Top Rated Stocks To Watch This Week - Feb. 12, 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.Apple (AAPL)

Apple Inc. (AAPL) has demonstrated resilience with solid results, despite facing foreign exchange (F/X) headwinds and a decline in revenue from its Greater China market.

Within the Q1 earnings report, Apple's iPhone revenue of $69.7 billion also surpassed both Street estimates of $67.9 billion and the $65.8 billion recorded in the previous year. The services segment reported revenue of $23.2 billion, fell slightly short of expectations, reflecting annual growth of 11%. 

iPad revenue declined by 25% to $7.02 billion, while wearables, home, and accessories saw an 11% decline to $11.95 billion. In terms of services, Apple's revenue reached $23.12 billion, an impressive 11% annual growth. However, the Greater China market posed challenges with revenue of $20.82 billion, down 13% year-over-year.

Apple's base of active devices reached an impressive milestone of 2.2 billion, signing a 10% increase from 2022. This growth, in comparison to the previous year's 11% growth off of a higher base, demonstrates the company's ability to maintain strong customer commitment. AAPL's strategy of cultivating a committed customer base bodes well for future device and services purchases, highlighting the strength of Apple's product flywheel.

Shares of AAPL are down approximately 4% following the report. Investors are concerned about the miss in China and the flat service revenues, both of which have been key drivers heading into this quarter. It will be interesting to see if investors shun AAPL in favor of stronger results from AMZN and META but we would view these AAPL figures as better than feared. We would like to see the stock regain the 200-sma ($182) which would make it more attractive from a technical standpoint. Click here to review the article.

2.Bristol-Myers (BMY)

Pharmaceutical powerhouse Bristol-Myers Squibb (BMY) exceeded market expectations in its recent earnings report for the fourth quarter of 2023. The company reported an impressive earnings per share (EPS) of $1.70, excluding non-recurring items, surpassing the estimated $1.55. With a 0.6% year-over-year revenue growth, Bristol-Myers achieved $11.48 billion in revenue, outperforming the estimated $11.19 billion.

The fourth quarter of 2023 saw a 1% increase in revenue to $11.5 billion, while full-year revenue experienced a marginal decline of 2% to $45.0 billion. GAAP EPS for the fourth quarter stood at $0.87, reaching $3.86 for the full year—a remarkable 31% increase. Non-GAAP EPS for the fourth quarter was $1.70, and $7.51 for the full year, highlighting Bristol-Myers' resilience in adjusted earnings.

A significant contributor to Bristol-Myers' growth is its new product portfolio, witnessing a remarkable 66% increase in Q4 revenues to $1.1 billion. This success is attributed to the strong demand for products across its diverse range. The company's strategic acquisitions, including plans to acquire Karuna Therapeutics and RayzeBio, along with the completed purchase of Mirati Therapeutics, underscore its commitment to innovation. Click here to review the article.

3.Coherent (COHR)

Coherent (COHR) has defied economic headwinds to report a notable second-quarter performance, ending December 2023, with a slight year-over-year revenue dip to $1.13 billion, yet surpassing the Zacks Consensus Estimate of $1.12 billion. The earnings per share (EPS) settled at $0.36, down from the previous year's $0.95, but significantly ahead of expectations with a +56.52% EPS surprise.

Segment-wise, the Networking division led with $524.20 million in revenue, outperforming analyst predictions of $510.13 million. The Lasers and Materials segments also exceeded forecasts, registering revenues of $353.50 million and $253.70 million, respectively, against estimates.

Coherent's Q2 report not only reflects its enduring strength in a volatile market but also underscores its forward-looking stance, promising continued expansion and shareholder value enhancement. As Coherent navigates through the fiscal year, its upwardly revised guidance and resilient performance position it as a compelling watch for investors tracking its sustained momentum. Click here to review the article.

4. Tractor Supply Company (TSCO)

In its recent quarterly report, Tractor Supply Company (TSCO) surpassed analyst estimates by $0.06 per share, posting earnings of $2.28 per share for the fourth quarter (Q4). Despite a year-over-year decrease in revenues by 8.6% to $3.66 billion, in line with estimates, the company's robust performance in year-round consumable, usable, and edible (C.U.E.) categories drove the earnings beat.

Challenges in Q4 included a significant -4.2% decline in comparable store sales, influenced by a 1.5% decrease in the comparable average ticket and a 2.7% decrease in the comparable average transaction count. Softness in cold weather products, discretionary categories, and big ticket items contributed to this decline.

