industries. The company reported a solid first quarter of 2022, with revenue and adjusted per-share earnings not only improving from the year-ago quarter, but also beating the consensus estimate. The company went on to issue an upbeat outlook for the second quarter.
Despite its strong results and optimistic guidance, RingCentral has not escaped the sell-off that has hit stocks across the board. For investors who may be considering buying the dip, Oppenheimer’s Timothy Horan is urging them to go ahead. In a recent report, the analyst said that RingCentral’s high quality service enables it to maintain stable pricing across its various offerings. The analyst also likes the company’s renewed focus on profitability. (See RingCentral Website Visits on TipRanks.)
Horan rated the stock a buy with a price target of $100.
RingCentral CEO Vlad Shmunis has said that the company’s success is built on three factors: trust, innovation, and partnership. The firm has recently launched several new products, including those targeting small businesses, hybrid work and study segments.
RingCentral has forged partnerships with telecom giants such as AT&T (T), Verizon (VZ), Vodafone (VOD), and Deutsche Telekom (DTEGY). It also recently added Frontier (FYBR) as a partner as it seeks to reach more small business customers. According to Horan, RingCentral has the best go-to-market strategy, citing its network of partners that consists of many incumbent telecom and PBX providers.
The analyst expects RingCentral to be a major beneficiary of the rapidly expanding cloud communications market, which he estimates will grow fourfold over the next six years to hit $100 billion.
Out of the nearly 8,000 analysts in the TipRanks database, Horan is ranked at No. 200. The analyst has been correct 64% of the time in his stock ratings, with an average return of 12.8%.
Peloton Interactive (PTON) posted a recent quarterly report that showed a drop in revenue and a widening loss. The fitness company’s business has not been in its best shape amid high inflation and global supply chain disruptions. The market’s meltdown has also taken its toll on Peloton stock.
However, Baird’s Jonathan Komp thinks it would be wrong to write off Peloton on the account of its current woes. In a recent report, the analyst noted that Peloton’s new CEO, Barry McCarthy, is pursuing multiple growth opportunities and working on operational improvements. The analyst also believes that Peloton’s high-margin, fast-growing subscription business appears undervalued.
Komp rated the stock a buy with a price target of $25.
“We are optimistic industry demand is near/at a new baseline and that PTON can drive healthy profitability by F2024E,” the analyst said. Komp believes that the subscription business will underpin Peloton’s profitability. He made note of the management’s cost control efforts, citing Peloton’s $800 million annual run-rate cost-savings target by fiscal 2024. (See Peloton Stock Charts on TipRanks)
Komp is ranked at No. 473 out of the nearly 8,000 analysts in the TipRanks database. The analyst’s stock ratings have been accurate 51% of the time, with an average return of 14.1% per rating.
Rivian Automotive (RIVN) is a new electric vehicle maker, and it has built several models, namely the R1T pickup truck, R1S SUV, and EDV delivery van. Shares of the company have skidded amid the market tumult.
While some may see a falling knife in Rivian, Mizuho’s Vijay Rakesh is urging investors to buy the dip. In a recent report, the analyst highlighted that Rivian’s business actually looks better than many investors may realize.
Rakesh rated the stock a buy with a price target of $80.
Rivian is aiming to produce 25,000 vehicles in 2022. The company produced 2,553 vehicles in the first quarter 2022. It’s adding manufacturing capacity to meet its production target amid strong demand for its vehicles. Rivian has now received more than 90,000 preorders for its truck and SUV models, compared to about 83,000 preorders in the previous update. Rakesh noted that Rivian’s nearly 10,000 new pre-orders come at a higher average selling price of $90,000 per vehicle, compared to $77,000 for the earlier orders. (See Rivian Retail Investors on TipRanks)
Adding to his bullish hypothesis, the analyst noted that Amazon (AMZN) placed an order with Rivian for 100,000 vans, which should be delivered by 2030. With orders continuing to come, demand is not a problem for Rivian, the firm only needs to scale up production. According to Rakesh, Rivian has sufficient cash to last it through the next 11 quarters.
Of the nearly 8,000 analysts in the TipRanks database, Rakesh is ranked at No. 72. The analyst’s calls have been accurate 62% of the time, with an average return of 23.2% per rating.
Six Flags (SIX) operates regional theme parks, and it recently reported a generally strong first quarter. However, the stock has continued to trade well below its recent highs alongside the broader market. In a recent report, B. Riley Financial’s Eric Wold discussed how Six Flags’ business is going to get better in the future.
Wold rated the stock a buy with a price target of $55.
Investors have long focused on attendance numbers for theme park operators. However, Wold said that attendance is no longer a key metric when it comes to evaluating Six Flags. According to the analyst, Six Flags is turning its focus to attracting premium guests and at the same time doing away with programs that have generally drawn low-margin guests. It means that while attendance may drop, Six Flags should see improved profitability, the analyst said. (See SIX Flags Risk Factors on TipRanks)
The analyst also believes that Six Flags has the ability to offset inflation pressures. For example, a new pricing strategy that is boosting admission fees and efficient labor staffing should help in alleviating inflation and wage pressures.
Out of the nearly 8,000 analysts in the TipRanks database, Wold is ranked No. 701. The analyst’s calls have been right 46% of the time, with an average return of 10.9% per rating.
Fuel cell company Plug Power (PLUG) recently reported that sales nearly doubled year-over-year in the first quarter, but high costs led to a wider loss. Lately, PLUG stock has been under pressure, recording a steep fall from its recent peak. (See Plug Power Blogger Sentiment on TipRanks)
According to H.C. Wainwright’s Amit Dayal, the decline in Plug Power shares is a blessing in disguise. The analyst sees the company’s business improving in the coming years and the stock rising as well.
Dayal rated the stock a buy with a price target of $78.
Plug Power is expanding its business globally, and the analyst sees up to 25% of the company’s estimated $909 million revenue in 2022 coming from international markets. The natural gas price volatility has pressured Plug Power’s fuel margins, and Dayal acknowledges that it could remain in the near term. However, the company is improving its service margins.
“We believe the stock should get a better appreciation from the market on evidence of execution against margin improvements and global growth,” said Dayal.
Plug Power’s fuel cell solutions address clean, renewable energy needs. According to the analyst, the stock stands to benefit from U.S. and global climate change legislation.
Dayal is ranked at No. 28 out of the nearly 8,000 analysts in the TipRanks database. The analyst’s ratings have been correct 44% of the time, with an average return of 49.8% per rating.