Top Rated Stocks To Watch This Week - Feb. 5, 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 Platform (META)
Meta reported an EPS of $5.33, surpassing the estimated $4.96, alongside $40.1 billion in revenue, exceeding the estimated $39.177 billion. The company also recorded a Daily Active Users (DAUs) count of 2.11 billion, higher than the estimated 2.07 billion.
Meta's Q4 report revealed a 6% year-over -year increase in Facebook DAUs, with ad impressions growing 21%, falling short of 24% Street expectations and average price per ad growing 2% which outpaced an expected decline of -4%.
In a significant move, Meta initiated a quarterly dividend of $0.50 per share. and announced a $50 billion increase to its share repurchase program.
In summary, META has reported robust Q4 earnings, surpassing expectations for both EPS and revenue. The company's user base continues to grow steadily, and advertising performance remains strong. META's positive outlook for Q1 2024, along with its dividend initiation and increased share repurchase program, demonstrates confidence in its future prospects. strategic investments in infrastructure, talent acquisition,and AI research and development highlight its commitment to long-term growth. Click here to review the article.
2.Amazon (AMZN)
Amazon, the global e-commerce giant, reported impressive fourth-quarter earnings, surpassing expectations.
The company announced earnings per share of $1.00, beating the FactSet Consensus estimate of $0.80. Revenues for the quarter rose by 13.9% year-over-year to $169.96 billion, outperforming the companys guidance of $160-167 billion. Q4 operating income was reported at $13.2 billion, well above the prior guidance range of $7-11 billion.
One of the key drivers of Amazon's success was its Amazon Web Services (AWS) segment, which saw sales increase by 13.2% year-over-year to $24.2 billion. This growth represents a positive trend compared to previous quarters, with AWS sales increasing by 12% on a constant currency basis in the third quarter and second quarter, and 16% in the first quarter.
In summary, Amazon delivered strong financial results in the fourth quarter of 2023, surpassing expectations across key metrics such as earnings per share and revenues. The company's AWS and advertising services segments demonstrated solid growth, driving overall performance. With a positive outlook for the first quarter of 2024, Amazon remains well-positioned to capitalize on its strengths and solidify its position as a dominant player in the global e-commerce market. Click here to review the article.
3.Merck (MRK)
Merck, the multinational pharmaceutical giant, has delivered a stellar performance in its fourth-quarter 2022 (Q4) earnings report, surpassing market expectations. Excluding non-recurring items, the company reported earnings of $0.03 per share, a remarkable $0.14 better than the estimated loss of $0.11 per share. This outstanding financial performance fueled a 4.3% surge in Merck's shares, reaching all-time highs.
The robust growth in Merck's Oncology and Vaccines divisions played a pivotal role in this buoyant result. Keytruda, a cancer drug, and Gardasil, an HPV vaccine, both experienced impressive year-over-year growth exceeding 20%. These flagship brands are anticipated to be key contributors in 2024, mitigating challenges such as foreign exchange headwinds. Despite these hurdles, Merck maintains its FY24 revenue growth outlook between a positive 4-7%.
Looking ahead to 2024, Merck forecasts sales between $62.7 billion and $64.2 billion, suggesting up to 6.8% year-over-year growth, surpassing analyst estimates of $63.5 billion. The company also expects earnings per share to range from $8.44 to $8.59, exceeding analyst estimates of $8.42. 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.Travelers Companies, Inc. (TRV)
Honeywell saw growth in several key segments. Aerospace sales, fueled by strength in commercial aviation and defense and space, increased 15% year-over-year on an organic basis. Building Technologies sales were down 1% organically, primarily due to lower volumes in fire and security offerings. Performance Materials and Technologies sales grew 4% organically, with Advanced Materials and HPS leading the way. Safety and Productivity Solutions sales declined by 24% organically, impacted by lower volumes in warehouse and workflow solutions.
The company's bottom line performance was driven by its solid operating cash flow and free cash flow. Operating cash flow for the quarter was $3.0 billion, resulting in an operating cash flow margin of 31.3%. Meanwhile, free cash flow was $2.6 billion, with a free cash flow margin of 27.4%. This was primarily due to a reduction in working capital.
Honeywell's backlog, which represents its contracted but unfilled orders, remained at a record level, ending the year up 8% at $31.8 billion. This provides support for the company's outlook and indicates continued strong demand for its products and services.
Looking ahead, Honeywell issued its guidance for the fiscal year 2024. The company expects EPS in the range of $9.80 to $10.10, in line with analyst expectations. It also projects revenues of $38.1 billion to $38.9 billion, which fell short of consensus. 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)
AMD has risen by 37.81% 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.
2.Supermicro (SMCI)
SMCI has risen by 36.91% 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.General Motors (GM)
GM has risen by 20.24% since being selected.
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.