Top Rated Stocks to Watch This Week - Jan. 16, 2024

In the stock market where opportunities and risks coexist, stock selection is of paramount importance for every smart investor. Here, we have some very good investment opportunities that can assist investors. Combines fundamental analysis and quantitative screens to uncover promising companies that have the potential to become market leaders.

Additions

There are several new additions to the Top Rated Stocks this week.

1.Meta Platforms (Meta)

Meta Platforms, the juggernaut behind Facebook, has recently seen its investor confidence soar, exemplified by Mizuho Securities elevating its price target from $400 to $470. This bullish stance is set against the backdrop of META's impressive 169% stock gain over the past year, painting a picture of a company on the ascent in the ever-evolving landscape of social media.

The optimism surrounding Meta is anchored in several key drivers. First and foremost is the projected sales growth, underpinned by the potential for enhanced monetization of Reels and the burgeoning demand from Chinese advertisers. Additionally, Mizuho anticipates a reduction in operating expenditures, continuing a trend observed in previous fiscal years. A pivotal development is the leveraging of artificial intelligence in WhatsApp, which could augment Meta's revenue base by transforming customer service.

In essence, Meta Platforms (META) presents an investment conundrum marked by promising growth prospects in online advertising and user engagement innovations. However, these opportunities are juxtaposed with the realities of a competitive landscape and regulatory uncertainty. For investors, the key lies in balancing the evident potential for growth through AI and VR innovations against the inherent risks posed by regulatory challenges and the competitive dynamics of the social media industry. A careful, thorough evaluation of these factors is crucial in determining Metas place in an investment portfolio. Click here to review the article.

2.Shopify (Shop)

Shopify Inc., under the ticker SHOP, has emerged as a titan in the e-commerce sector, offering an all-encompassing platform and suite of services for merchants worldwide. This sophisticated platform empowers merchants to seamlessly navigate the digital marketplace through diverse channels, including web and mobile storefronts, social media integration, and physical retail spaces. Boasting a formidable market capitalization of $102.88B and an enterprise value of $99.09B, Shopify stands as a beacon in the e-commerce domain, captivating the attention of investors and market analysts.

Operating through its dual segments – Subscription Solutions and Merchant Solutions – Shopify provides a multifaceted approach to digital commerce. The Subscription Solutions segment is the gateway for merchants to enter the e-commerce arena, while the Merchant Solutions segment offers an array of ancillary services like Shopify Payments and Shopify Shipping to augment the online retail experience. Currently, 39 Wall Street analysts are keeping a close watch on SHOP, offering a consensus rating of Moderate Buy.

Shopify's prowess lies in its appeal to the burgeoning sector of small and medium-sized businesses (SMBs). The platform's user-friendly interface and comprehensive feature set make it an invaluable asset for SMBs venturing into or expanding their online presence. Additionally, Shopifys ecosystem, enriched by a vast network of referrals and developers, adds layers of value and assistance in areas ranging from website design to marketing. Click here to review the article.

3.Bank of America (BAC)

Bank of America's earnings report for the fourth quarter reflected a decrease in net income and revenue compared to the previous year. However, the bank's ability to manage credit risks, improved sales and trading revenue, and maintain healthy capital ratios showcased its resilience in a volatile market environment.

Bank of America reported a decline in revenue, net of interest expense, of $2.6 billion, or 10% compared to the previous year. However, when excluding the impact of BSBY cessation, adjusted revenue decreased by 4%. Noninterest income also decreased by $1.8 billion to $8.0 billion, with adjusted noninterest income declining by $264 million. Factors contributing to the decrease in revenue and noninterest income include higher deposit costs, lower deposit balances, and weaker trading in rates and credit.

Shares of BAC rallied from $26 at the start of November to $33 ahead of this report. The results leave a little to be desired and are leading investors to bank some profits. The pullback is minimal and the stock continues to look attractive as it trades below peers at 1.0x price to book. We would view a pullback as a good entry for investors with a longer-term holding period. Click here to review the article.

4.Delta Air Lines (DAL)

Delta Air Lines (DAL) delivered a robust fourth-quarter earnings report, surpassing expectations on both the top and bottom lines. However, the stock plummeted over 5% in premarket trading on Friday due to disappointing guidance for the upcoming year.

The primary concern for investors is the weakening growth outlook for 2024. Delta's projected EPS growth of 5-10% falls short of the 14% increase recorded in 2023. This slowdown can be attributed to factors such as softening domestic demand, rising costs, and the uncertain impact of the ongoing pilot pay deals.

Despite the negative sentiment in the airline sector, Delta still holds potential for outperformance. The company's strong international presence and greater resilience to cost pressures compared to discount airlines could provide a competitive edge in 2024.

Additionally, Delta is not affected by the temporary grounding of the Boeing 737 MAX 9 jets, which could further mitigate risks for the company. This aircraft accounts for around 20% of Alaska Airlines' fleet and 8% of United Airlines' fleet. Click here to review the article.

