The market sell-off seems to be picking up again, and it’s dragging down shares of some proven Steady Eddies. As various market strategists at the big banks call for downside amid the Fed’s ongoing rate hikes, it’s hard to find anything to be optimistic about. Indeed, tech and bank woes are making it hard for markets to sustain any sort of meaningful relief rally.
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In this piece, we’ll check out three very different stocks that Wall Street still has confidence in. Each stock is expected to end the year higher, perhaps much higher, according to the current slate of analyst estimates.
Therefore, let’s use TipRanks’ Comparison Tool to have a closer look at these stocks as we move into a turbulent Spring.
Costco (NASDAQ:COST)
Costco is a wholesale retailer that’s been incredibly resilient amid inflation and economic headwinds. Despite drawing in crowds with its low-cost necessities that many are eager to buy in bulk, the stock has been quite sluggish over the past year. Though Costco’s fared better than many peers in the retail arena, the stock’s valuation has taken a bit of a hit. That’s because as rates rise, it’s harder to justify paying up for future growth. Regardless, I remain bullish on the name for the long term.
As a defensive growth juggernaut with one of the best managers and value propositions out there, Costco stock is worth a premium to the peer group. It currently trades at 35.2 times trailing price/earnings (P/E), but I’d argue that COST is an intriguing play that can power through an economic hand-landing. Few firms can grow in such ugly climates. Costco is one of them.
As recession and lingering inflation weigh, Costco seems to be in a sweet spot. The company’s membership renewal rate is nearly 93% in the U.S. and Canada and 90.5% globally. These rates are new heights for the firm. I think such rates are headed higher as it’s either lingering inflation or the recession’s impact on spending that will keep value seekers returning to Costco in search of deals.
Looking further out, legendary investor Charlie Munger expects Costco’s expertise to translate very well online. The man previously said the firm would be “an absolute titan on the internet.” Over the next decade, I’d not rule out a digital push that could fuel further growth.
What is the Price Target for COST Stock?
Wall Street has a “Strong Buy,” with 18 Buys and five Holds. The average COST stock price target of $555.61 implies 17.9% upside.
Visa (NYSE:V)
Visa is a payments kingpin that’s hovering around its pre-pandemic 2020 highs. Indeed, the stock is in a slump as the economy looks to tilt into a recession. Despite macro headwinds, Visa has continued to beat earnings estimates over the past several quarters. Even with unknowns ahead, Visa seems likely to remain a steady rock. Therefore, I am bullish.
In the latest quarter, cross-border volumes rose an impressive 31%, thanks to the ongoing recovery in travel. Even as a recession stalls the travel recovery over the near term, Visa is well-equipped to capitalize on what could be another push forward in travel demand.
While it’s hard to tell where consumer spending goes from here, Visa has the financial capacity to take advantage of opportunities in the space to add to its already sizeable moat in payments. In recent years, Visa has been quite acquisitive. As fintech valuations continue to fall, one has to think that Visa could continue or even pick up the pace of deal-making.
At writing, shares trade at 31.4 times trailing earnings. That’s on the low end of its historical range. Even if Visa stock’s breakout is a few quarters out, it’s tough to pass up on the name here.
What is the Price Target for V Stock?
Analysts have a “Strong Buy” rating on Visa, with 20 Buys, one Hold, and one Sell. The average V stock price target of $261.29 implies 20.9% upside potential.
JD.com (NASDAQ:JD)
JD is a Chinese e-tailer that’s not for the faint of heart. The stock has been crushed since peaking in 2021, sinking as low as ~65%. As shares get closer to new lows on the back of a muted guide, questions linger as to whether JD is still a worthy growth addition after last year’s tech wreck. I am bullish, but there are numerous concerns.
Starting with some good news, JD is fresh off a solid fourth quarter that saw EPS of $0.69, well ahead of the $0.51 consensus estimate. However, despite the earnings beat, the full-year guidance spooked investors.
For a while, it seemed like JD was signaling a big turnaround for the Chinese economy. Now, it looks like consumer spending may take more time to get up to speed after last year’s painful lockdowns.
JD CEO Lei Xu noted that China’s spending recovery was “imbalanced.” In any case, I do think JD will find its footing again once the Chinese consumer finally does experience a bigger bounce back, likely on the other end of a potential global recession.
At 14.2 times forward earnings and 0.4 times sales (52% lower than the sector median), JD stock is a relative bargain in e-commerce, supporting the bull case. There are risks, though. China’s uneven recovery and geopolitical risks are major question marks that value investors should consider.
What is the Price Target for JD Stock?
Again, analysts love JD, giving it a “Strong Buy” rating based on 11 Buys and one Sell. The average JD stock price target of $73.29 implies 81.1% upside.
Conclusion
As markets take a few steps back again, investors may have a chance to snag their favorite blue-chip stocks at slightly better prices. Indeed, there’s a lot of fear in markets right now, and the best deals tend to be when investors are inclined to sell before asking any questions. Wall Street loves all three of these stocks and is most bullish on JD.
