Top Rated Stocks to Watch This Week - Jan. 08, 2024
AInvestMonday, Jan 8, 2024 3:51 am ET
7min read
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MRNA --
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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 faced notable headwinds recently, with a decline in its market share in the global premium smartphone market, legal issues with Masimo (MASI) around its Apple watch, potential legal issues for Alphabet (GOOG) which could impact a key revenue stream, and a downgrade by Barclays due to cooling iPhone demand.

Counterpoint Researchs Market Pulse Service indicates that Apples share in the global premium smartphone market dropped to 71% in 2023 from 75% in the previous year. This decline can be attributed to the resurgence of Huawei in China, primarily fueled by the success of their Mate 60 series.

The iPhone concerns add to potential headwinds around the Apple Watch. MASI accused Apple of hiring away employees and stealing its oximetry technology. The International Trade Committee (ITC) barred imports and sales of the watches as it delved into the complaints. Apple did win a pause in the ban at a U.S. Appeals Court but the final ruling remains uncertain.

While the bears focus on sustained underperformance and potential risks associated with Services, there are contrasting beliefs among the bulls. Notably, Gene Munster, founder of Loup Ventures, remains optimistic and believes that Apple will find a workaround that allows the sale of Apple Watch Series 9 and Ultra in the US before March 1st, 2024. Munster highlights Apples track record in navigating legal challenges and points out that Apple has not engaged in licensing discussions with Masimo, suggesting they already have a potential path forward. Click here to review the article.

2.The Walt Disney (DIS)

Shares of The Walt Disney Company (DIS) have had a turbulent year, as investors and analysts try to decipher the companys long-term direction. The recent announcement that James Gorman, CEO of Morgan Stanley, will join Disneys succession planning committee to help select CEO Bob Igers successor has caused some excitement, and UBS expects media consolidation to be a focus following recent headlines regarding Paramount/Warner Bros. Discovery. There have been a multitude of activist investors involved with DIS. The outcome from proxy battles will help shape DIS' business model for years to come. 

UBS as it named DIS one of its top plays in media. The firm highlights that Disney stands to benefit from certain industry trends, including the pressure on TV advertising and a pullback in content spending. Despite these challenges, Disneys asset value, potential strategic developments, and accelerating OI/EPS growth position it with a positive risk/reward profile. Moreover, the companys strong brand recognition and wide range of content offerings position it well to capitalize on evolving consumer preferences. 

The media landscape has been undergoing significant transformation, and UBS predicts that media consolidation will remain a focus. Recent headlines regarding Paramount/Warner Brothers Discovery have emphasized the structural issues facing the industry. As Disney continues to prioritize its direct-to-consumer (DTC) offerings, it may explore strategic partnerships or acquisition opportunities to strengthen its position in the market. Click here to review the article.

3.Eli Lilly (LLY)

Eli Lilly and Company (LLY) has been making strides in developing drugs for Alzheimers disease and cancer, and has a promising pipeline of diabetes and weight loss medications. The companys forward price-to-earnings ratio of 48.31 is high compared to the S&P 500, but justified by its potential for growth in these markets. 

Despite the risks involved in developing its Alzheimers drug donanemab, the FDAs lower approval threshold for this disease could lead to a major blockbuster if successful. Lillys cancer drug Verzenio also reported strong data in early-stage breast cancer, giving it the potential to be the first CDK4/6 drug in this multi-billion-dollar market. 

Overall, Eli Lilly and Company appears to be a strong buy with its promising pipeline of drugs and high potential for growth, but investors should keep an eye on the risks involved in the development of its Alzheimers and diabetes drugs.Click here to review the article.

4.Xerox (XRX)

Xerox, primarily known for its multifunction printers (MFPs) and large enterprise market focus, has recently expanded its reach into digital print packaging solutions and printed electronics. This shift represents an effort to diversify its product offerings and revenue streams. 

The company generates 60% of its revenue from the U.S. and 40% internationally, reflecting a significant global presence. Currently, XRX trades at a market cap of $1.95B and an enterprise value of $5.02B, with a forward P/E ratio of 8.26, suggesting a lower valuation compared to the broader market and its sector. 

XRXs current rating by Wall Street analysts as a Moderate Sell indicates a cautious perspective on the stock. Positioned in the Technology sector, Xeroxs TTM P/E of 14.94 is considerably lower than the sectors average of 35.15, highlighting its relatively lower valuation against its peers. 

Bulls on Xerox see potential growth avenues in several areas. The digital packaging industry, a relatively nascent market, could offer substantial growth opportunities, with Xerox poised to establish a strong position. 

Additionally, developing markets might provide a buffer against declines in more mature markets, aiding in top-line growth. There is also optimism about Xeroxs ability to gain a share in the small- to mid-size print servicing business, leveraging its expertise in managed print services. Click here to review the article.

5.SentinelOne (S)

SentinelOne (S), a global leader in AI-powered security, has recently announced its acquisition of PingSafe, a cloud native application protection platform (CNAPP). By combining PingSafes capabilities with SentinelOnes existing cloud workload security and cloud data security offerings, the company aims to provide organizations with a fully integrated platform that enhances coverage, hygiene, and automation across their entire cloud footprint.

SentinelOne has been actively expanding its cloud security capabilities beyond cloud workload security, and the acquisition of PingSafe accelerates this strategic initiative. This move aligns with the companys Singularity Unity Release strategy, which aims to transform security operations centers.

PingSafes CNAPP solution has received positive feedback from customers who view it as superior to alternative solutions in the market. One such customer is Razorpay, one of Indias largest payment processors, which handles over $100 billion in transactions.

Prior to the news, WestPark, a reputable financial firm, raised its estimates for SentinelOnes performance in FY24, projecting revenues of $617 million and a loss of 0.27 for the year. Based on a strong Q3 performance and a positive outlook for Q4, WestPark upgraded its rating on SentinelOne to Buy from Hold. Click here to review the article.

Delletions

There are several deletions this week: AFRM, NIO, QCOM, CRM, BABA.

Last Week's Best Performing Stocks

1.Moderna (MRNA)

MRNA has risen by 29.19% 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.General Motors (GM)

GM has risen by 11.22% 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.

3.Costco (COST)

COST has risen by 9.85% 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.

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.