During the conference call, Tractor Supply acknowledged the challenging first quarter in the previous year but anticipates positive comp sales for the upcoming first quarter. Despite the solid Q4 result and guidance, TSCO shares experienced only a modest 1.8% increase, reflecting lingering headwinds, including a widening decline in comparable store sales and a cautious outlook for 2024 amid economic uncertainty. Click here to review the article.

5.Peloton (PTON)

Peloton, the leading connected fitness company, released its earnings report for the fourth quarter of fiscal year 2023. While the company's revenue and subscriber growth showed some signs of improvement, certain challenges persist.

The number of connected fitness subscribers stood at 3 million, roughly in line with the estimated 3.01 million. Peloton expects the number of connected fitness subscribers to grow to a range of 2.99 million to 3.01 million in fiscal year 2024. The company also ended the quarter with 718,000 paid digital subscribers, which marks a 16% year-over-year decrease. 

Looking ahead to the third quarter forecast, Peloton expects revenue in the range of $700 million to $725 million. Although this estimate is lower than the expected $755.6 million, the company has highlighted the stronger-than-expected demand backlog for its Tread+ product, which could potentially drive revenue growth in the future. 

Peloton's performance in the fourth quarter demonstrates its continued leadership in the connected fitness category and the resilience of its subscription business. The company remains confident in its key growth initiatives but acknowledges uncertainty regarding the timing of growth acceleration and the performance of new initiatives. Despite ongoing challenges, Peloton is committed to improving its internal capabilities and delivering innovative solutions to its loyal member base. Click here to review the article.

Delletions

There are several deletions this week: PLD, TRV, RAMP, FAST, TSM.

Last Week's Best Performing Stocks

1.Advanced Micro Devices (AMD)

Since being selected, AMD has risen by 37.81% as of February 2nd.

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.

2.Supermicro (SMCI)

Since being selected, SMCI has risen by 36.91% as of February 2nd.

The preliminary results released by SMCI exceeded market expectations, leading to a 5% increase in the company's share price. The projected sales for the second quarter are now expected to be between $3.6 billion and $3.65 billion, significantly higher than the earlier estimate of $2.78 billion. This demonstrates a substantial improvement in anticipated revenue and showcases the company's ability to generate strong sales. Analysts expect SMCI's revenue for the fiscal year 2024 to reach $14 billion.

Additionally, there is an optimistic outlook regarding earnings per share. The GAAP diluted net income per common share is projected to range between $4.90 and $5.05, surpassing the previous estimate of $3.75 to $4.24. The non-GAAP diluted net income per common share is also expected to be higher, with the new guidance ranging from $5.40 to $5.55, compared to the prior estimate of $4.40 to $4.88. These revisions imply a more positive perception of SMCI's profitability and indicate a stronger earnings performance than previously anticipated.

Wedbush noted SMCI's solid results were driven by deals related to artificial intelligence (AI). While it acknowledged some uncertainties, Wedbush remained confident about the correlation between SMCI's performance and the allocation of NVDA's graphics processing unit (GPU) chips. Despite the potential challenges posed by demand outpacing supply, Wedbush interpreted the surge in revenue as a positive indicator for NVDA's growth in the fourth quarter. Wedbush pointed out that Meta, the parent company of Facebook, also made significant investments in AI, which could indirectly benefit SMCI. As a substantial customer of SMCI in the past, Meta's commitment to AI could potentially contribute to SMCI's continued success. Click here to review the article.

3.General Motors (GM)

Since being selected, GM has risen by 20.24% as of February 2nd.

Shares of GM broke out of a downward trend line. The company did drop its outlook in several key areas, but it was better-than-feared. The end of the UAW strike lifts a major loud of uncertainty around the business. While GM is seeing a slowdown it is on par with what we have seen in other industries. The capital return plan announced has helped sooth investor concern around any economic malaise. The stock will see resistance at the $32-34 area which bears watching. 

In conclusion, GM's reinstatement of its full-year 2023 earnings guidance, coupled with its capital return plan, has generated optimism among investors. Although challenges in the EV and self-driving sectors persist, GM's robust performance in internal combustion engines and the resolution of labor-related issues highlight the company's resilience. With an accelerated share repurchase program and a dividend increase, GM is taking strategic steps to enhance shareholder value and position itself for long-term success. 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.

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