One of the primary rules for investors is to “buy low and sell high.” And in order to commit to this rule, one needs to build a profitable portfolio. That said, finding the right stock for one’s portfolio can be difficult, especially for new investors. In these circumstances, an investor can always look to Wall Street analysts as a source of wisdom for strong buys.
Now, some suggest that Wall Street analysts generally follow the momentum in the stock markets. In other words, these analyst ratings can be lagging indicators that should be ignored. I think that’s an overly-simplistic view; Though, there is some truth to that.
Stock analysts on Wall Street use their expertise to provide stock ratings, reviews and predictions. With this, they recommend and rate certain stocks as “strong buys.” Generally speaking, stock upgrades or downgrades can drive a particular company’s valuation in one direction or another because of the power these reports wield. Of late, many analyst revisions have been to the downside. Cynics might say that’s because the overall sentiment in the market is bearish right now, and to me, that’s fair enough.
However, there remains a strong stable of companies that Wall Street analysts agree are “strong buys.” Therefore, let’s take a look at seven of the top companies I think are worthy of consideration right now.
- Nio (NYSE:NIO)
- Li Auto (NASDAQ:LI)
- XPeng (NYSE:XPEV)
- Nvidia (NASDAQ:NVDA)
- Marvell Technology Group (NASDAQ:MRVL)
- OneMain Holdings (NYSE:OMF)
- CrowdStrike Holdings (NASDAQ:CRWD)
With all of that in mind, let’s dive in and analyze each one.
Strong Buys Right Now: Nio (NIO)
The first of a handful of Chinese electric vehicle (EV) stocks on this list is Nio. A leading pure-play EV stock, Nio is a company that ebbed and flowed in epic fashion last year. Hitting a high of nearly $67 per share during last January’s bull rally in spec tech, NIO stock has since fallen to the $25.40 level.
This epic decline of approximately 60% from its peak certainly doesn’t point in the right direction. However, Wall Street remains bullish on this company. In fact, the average investor target price is 129% higher than its current price. Now, that’s a bullish take from Wall Street.
Much of this bullish enthusiasm among investors is related to the company’s fundamentals. Nio doubled its sales in its recent earnings report, growing its market share relative to its peers. As the EV market continues to grow in China, and the middle class transitions to EVs, this company has an incredible future ahead of it. While not yet profitable, analysts see profitability on the horizon — making this company a potential cash flow machine in just a few years.
Li Auto (LI)
Yet another Chinese EV manufacturer, Li Auto is a company Wall Street shares a similar view of. This company is making headway, like its peers, in the Chinese EV market. During the company’s most recent quarterly earnings report, Li reported more than 25,000 deliveries of its Li ONE model, representing 190% year-over-year (YOY) growth.
Those are certainly some impressive growth numbers.
Now, also like its peers, Li is not yet profitable. That said, the company’s current loss is negligible, leading many analysts to think that profitability could be on the menu for 2022. If that’s the case, Li could shoot higher in value, leading to some very strong target price predictions for this stock.
Continuing its robust demand trajectory, Li Auto delivered 12,268 Li ONEs last month, witnessing a 128.1% increase YOY. Upon announcing this impressive number, LI stock’s price jumped 10% and is currently trading at just below $30 per share. However, the company’s valuation multiple remains below many of its peers, leading to expectations this stock could be in for growth, should bullish sentiment return to the market.
Strong Buys Right Now: XPeng (XPEV)
The third Chinese EV stock on my list here is XPeng. Like Nio and Li, XPEV stock has also been hit hard in 2021, particularly in the first half of the year. However, this decline has little to do with the company’s financial performance. Accordingly, Wall Street remains very bullish on this stock, as I am.
The company’s average target price is now about 45% higher than its current price. As a high-growth EV stock based in China, expectations are that this company’s results in future quarters could be even better than what the company has reported thus far. And those numbers are staggering.
Moreover, XPeng offers three models: the P7 sports sedan, P5 family sedan, and G3 SUV. In 2021, it delivered 98,155 vehicles, which was 263% above its 2020 numbers. Last month, it fulfilled demands for 12,922 EVs, beating both Li Auto and Nio.
The reason to remain bullish about its upward momentum is XPeng’s expansion into the international market. In 2022, it will start selling these three models and a new G9 SUV in the Netherlands, Sweden, and Denmark. Given its brilliant quarterly performance, the company’s revenue could reach $6.06 billion by the end of this year.
