Russia’s invasion of Ukraine is extracting a horrific human cost but also has huge implications for the global economy. With high inflation front and center already, the prospect of rising oil and wheat prices along with those of other commodities exported from the region have investors feeling very skittish indeed. Even a highly reassuring jobs report was not enough to stave off the bears.
While trivial in comparison to the ongoing war, an investor must adapt to the macro developments to still be able to succeed in such an environment. But how to do so? An obvious starting point would be to follow the analysts’ moves at leading investment firms such as financial colossus Goldman Sachs.
The bank’s analyst Kash Rangan has homed in on two equities which he believes are poised to flourish in today’s uncertain climate. Using the TipRanks database, we can see the Goldman analyst is not alone in thinking these names have plenty of room to run; both names fit a certain profile; they are rated as Strong Buys by the analyst consensus and are projected to generate big returns over the coming year.
Informatica (INFA)
We’ll start off with Informatica, a provider of data integration software and services. The company’s data management offerings are used by clients including government organizations, financial and insurance services and telecommunication and health care companies, amongst others.
Informatica’s artificial intelligence-powered platform acts as the bridge for enterprises’ data troves, connecting across data lakes, on-premise systems, data warehouses, and front-office applications. All coalesce to give enterprises a bird’s eye view of the their application, supply chain, and multi-cloud environments’ ongoing health.
The company’s transformation to a cloud-first business was marked by its return to the public markets last October, following a 6-year hiatus. The company sold 29 million shares at $29 each, raising $841 million in the IPO. That gave the Redwood City, California-based company a valuation of $7.9 billion.
However, the timing of the IPO has coincided with the market’s sharp downturn, and it has been a brutal reintroduction to life as a public entity. The stock has seen losses of 39% since the first day’s close.
A mixed Q4 earnings report has not helped either. Revenue increased by 8% year-over-year to reach $406.7 million and beat the Street’s call by $10.16 million. However, the company missed on the bottom-line, as EPS of -$0.25 fell short of the consensus estimate by $0.12.
That said, Goldman Sachs’s Kash Rangan thinks the selloff represents a “compelling entry point,” as he believes the company’s prospects are sound.
“With Informatica re-platforming to cloud native products and pivoting to a subscription business model, we believe the company is well positioned to gain share in a large and growing TAM. In our view, the company is ahead of revenue growth acceleration amid 20%+ subscription revenue growth, improving renewal and net retention rates, and a significant maintenance conversion opportunity,” Rangan explained.
“Despite a competitive market with multiple legacy vendors, we believe Informatica has a customer and technology moat through its track record as a best-in-class data management vendor, easy to use interface, and robust integrations across all major public clouds and SaaS vendors,” the analyst summed up.
To this end, Rangan rates INFA stock a Buy and has a $46 price target for the shares, suggesting room for huge 160% growth over the coming year. (To watch Rangan’s track record, click here)
Rangan might be bullish but so are most of his colleagues. Since going public, 9 analysts have posted INFA reviews, which come in as 8 to 1 in favor of Buys over Holds, naturally culminating in a Strong Buy consensus rating. There are plenty of gains projected too; at $37.67, the average price target implies share appreciation of ~113% over the one-year timeframe. (See INFA stock analysis on TipRanks)
Samsara (IOT)
We’ll stay in the field of connected data with the next stock Goldman are bullish on. Samsara is another company at the center of the digital transformation theme, more specifically to do with the Internet of Things, as its ticker implies.
Samsara’s connected operations platform is used for tracking fleets of vehicles and other equipment and allows for real-time connectivity between physical assets and people.
The result is automation which improves the longevity of assets, raises employee work rate and safety, and increases the overall effectiveness of the business.
This is another newly listed company; Samsara went public as recently as December, raising $805 million after selling 35 million Class A shares at a price of $23 per share. This gave the IoT player a valuation of $11.5 billion.
But Samsara stock has also taken a hit due to the unfortunate timing of its IPO. The shares are down by 37% since going public, despite dialing in a strong quarterly report – the first since going public.
In Q4, Adj. EPS came in at -$0.5, compared to the analysts’ expected loss of $0.07. Revenue of $125.8 million showed a 65.7% year-over-year uptick, also coming in above the Street’s forecast of $116.4 million.
Samsara’s outlook also came in better-than-expected; the company sees a loss of between $0.07 and $0.08 per share and revenue between $130 million to $132 million in Q1. The Street was looking for a loss of $0.08 and revenue of $124.5 million.
It is still early days for the IoT industry, a fact which bodes well for Samsara, according to Rangan, who notes the company is well-positioned to benefit from the ongoing digital transformation.
“With a TAM of $97bn, Samsara is an emerging leader in IoT (Internet of Things) with a strong competitive moat, in the world of physical operations which represents 40% of US GDP,” the 5-star analyst said. “Samsara’s business currently comes mostly from fleets (92% of ARR) and the company’s entry into equipment/sites (8% of ARR) is in the early days. Addressing a large under-penetrated TAM with a modern platform with both replacement and net new markets in our view positions Samsara for a multi-year 30%+ growth.”
Accordingly, Rangan has a Buy rating for Samsara stock, backed by a $30 price target. Should the figure be met, investors are looking at 12-month returns of 93%.
Rangan is not alone here either with his bullish stance; this stock boasts a Strong Buy consensus rating, based on 8 positive reviews and just one skeptic. The forecast calls for one-year gains of ~80%, given the average price target clocks in at $27.88. (See Samsara stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
