It’s Thanksgiving, 2023, and these past few weeks have given us plenty to be thankful for, economically speaking. A late-summer market swoon has reversed, and stocks have regained most of the ground lost from August to October. For the year-to-date, the S&P 500 is up more than 19%; the tech-leaning NASDAQ is doing even better, with a 37% gain.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
When markets are moving up like this, it’s a sure bet that investors can find some solid stock choices. There are plenty out there – shares that are bringing good returns right now, and also shares that have been showing solid performance all year.
Those latter are the stocks that we can really be thankful for, so let’s take a closer look at a couple of them. These are ‘Strong Buy’ equities that have outperformed in a big way this year, garnering headlines and making investors grateful all along the way. As companies, offering products, Nvidia (NASDAQ:NVDA) and Carrols Restaurant (NASDAQ:TAST) couldn’t be more different – but both are far outpacing the markets. Here are some of their details, from the TipRanks database, along with recent comments from the Street’s analysts.
Nvidia Corporation
We’ll start with Nvidia, one of the giants of the tech industry. Nvidia got its start back in the 90s, and has long been a major name in tech. In 1999, the company changed all our lives – although it wasn’t apparent at the time – when it introduced the first GPU chips. These were invented to power higher quality graphics for gamers, but since then have found numerous other applications. Their faster processing capacities make them invaluable in professional graphic design, data centers, and AI applications.
Nvidia has ridden that market expansion to an enormous success. The company is one of the handful of publicly traded firms with a valuation above $1 trillion and is the 5th largest public company in world, with a market cap of $1.2 trillion. So far this year, shares in Nvidia are up by more than 233%, gaining on high demand.
The AI boom is giving Nvidia a boost. The company is the leading provider of high-end GPUs for OpenAI, the company that released ChatGPT last year and kicked off our current interest in generative AI. OpenAI is working hard to keep its first-off-the-blocks chatbot at the cutting edge, and to that end announced that it will need as many as 10,000 new GPU chips as early as next summer – an announcement that provided support to Nvidia, its chief supplier.
But even though AI has been hogging the headlines, the bulk of Nvidia’s business comes from the more pedestrian, but also more ubiquitous, data center niche. Nvidia released its fiscal 3Q24 report just before the Thanksgiving holiday, and the release showed the company brought in $14.5 billion in data center revenue for the fiscal quarter ending this past October 29. That $14.5 billion was 41% quarter-over-quarter, and an even more impressive 279% year-over-year – and it made up 80% of the company’s total quarterly revenue.
That revenue, which came to $18.1 billion, was the lede in a forecast-beating quarter. The top line was up 205% y/y and a full $2 billion above expectations. At the bottom line, Nvidia realized a non-GAAP diluted EPS of $4.02, beating the forecast by 63 cents per share. There are concerns about the future of the company’s business interests in China, but Nvidia says that it can offset losses there with gains in other areas.
All of this caught the attention of Baird analyst Tristan Gerra. The analyst sees plenty of reason for optimism on Nvidia despite the likely drop in its Chinese business; in Gerra’s view, the chief support comes from AI, which the 5-star analyst notes still has plenty of room for growth. Gerra writes, “Nvidia is at the center of the secular demand for AI ahead: nations, regional CSPs, enterprise, and software companies are part the next AI wave, which overall remains at its infancy. Significant decline in China DC revenue outlook resulting from the most recent U.S. restrictions has its silver lining, in our view: less lumpiness going forward. We see a solid path toward $20 in EPS for C2024 and above in subsequent years.”
These comments back up Gerra’s Outperform (Buy) rating on NVDA, and his price target, of $750, implies that the stock has room to gain another 54% in the year to come. (To watch Gerra’s track record, click here)
The Wall Street view of Nvidia is almost as bullish as Gerra, based on 39 recent analyst reviews that show a decidedly lopsided split between the bulls and bear – 36 Buys to 3 Holds, for a Strong Buy consensus rating. NVDA does sell cheap; the stock is priced at $487.16, and its $657.17 average price target suggests an upside potential of 34% on the one-year horizon. (See Nvidia stock forecast)
Carrols Restaurant Group
The next stock on our list is one you probably never think about – although there is a pretty good chance that you have eaten at one of the company’s restaurants. Carrols got its start in 1960, as a burger chain in upstate New York and the Northeast, and by 1975 had 150 locations. In that year, the company entered into an agreement with Burger King, to turn applicable Carrols restaurants into Burger King franchises.
Today, Carrols is the nation’s largest BK franchisee, with a total of 1020 Burger King locations across 23 states. In addition, the company is also a Popeyes franchisee, and has 60 Popeyes restaurants in 6 states. Carrols started taking on Popeyes franchises in 2019.
This company has had a great ride in recent months, racking up strong gain on a combination of improved profitability and revenues – which have largely negated losses seen in 2020 through 2022. The magnitude of this year’s gains is truly impressive: the stock is up approximately 457% year-to-date. The bottom line is, the company’s sales are strong, and growing. In recent quarters Carrols has seen both higher menu order and higher margins, which have pushed the firm toward record-level quarterly revenues.
Looking ahead, there are signs that Carrols will continue to show strong growth. The larger Burger King company in currently in the midst of a heavily funded improvement program, ‘Reclaim the Flame,’ under which BK is investing up to $400 million in restaurant enhancements and remodels, additional advertising initiatives, and digital and tech improvements. This is a company-wide program, and has received support from upwards of 93% of Burger King’s franchisees.
For now, we can look at Carrols’ last quarterly report. The company’s top line came to $475.8 million, growing more than 7% y/y and beating the estimates by almost $6.9 million. Carrols’ diluted EPS, the non-GAAP earnings measure, was reported at 16 cents per share – a solid turnaround from the 14-cent EPS loss recorded I the year-ago quarter, and 11 cents better than had been expected.
Jake Bartlett, covering this stock for Truist, takes note of all of this, and is seats Carrols’ gains squarely in the lap of Burger King’s improvement program; the two go hand-in-hand. Bartlett writes, “TAST’s slightly positive BK traffic, with drivers ahead (marketing, operations, kiosk rollout and remodels) gives us increased confidence in the Burger King turnaround. TAST is also benefiting from rapidly expanding margins, due to operating efficiency efforts, tame cost inflation and Burger King’s focus on profitable sales (a core aspect of the turnaround). TAST initiated a small quarterly dividend (~1% yield), which signals confidence in its balance sheet and the BK turnaround, in our view.”
The analyst goes on to give TAST a Buy rating and a $10 price target, suggesting his confidence in a one-year upside of 32%. (To watch Bartlett’s track record, click here)
Overall, Carrols gets its Strong Buy consensus rating from 3 unanimously positive analyst reviews set in recent weeks. The shares have a $7.57 trading price, and the average target price, at $10.50, implies the stock will appreciate 38% by this time next year. (See TAST stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
