Top Rated Stocks To Watch This Week - March 25, 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

Chipotle Mexican Grill, Inc. (CMG)

Overview: Chipotle Mexican Grill continues to thrive in the North American consumer staples sector, with its stock showing robust growth since our bullish rating in September 2022.

Recent Developments:

• Stock Split: Chipotle announced a 50-1 stock split, expected to close by June 6, subject to shareholder approval. This move aims to make the stock more accessible to smaller investors, potentially driving up volumes and prices.

• Financial Performance: The company saw a 14.3% increase in broad-based revenue in 2023, outpacing inflation. With 250 new restaurants added, Chipotle's expansion plans are on track, and its non-cyclical product sales continue to grow.

• Valuation: Using a P/E expansion valuation, we target a price of $4,304 for CMG stock, indicating potential undervaluation despite its recent rally.

Risks: The low barriers to entry in the food industry, trend-like consumer cycles, and technical analysis metrics suggest caution. Chipotle's value-at-risk is elevated compared to the S&P 500, indicating potential portfolio impact during market downturns.

Outlook: We maintain a strong buy rating on CMG, anticipating continued profitability and potential upside from the stock split. Click here to view the article.

Chewy Inc. (CHWY)



Overview: Chewy, an online retailer for pet products, is under scrutiny for its valuation amidst a challenging macroeconomic environment.

Market Position: Chewy capitalizes on the pet humanization and premiumization trends, with a 12% market share in the pet retail market and a strong subscription-based selling model.

Financial Performance: Despite a 4.2% increase in Q4 net sales and a record high in net sales per active customer, Chewy faces challenges with declining active customers and margin pressures.

Valuation: Analysts predict a return to profitability and sustained growth, with a potential 40-130% upside in stock price if Chewy can maintain double-digit EPS growth.

Risks: Inflation, reliance on existing customers for growth, and profitability concerns are key risks. The stock's volatility and uncertain growth prospects warrant caution.

Outlook: Chewy receives a strong buy rating, albeit with reservations due to its elevated risks and long-term growth uncertainty. Click here to view the article.

Starbucks Corporation (SBUX)



Overview: Starbucks, a global coffee giant, continues to demonstrate growth potential despite its size, with a market capitalization of $105.48 billion.

Growth Drivers: The company's revenue growth is driven by a 4-6% increase in comparable store sales and the opening of new locations, with an expected 7-10% overall revenue growth in 2024.

Expansion: Starbucks has expanded its store count to 38,038 by the end of 2023, with plans to continue growing its global presence.

Financial Performance: Starbucks has shown consistent growth in net profits, operating cash flow, and EBITDA, with expectations of 15-20% earnings per share growth in 2024.

Investment: The company has allocated significant capital to expansion and shareholder returns, with $20.49 billion in net share buybacks and $10.63 billion in dividends since 2019.

Valuation: Starbucks is priced at reasonable multiples for an industry leader, with potential for continued growth in the global coffee and tea markets.

Outlook: Starbucks retains a buy rating, with its consistent growth and strong financials supporting a positive outlook for the company. Click here to view the article.




Delletions


There are several deletions this week: PANW, CRWD, ORCL

Last Week's Best Performing Stocks

1.Advanced Micro Devices, Inc. (AMD): A Semiconductor Powerhouse with AI Ambitions

AMD has risen 34% since selection.

AMD has been a prominent player in the semiconductor industry, with a 43.61% increase in revenue in 2022. However, a 58.25% decrease in earnings raises concerns about profitability and cost management. The company's forward P/E ratio of 31.85 suggests a premium valuation, reflecting its growth potential in high-growth sectors like AI.

The acquisition of Nod.ai demonstrates AMD's commitment to expanding its AI capabilities, positioning it to compete with industry leader Nvidia. Despite intense competition and mixed market sentiment, AMD's focus on open AI software ecosystems and integration of Nod.ai's technology presents a clear growth strategy.

Investors should be cautious due to the significant decrease in earnings and intense competition. However, AMD's growth in revenue and strategic positioning in AI make it an attractive long-term investment for those willing to accept the risks. Click here to view the article.




2.Square, Inc. (SQ): Pioneering the Fintech Revolution

SQ has risen 19% since selection.

Square stands out in the fintech space with its diverse product lineup, including Square, Cash App, Afterpay, and TIDAL. The company has shown strong momentum, with a 19% year-over-year growth in BNPL transactions via Afterpay and a 10% increase in Gross Payment Volume (GPV) in Q3.

Cash App's growth, with 22 million monthly active users, highlights the increasing consumer adoption of digital financial solutions. Despite a challenging start to 2024, with shares down by approximately 13%, SQ's innovative approach and solid fundamentals present a compelling case for investors.

As SQ prepares to release its Q4 earnings, investors should focus on updated forecasts for adjusted EBITDA and operating income. The consensus of a Moderate Buy rating among analysts suggests a robust market positioning, making SQ an attractive investment opportunity in the digital finance landscape. Click here to view 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.