5.Masimo Corporation (MASI)

Masimo Corporation (MASI) provided its financial forecasts for 2024, which showcased significant growth potential. The company expects an increase in adjusted earnings per share (EPS) and revenue, indicating positive momentum in the upcoming year. Additionally, Masimo's CEO expressed openness to resolving its ongoing dispute with tech giant Apple, potentially leading to lucrative royalties. 

Masimo forecasts adjusted EPS for 2024 in the range of $3.44 to $3.60, surpassing the market consensus estimate of $3.08. This projection indicates a robust earnings growth trajectory, reflecting the company's focus on innovation, expanding product lines, and strategic initiatives. The company anticipates 2024 revenue between $2.05 billion and $2.17 billion, with the market estimate at $2.09 billion. 

MASI reaffirmed its FY24 Consolidated revenue outlook ($2.04-2.16 billion) and Healthcare revenue ($1.34-1.38 billion). It raised its FY24 Consolidated operating income to $307-322 million from $275-290 million. The company raised its FY24 EPS to a range of $3.44-3.60 from the prior outlook of $3.00-3.15. Click here to review the article.

Delletions

There are several deletions this week: AAPL, OXY, DIS, XRX, HOOD.

Last Week's Best Performing Stocks

1.Moderna (MRNA)

MRNA has risen by 23.18% since being selected.

Moderna is a biotechnology company specializing in the development of mRNA-based therapeutics and vaccines. They have gained recognition for their COVID-19 vaccine, which received Emergency Use Authorization (EUA) by various regulatory agencies worldwide.

Moderna (MRNA) and Merck (MRK) jointly announced positive results for their combination treatment, mRNA-4157 (V940), in combination with Keytruda (Pembrolizumab) for stage III/IV melanoma patients with a high risk of recurrence following complete resection. 

Following the news of positive clinical results, Moderna's stock exhibited a notable 11.7% uptick. This surge suggests that market participants view the news favorably and anticipate the potential for future growth.

MRNA sets up as an interesting opportunity for investors. The stock was a covid darling as it gained recognition for its covid vaccine in 2021. This drove its stock price to $497 in August of 2021. The stock has pulled back aggressively as worries around covid receded. The stock held its ground at the $71 level the past couple of months, suggesting sellers had left. This news has renewed interest in the name. MRNA could see some interest from traders given its breakout on the weekly chart and the positive new from today. Click here to review the article.

2.Costco (COST)

COST has risen by 14.41% since being selected.

Bulls argue that Costco maintains a proven formula for successfully translating its operations across borders and faces minimal direct competition abroad, implying a long runway of growth prospects. With unmatched scale and plentiful consumer data, Costco's pricing and value proposition remain superior relative to competing retailers and should be difficult to replicate. On the other hand, bears counter that as Costco reaches a point of maturity in its U.S. and Canadian markets, the firm's cost leverage may show signs of deterioration. Furthermore, Costco has lagged competing retailers when it comes to digital innovation and omnichannel fulfillment, which could cause customers to favor retailers such as Walmart and Amazon that have prioritized the digital customer experience in recent years.

COST shares have been out in front of the market overall this year, with the stock heading for a test of its all-time highs imminently as it approaches the $610-615 area, where it topped back in April 2022 as the bear market hit its stride. While COST shares are nearing overbought RSI and Bollinger Band levels, they aren't there yet, suggesting bears may need to absorb more pain to see through double-top bets in this trending leader. Click here to review the article.

3.Advanced Micro Devices (AMD)

AMD has risen by 13.68% since being selected.

AMD shares have been triangling sideways since fall 2021, ranging roughly between $50 and $150 in a wide-swinging consolidation over two years in the making. Zooming in a bit, the stock is currently trading above rising major MA's. It is flirting up against key resistance in the $125 area. Support sits below in the area around $105-110 where we see the 50- and 200-day MA's.

In conclusion, AMD is a promising long-term investment for those who are willing to accept the risks involved. The company's growth in revenue, strategic positioning in AI, and focus on innovation make it an attractive option for investors who believe in its ability to secure its future in a rapidly evolving tech landscape. However, it is essential to monitor the company's performance closely and make informed decisions based on the latest financial data and market trends. 

In short, there are enormous risks in play here, but enormous upside potential is also within reach. It's a very interesting basket, but it's not a place to hold all your eggs. Click here to review the article.

Summary

Top Rated Stocks is savvy investor's proprietary quantitative system designed to uncover small, fast-growing companies that have the potential to become market leaders.

If you're new to this page, each Monday we publish an updated list of the growth stocks in the market. In-house focus list of the most compelling investment and trading opportunities in the eyes of savvy analytical team. Also incorporates periodic Special Situations reports on theme-based market opportunities.