With the fourth quarter shaping up to be considerably choppier than many expected, it’s time to look at Wall Street and see which stocks the experts are betting on as solid picks amid the selloff.
The Dow Jones Industrial Average and S&P 500 fell more than 4 percent last week despite strong gains on Friday. The Nasdaq dropped nearly 3.75 percent for the week.
TipRanks tracks and ranks almost 5,000 Wall Street analysts. We scanned our data for the Street’s best-rated stocks across the different sectors right now. All the stocks covered below have fallen recently, providing compelling entry points for investors to take on new stakes or add to existing positions.
Illumina (ILMN)
Illumina is a global leader in genomics, grappling with questions like ‘what causes cancer cells to mutate.” Its sequencing technologies enable us to understand genetic variations in health, disease and drug response.
Canaccord Genuity’s Mark Massaro (Track Record & Ratings) has just reiterated his buy rating on the stock. This comes with a bullish $375 price target (15 percent higher than its current trading price).
The analyst recently wrote: “No fault of its own, ILMN is down 21% since reaching $372/share just 9 days ago. We would buy ILMN right here, as ILMN, the dominant leader in sequencing, is powering huge population sequencing projects around the world at a scale never seen before.”
Overall, this stock earns a strong buy consensus rating on TipRanks. In the last three months, analysts have published seven buy ratings and one hold rating. Meanwhile the average analyst price target stands at $350 (7 percent upside potential).
Amazon (AMZN)
E-commerce giant Amazon has slipped recently. The shares are down 8 percent in the last month, but the fundamental outlook remains as strong as ever.
Stifel Nicolaus analyst Scott Devitt (Track Record & Ratings) is now out with the stock’s highest price target, at $2,525. That is 38 percent above from current levels. Devitt also added the stock to the firm’s elite Select List, bumping out Alibaba in the process.
“We are replacing Alibaba with Amazon on the Stifel Select List in light of greater near-term optimism for Amazon, an uncertain China macro environment, and the opportunity created by recent AMZN price movement” Devitt wrote on October 11.
As Devitt noted, Amazon is a leader in two large and rapidly growing markets, e-commerce and cloud services. Moreover, its developing ad business is well-positioned to deliver strong revenue growth over the intermediate to long term.
“Strong momentum in the higher-margin cloud services and advertising business are elevating the near/intermediate-term margin trajectory for the company” the Stifel analyst told investors in the report.
He sees strategic investments (think Prime membership, emerging geographies and video content) both supporting long-term growth and advancing the company’s leadership position.
In the last three months, 36 out of 37 analysts have made bullish calls on the stock. These analysts have a $2,195 price target on AMZN (19 percent upside potential).
PayPal (PYPL)
Payments giant PayPal is down 15 percent since its second quarter earnings report (versus 4 percent for the market). The word on the Street is this weakness spells a buying opportunity.
William Blair analyst Robert Napoli (Track Record & Ratings) says that while recent acquisitions and the sale of its credit business “could complicate near-term visibility, PayPal’s (PYPL) fundamentals remain strong.”
With the share price pull back, taking the valuation to 17 times 2019 earnings before interest, taxes, depreciation and amortization, we are now looking an attractive entry point for long-term investors, Napoli wrote in a research note dated October 9.
Cantor Fitzgerald’s Joseph Foresi (Track Record & Ratings) turns his attention to the stock’s upcoming earnings report. Management has guided for third quarter revenue between $3.62 billion and $3.67 billion, representing 12 percent to 13 percent year-over-year growth.
“[PayPal] kicks things off this week reporting 10/18. We expect steady results and believe in the long-term story” Foresi wrote on October 15.
He has a buy rating on the stock with a $98 price target (22 percent above current trading price). “We believe PayPal can grow at roughly double the market average, supporting its premium to the group” the Cantor analyst explained.
With 23 recent buy ratings and 5 hold ratings, this strong buy stock has a $99 average analyst price target.
Delta Airlines (DAL)
Good news for Warren Buffett. His favorite airline stock has the thumbs up from the Street. Even though share prices are down 10 percent in the last month, the $70 average analyst price indicates shares could rebound 29 percent.
Plus Delta has received six back-to-back analyst buy ratings in the last week following a strong third quarter earnings report.
Top Stifel Nicolaus analyst Joseph DeNardi (Track Record & Ratings) reiterated his DAL Buy rating on October 12. He has a Street-high price target on the stock of $95 (83 percent upside potential).
According to DeNardi, a 3 percent to 4 percent capacity-growth outlook is probably higher than some investors would have liked, but “if any airline has a pass to cheat, it’s probably Delta.”
Delta is a leader among peers in providing revenue visibility, says DeNardi, who suggests that this is a tactic used by the company to highlight its robust premium seating demand levels.
Indeed, the recent report revealed that demand for premium cabin seats, such as those in first and business class, rose 20 percent. The higher-cost of premium seating makes this a key money-maker for airlines.
Facebook (FB)
Despite recent controversies, Facebook is still a top pick for the Street. On October 15, top Loop Capital analyst Alan Gould (Track Record & Ratings) initiated coverage of the stock with a buy rating and $210 price target.
With shares down 13 percent year to date, the stock is now valued “quite attractively” says Gould after a “strong year financially and a challenging year operationally.” His price target suggests upside potential of 33 percent.
“We acknowledge the uncertainty,” Argus Research’s Joseph Bonner (Track Record & Ratings) wrote of Facebook’s security breach, regulatory probe and exec departures, “but also recognize that Facebook’s (FB) platforms provide digital advertisers with unique access to a huge base of users.”
According to Bonner, FB now trades at a 40 percent discount to its peer group of large internet and tech stocks. The Argus analyst reiterated his buy rating on October 3, writing: “The haircut for Facebook shares has been a positive for valuation.”
Bonner points out that the 50 million accounts reportedly affected by the security breach make up only a small percentage of the Facebook’s total user base. He adds that the company’s response could be strong enough to avoid a major regulatory fine, such as the $1.6 billion fine it faces in Europe.
The social media giant scores a strong buy analyst consensus with 32 buy ratings in the last three months. This is with six hold ratings and one sell rating. Their average price target of $205 translates into 33 percent upside potential.