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Top Rated Stocks To Watch This Week - Mar. 04, 2024

AInvestMonday, Mar 4, 2024 1:14 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.Salesforce (CRM)

In terms of revenue, Salesforce recorded $9.29 billion in Q4, representing an 11% year -over-year increase and meeting analysts' estimate. Subscription and support revenue, a key metric for the company, grew by 12% year-over-year to $8.75 billion.

Adjusting for certain expenses, Salesforce achieved an impressive adjusted EPS of $2.29 in Q4, surpassing the prior year's $1.68 and beating the estimated $2.27. This impressive growth in earnings per share can be attributed to the company's focused cost management strategies and increasing operational efficiency. 

Salesforce also exhibited robust profitability in Q4, as indicated by its adjusted income from operations of $2.92 billion, showing a 19% year-over-year increase. The adjusted operating margin improved to 31.4 % from 29.2% in the previous year, matching market expectations. 

Looking ahead, Salesforce provided optimistic guidance for fiscal year 2025. The company expects total revenue to be in the range of $37.7 billion to $38.0 billion, reflecting a year-over-year growth of 9%. It anticipates GAAP diluted EPS of $6.07 to $6.15 and non-GAAP diluted EPS of $9.68 to $9.76. Salesforce also provided full-year non-GAAP operating margin guidance of approximately 32.5%. Additionally, the company projects operating cash flow growth of 21% to 24% year-over-year. Click here to review the article.

2.Boston Beer (SAM)

In the fourth quarter of 2023, Boston Beer witnessed a 9% fall in depletions and a 12.2% dip in shipments, leading to a 12.0% decrease in net revenue to $393.7 million. This downturn was partly attributed to an additional week in Q4 of the previous year, with an adjusted net revenue drop of 3.1% for comparable periods. The period concluded with a net loss of $18.1 million and a GAAP diluted loss per share of $1.49.

Despite the adversities faced in 2023, Boston Beer's strategic responses to the ever-evolving beverage market landscape—highlighted by margin improvements and robust cash flow—are encouraging indicators for investors. Nonetheless, the observed declines in key performance metrics underscore the industry's competitive and unpredictable nature. As Boston Beer continues its journey of innovation and operational refinement, the effectiveness of these strategies in the face of 2024's challenges remains to be seen. Click here to review the article.

3.Beyond Meat (BYND)

Beyond Meat, the leading plant-based meat alternative company, reported its Q4 earnings on Tuesday after market. The stock was a powder keg waiting to happen as its low float and high short interest set it up for a squeeze. 

Traders should expect some profit taking as the companys outlook was disappointing. The comments around cost-control and managing margins are positive but management will need to prove it can achieve these goals in coming quarters. 

Beyond Meat's earnings report and post-earnings announcement indicate a company focused on operational changes and cost reduction to drive margin expansion and profitability. While the downside guidance may be a short-term concern, the company's long- term vision and commitment to product improvement may be a positive sign for investors. Click here to review the article.

4. Advance Auto Parts (AAP)

Advance Auto Parts, Inc. (AAP) has unveiled its Q4 earnings, highlighting a per-share loss of $0.59, missing the expected $0.20 mark. Revenue dipped slightly by 0.4% year over year to $2.46 billion, slightly below the forecasted $2.47 billion. The report also noted a 1.4% drop in fourth-quarter comparable store sales.

In a bold move to bolster its financial health, AAP announced an initiative to cut an additional $50 million in indirect spending annually, adding to the already realized $150 million in annualized SG&A savings achieved in the last quarter. Additionally, the company has revised its revolving credit facility to include certain allowances for inventory and vendor receivables write-downs, securing its adherence to financial covenants as of the end of 2023.

Looking ahead to FY24, Advance Auto Parts sets an optimistic tone with an EPS forecast ranging from $3.75 to $4.25, outpacing the anticipated $3.51. However, revenue projections fall slightly short, with expectations set between $11.3 and $11.4 billion, against the estimated $11.46 billion. Comparable store sales are projected to slightly improve or remain steady, marking a shift from the previous year's 0.3% decline. Click here to review the article.

5.Gogo (GOGO)

Gogo Inc., a leading provider of in-flight broadband connectivity solutions for the aviation industry, recently released its earnings report for the fourth quarter of 2023. The company beat by a penny on the bottom line and outpaced revenue expectations. It provided in line guidance and updated its long-term projections. 

Gogo's cash provided by operating activities decreased from $31.5 million in the prior-year period to $26.2 million in Q4 2023. However, the company reported record Free Cash Flow of $28.4 million, an increase from $25.0 million in the prior-year period. As of December 31, 2023, Gogo had $139.0 million in cash, cash equivalents, and short-term investments, compared to $110.8 million as of September 30, 2023. Gogo has signed a new 10-year connectivity agreement with NetJets and has repurchased approximately 1.05 million shares for a total cost of approximately $10.0 million in Q4 2023 and January 2024. 

The company has provided guidance for 2024, which includes the impact of the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program. Gogo expects total revenue in the range of $410 million to $425 million, with Adjusted EBITDA in the range of $110 million to $125 million, reflecting operating expenses of approximately $44 million for strategic and operational initiatives. The company expects Free Cash Flow in the range of $20 million to $40 million, including $45 million in reimbursements tied to the FCC Reimbursement Program.  Click here to review the article.

Delletions

There are several deletions this week: WDC, VLO, NOW, TRV, CSX.

Last Week's Best Performing Stocks

1.Arm Holdings (ARM)

ARM has risen by 121.6% 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 113.8% 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 57.18% 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.