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Top Rated Stocks To Watch This Week - Feb. 26, 2024

AInvestMonday, Feb 26, 2024 8:19 am ET
6min read

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.Carvana (CVNA)

Q4 saw Carvana post a $1 per share loss, falling short of the expected ($0.85) and marking a 14.6% drop in revenue year-over-year to $2.42 billion, below the anticipated $2.56 billion. The company sold 76,090 retail units, a 13% decrease. However, it reported a notable rise in gross profit per unit to $5,283, indicating robust profit margins even amid challenging conditions.

Looking forward, Carvana forecasts an uptick in retail unit sales and adjusted EBITDA for the initial quarter of 2024 and the entire year. Specifically, the company projects its adjusted EBITDA to significantly exceed $100 million in Q1, with retail unit sales expected to slightly increase from the previous year. For 2024, Carvana aims to enhance both retail unit sales and adjusted EBITDA in comparison to 2023. Click here to review the article.

2.Etsy (ETSY)

Q4 Financials: Etsy announced a Q4 GAAP EPS of $0.62, missing the anticipated $0.77 by analysts. Nonetheless, revenue saw a 4.3% increase year-over-year to $842.32 million, surpassing the $827.79 million forecast. The Etsy marketplace thrived during the holiday season despite facing headwinds, including reduced spending on discretionary items, a downturn in the Home & Living category, and a retail market competing with significant discounts.

Q1 Expectations: The company predicts a low-single-digit decline in consolidated Gross Merchandise Sales (GMS) year-over-year for Q1, citing a slow quarter commencement and persistent consumer apprehension. However, improvements are expected in the core Etsy marketplace GMS throughout the quarter, buoyed by strategic product and marketing investments. A failure in trend improvement could lead to a mid-single-digit decline.

2024 Outlook: Etsy anticipates Q1 to mark the lowest point in year-over-year GMS and revenue growth, with a positive shift expected from Q2 onwards, driven by investments in the Etsy marketplace. The company forecasts revenue growth to surpass GMS growth, maintaining robust margins. The projected consolidated Adjusted EBITDA margins for 2024 are expected to match or exceed those of 2023. Click here to review the article.

3.Amedisys (AMED)

Amedisys Inc. (AMED) unveiled its Q4 earnings for the period ending December 31, 2023, presenting a mixed bag of results. As a prominent home healthcare provider in the U.S., the company reported a slight uptick in net service revenue, showcasing its operational resilience. Yet, it encountered hurdles, notably a dip in net income and adjusted EBITDA, primarily due to costs tied to merger activities.

In financial terms, Amedisys saw a modest revenue increase in Q4 and throughout the year, even after divesting its personal care segment early in 2023. However, Q4 net income fell to $19.3 million from the previous year's $31.7 million, with merger-related costs at $11.5 million. The annual figures revealed a net loss of $9.7 million, inclusive of $142.7 million in merger expenses, a stark contrast to the $118.6 million net income in 2022.

To summarize, Amedisys Inc.'s Q4 report indicates a phase of mixed outcomes, marked by steady revenue growth against the backdrop of strategic mergers and associated costs. The company's commitment to quality care and strategic positioning as a top home healthcare service provider in the U.S. underscores its efforts to navigate through transformational challenges. Stakeholders and investors will be keenly observing how Amedisys manages its financial health while focusing on patient care in the changing healthcare landscape. Click here to review the article.

4. Square (SQ)

In Q4 2023, Square, Inc. (SQ) disclosed earnings per share of $0.45, missing expectations by $0.13. Despite this, revenue climbed 24.1% from the previous year to $5.77 billion, surpassing the anticipated $5.7 billion. This performance was bolstered by significant growth in Cash App revenue and overall gross profit.

Square's end-of-year financials highlight its dynamic growth and potential, especially within the Cash App domain. The 2024 outlook is optimistic, but the decreased performance in Cash App Business GPV and the competitive landscape of the fintech sector are important elements to monitor moving forward. SQ shares are surging 12% after hours in response. Click here to review the article.

5.Vicor (VICR)

Vicor Corp, recognized for its advanced modular power components and power system solutions, disclosed its financial achievements in the fourth quarter and the entirety of 2023 on February 22, 2024. Despite facing market headwinds, the company demonstrated its resilience by managing a strategic course towards sustained growth and innovation.

For the annual perspective, Vicor reported a modest revenue growth of 1.5% to $405.1 million, with net income surging impressively to $53.6 million, or $1.19 per diluted share, from $25.4 million, or $0.57 per diluted share, in 2022. This performance underlines Vicor's capability to enhance its financial health over time.

Operational cash flow was notably strong in the quarter, amounting to $22.1 million, a significant leap from the previous year's $0.9 million, signifying robust operational efficiency and financial stewardship. With capital expenditures of $7.7 million, Vicor continues to invest in its future growth, supported by a solid cash and equivalents reserve of approximately $242.2 million. Click here to review the article.

Delletions

There are several deletions this week: AAPL, BMY, COHR, TSCO, PTON.

Last Week's Best Performing Stocks

1.Arm Holdings (ARM)

ARM has risen by 108.6% since being selected.

While Arm experiences increasing adoption, its stock price may not be justified by its current valuation. The stock currently trades at over 55 times next year's earnings estimates, which is significantly higher than Nvidia's forward multiple. Although Nvidia is adopting Arm for its Grace CPU chips, the majority of Nvidia's revenue is attributed to its core GPU products. Comparatively, other semiconductor players, such as Nvidia, exhibit lower valuation multiples. 

Arm Holdings shows promising growth potential, backed by its dominant position in the chip architecture market and partnerships with industry-leading technology companies. The adoption of Arm's architecture by Nvidia for data center CPUs and the development of Arm-based chips for PCs indicate a growth trajectory. However, Arm's stock valuation appears relatively expensive compared to other semiconductor players. This information should be considered when making investment decisions related to Arm Holdings. Click here to review the article.

2.Supermicro (SMCI)

SMCI has risen by 103.1% since being selected.

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.Advanced Micro Devices (AMD)

AMD has risen by 36.92% 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.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.