This year has not been easy for any of us, beginning with the excitement surrounding the vaccine and the revelation of the Delta variant, and then progressing to concerns about component shortages and supply chain challenges.
That was followed by price increases and corresponding input cost inflation, prompting concerns about the impact on business profitability. As a result, during the current Q3 earnings season, a few equities were able to win investors’ love, while others disappointed them.
Therefore, selecting stocks could be challenging at any point in time. In this situation, TipRanks’ Smart Score System is an ideal tool, since it allows an investor to evaluate a company in greater depth.
This tool combines eight critical characteristics, including Hedge Fund and Insider Trading activities, which are not commonly known among investors. Each stock is then evaluated on a scale of 1 to 10, with ten being the best, to help investors make smarter judgments.
With this in mind, we used TipRanks’ Top Smart Score Stocks to find two stocks that have received a “Perfect 10” Smart Score. These stocks likewise have a consensus rating of Strong Buy and a lot of upside potential.
McDonald‘s
McDonald’s (MCD) is the first stock we’ll look at, since it has earned a “Perfect 10” since yesterday. The Chicago-based chain of fast-food restaurant franchises operates more than 38,000 restaurants in over 100 countries.
The company recently released strong third-quarter earnings that outperformed market forecasts. Consolidated revenues climbed 14% to $6.2 billion, while adjusted profits increased 24% to $2.76 per share year-over-year. Furthermore, same-store sales were robust both domestically and internationally, demonstrating that McDonald’s can prosper in both good and bad times by adjusting to consumer demands.
Meanwhile, during the company’s earnings call, McDonald’s CEO Chris Kempczinski expressed optimism about the company’s future growth, saying, “We continue to execute our strategic growth plan and manage excellent restaurants so that we can achieve long-term, sustainable growth for all of our stakeholders.”
Wedbush analyst Nick Setyan, who was impressed with the company’s Q3 performance, believes that “MCD’s ongoing menu, technology, marketing, and CapEx investments” give very high visibility into sustained worldwide same-store sales (SSS) growth.
He reiterated a Buy rating on the stock and a price target of $270.00, which implies about 7.8% upside potential to current levels.
This stock is performing well in the Smart Score. It receives a ‘Perfect 10’ grade since all of the factors are favorable, except Insider data and TipRanks Investors, which are both negative.
However, the overall number of unique visits to McDonald’s website declined 12.10% sequentially in Q3, according to TipRanks’s website traffic tool.
With 21 recent reviews on file, including 18 recommendations to Buy and 3 to Hold, McDonald gets a Strong Buy consensus rating from Wall Street’s analysts. Shares are trading for $250.58 and the average McDonald’s price target of $275.40 implies around 10% upside from that level.
Alphabet
Another stock that has scored a “Perfect 10” in the last two days is Alphabet (GOOGL), a technology powerhouse. Alphabet has developed into something more than a search firm in recent years, while search and online advertising still make for the majority of the company’s revenues.
The corporation released fantastic third-quarter earnings last week. Revenue increased by 41% year over year to $65.12 billion, above analysts’ estimates of $63.45 billion. Meanwhile, earnings increased 70.7% year-over-year to $27.99 per share, above the Street’s prediction of $23.47.
Sundar Pichai, Alphabet’s CEO, seemed upbeat about the company’s future prospects, particularly AI (artificial intelligence) and cloud expansion.
Pichai stated during the third-quarter earnings call, “Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners…And as the digital transformation and shift to hybrid work continue, our Cloud services are helping organizations collaborate and stay secure.”
The stock also receives a ‘Perfect 10′ rating since most of the variables are good: Technical and Fundamental aspects are all positive, and News and Bloggers’ sentiment are both positive. On the other hand, Investor sentiment and Hedge Fund activity remain negative.
However, TipRanks’s website traffic tool showed that the total number of unique visitors to Alphabet’s website decreased 2.30% sequentially in Q3.
On the analyst side, Daniel Salmon of BMO Capital Markets maintained a Buy rating on the stock and increased the price target to $3,200 from $3,000, implying 11.5% upside potential.
Salmon was impressed with the company’s search revenue and margins performance in the quarter.
He said, “Despite a high bar of expectations this quarter, we think risk/reward continues to tilt positive.” He further added, “GOOGL should prove resilient owing to YouTube’s leadership in CTV and the continued emergence of Cloud.”
On TipRanks, Alphabet stock commands a Strong Buy consensus rating based on 24 Buys and 2 Holds. The shares are priced at $2,869.94 and their $3,336.60 average Alphabet price target suggests an upside of 16.3%.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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