Despite a massive chip shortage in the market, Nvidia was one of the best-performing stocks in 2021. It grew almost 125% and is currently trading at a reasonable value of $263 per share. However, NVDA stock has been on quite a downtrend since its November peak. Currently, investors can pick up shares of this world-class chip manufacturer at a 20% discount from its peak.
That said, Wall Street considers this stock a strong buy because this recent dip is the growth opportunity that Nvidia needs. This company is a pioneer in manufacturing graphics processing units (GPUs) for fast-growing industries like gaming, data centers, artificial intelligence and EVs.
Following this correction, it’s expected NVDA stock could go as high as $400 per share in 2022. Interestingly, part of its upside potential is aligned with Nio, as Nvidia is going to supply the chips for Nio’s ET7 Sedan model. Furthermore, this company is vital for the growth of the metaverse industry as it provides the basic infrastructure.
Nvidia launched its Omniverse software on Jan. 4, which has already become its fastest-growing component. It can charge as much as $1,000 from its users to access this metaverse platform. Thus, based on the success of metaverse, investors can expect huge returns from Nvidia in 2022.
Strong Buys Right Now: Marvell Technology Group (MRVL)
Another chipmaker on this list is Marvell Technology, which is also presenting a great “buy the dip” opportunity. In the past month, MRVL has fallen 13.3% and remains one of the strong buys on this list because of its correction timing.
This Delaware-based semiconductor company has an impressive portfolio of products. It manufactures chips for data centers, wireless and automotive industries. In 2021, Marvell benefited from the increasing demand for its storage and networking chips in these industries.
As per its recent Q3 report, this company saw 61% YOY growth in net revenue, reaching $1.2 billion. Revenue from its data center segment rose 109% YOY, and earnings per share (EPS) grew 72% YOY to 43 cents. Moreover, Marvell Technology anticipates net revenue of $1.32 billion in the fourth quarter of FY2022.
Indeed, Marvell isn’t as popular among investors as Nvidia or AMD. However, it has the potential to be very competitive in the coming years. Furthermore, this company’s revenue growth is likely to be driven by new products resulting in market share gain. Right now, this is a stock I tend to agree with Wall Street on.
OneMain Holdings (OMF)
In times of high market volatility, dividend stocks offer the best investment opportunity. With a consistent dividend payout, dividend stocks attract numerous risk-averse investors. Among such stocks is OneMain Holdings, a dividend aristocrat.
This Indiana-based company is America’s largest personal installment loan company. It caters to 2.2 million customers who have poor credit scores, and thus, face difficulty in attaining a loan. Being part of such a unique market is what makes OneMain a highly profitable company.
So far this year, this financial services company has outperformed the broader market. In the financial year of 2021, OneMain reported a net income of $1.3 billion, which is way above 2020’s figure of $730 million.
This company also witnessed an increase in diluted EPS from $5.41 per share to $9.87 per share. Additionally, attracting more investors was a 36% rise in its quarterly dividend payout. Thus, it is now offering a whopping dividend yield of 7.3%.
Overall, OneMain’s stellar track record is the reason why Wall Street analysts believe that it is one of the top strong buys for investors.
Strong Buys Right Now: CrowdStrike Holdings (CRWD)
Shares of cybersecurity technology company CrowdStrike are down almost 40% from its 52-week high, trading at $181. Fortunately, this is because of a broader market selloff and does not indicate poor performance by CrowdStrike.
Among all software-as-a-service (or SaaS) stocks, CRWD stock is at the top. With an increase in cybercrime, especially after the pandemic, CrowdStrike offers numerous versions of cloud-based cybersecurity services. Its products eliminate the need for on-site applications and offer protection for your identity and data.
As it provides an essential service with high quality, CrowdStrike has become the industry leader. In its recent quarter, this company witnessed a 63% increase in revenue, reaching $380.1 million. Additionally, it added 1,600 new customers to its portfolio. Thus, the company’s total customer count rose 75% YOY.
The cybersecurity industry is a high-margin industry, expected to grow at an annualized rate of 14.5% by 2026. CrowdStrike’s unique Falcon architecture is cheap and highly effective. With such a platform, this company can easily capture the cybersecurity market and double its revenue by 2023. Thus, it is not shocking that Wall Street analysts estimate a 51% upside in CRWD stock’s value.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.