While earnings season looks set to add to the growing volatility on Wall Street, successful analysts are sticking with 2 ‘old school’ investments
Years from now when we look back, much of 2020’s investment activity will be summarized in one word: speculative. It’s already become the year of the ‘day trader’ in many ways, with the likes of Hertz (NYSE: HTZ), Nikola (NASDAQ: NKLA), and other ‘speculative’ stocks undergoing wild stock movements.
Likewise, the coronavirus pandemic has given rise to an entirely new breed of ‘at-home’ stocks, with Zoom (NASDAQ: ZM), Dominos (NYSE: DPZ), Netflix (NASDAQ: NFLX), and Peloton (NASDAQ: PTON) dominating headlines during the lockdown. Of course, the biggest names in the game — Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and the rest of FAANG — are also smashing records, with the Nasdaq (NASDAQ: QQQ) recently hitting all-time highs.
However, what happens to the ‘at-home’ stocks if a vaccine comes along? Pfizer (NYSE: PFE), Moderna (NASDAQ: MRNA), and BioNTech (NASDAQ: BNTX) are just some of the names with promising vaccines in the works right now. Though it will be some time yet, this pandemic will eventually be defeated, and (hopefully) normality will resume on the stock market instead of the wildly speculative volatility we’ve been experiencing. For that reason and others, some of the top-performing analysts on Wall Street have identified a number of stocks that they’re backing in the long-term. Here are 2 of our favorites.
1. Apple
Ok, so in the intro above I referred to these stocks as ‘oldies’ and although it did first go public in 1980, I don’t think anyone regards Apple (NASDAQ: AAPL) as an ‘oldie’. The most valuable brand in the world remains at the top of its game, and though its Big Tech rivals are closing the gap on its $1.7 trillion valuation, it has still risen 31% YTD and has plenty of room to grow.
Last week, five-star Canaccord Genuity (TSE: CF) analyst Michael Walkley — one of the most successful analysts on Wall Street — predicted a further 14% upside for Apple this year, and it’s clear to see why. In June, the iPhone-maker reduced its dependence on third-party manufacturers when it ended its long-standing agreement with Intel (NASDAQ: INTC) to make chips for its Mac computers. Now, it is looking forward to unleashing its first wave of 5G compatible devices later this year, alongside a market-leading position in wearables with the Apple Watch and AirPods, a stellar services ecosystem, and $83 billion in net cash to invest in long-term growth.
Although Apple has been forced to close its stores once more due to the pandemic, it did report a 13.5% increase in e-commerce activity in Q1, so investors will hope for an even higher jump when the Q2 report comes around. Apple has spent a lot of time and money reducing its dependence on the iPhone in recent years, and though it still accounts for almost half of its revenue, its other services have expanded massively. With Q1 revenue rising 1% year on year, investors will be anticipating roughly $60 billion in Q2 revenue when it announces earnings in a few weeks.
2. Disney
With Tesla (NASDAQ: TSLA) on the cusp of joining the S&P 500 (NYSEARCA: VOO), one could be forgiven for thinking that it deserves a mention among analysts, but this goes back to our discussion about speculation above. Meanwhile, some of Wall Street’s top analysts are bullish on Disney (NYSE: DIS) in the long run.
To put it lightly, Disney is having the year from hell… It’s Parks and Cruises segment has been decimated by the coronavirus, with the company reporting $1.4 billion in losses in Q1. However, parks are now reopening across the world and the House of Mouse is coming back to life. But despite this segment accounting for more than a quarter of the company’s overall revenue, it is its new over-the-top streaming service Disney+ that has got investors bullish.
Goldman Sachs (NYSE: GS) has claimed that the market is undervaluing its latest service by more than 50%, a bold claim considering that its current offering only brings in about $3.7 billion per year as of May’s Q1 earnings — less than 6% of the company’s total revenue. However, another top Wall Street analyst, Brett Feldman, sees the service following a Netflix-esque growth trend and hitting profitability as soon as next year, versus 2023 as originally anticipated. Though I take this Disney analysis with a pinch of salt as I find it hard to see much upside to the media giant right now, in this unprecedented time, it could make sense to follow the stock picks of analysts with a proven track record of success.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above Read our full disclosure policy here.