Finding the right stocks to bulk up a profitable portfolio doesn’t have to be a chore. Wall Street supports a large and growing cadre of professional stock and market analysts who regularly comb through the results of every publicly traded company, publishing their views on which stocks are worth investors’ time, and which should be avoided.
And this is where TipRanks comes in. The platform has the collected and collated results of all the analysts’ reviews, creating a listing of which Wall Street pundits are the best, as shown by their success rate and the average return of their stock picks. The best analysts on Wall Street, the ones standing head and shoulders above their peers, have clear records of success, and when they speak, investors listen.
And to demonstrate, we’ve pulled up three recent stock picks from Piper Sandler analyst Brent Bracelin, currently ranked #1 overall out of more than 6,800 analysts in the database. Bracelin is an expert on the technology sector, and regularly reviews some of the market’s best performing tech stocks. His picks have been profitable more often than not – Bracelin has an 81% success rate with his stock calls, and a 35% average return.
The three stocks on today’s list are all recent ‘Buy’ recommendations from Bracelin. Each has performed well this year (two of them have more than doubled), and shows at least 25% year-to-date growth. Let’s find out what Bracelin has to say about them.
We’ll start with Zendesk, a customer service software company based in San Francisco. Zendesk offers a customer service platform that allows businesses to prioritize the fastest possible response to queries, to keep their customers engaged. The system allows contact via live chat, social messaging, and voice. Zendesk boasts customers in over 150 countries, and brought in $816 million in total revenue last year.
The corona pandemic opened an obvious opportunity for Zendesk. With the sudden emphasis on remote work, virtual office space, and online business, a fast and reliable support network would give a clear advantage. The company’s revenue and stock performance in 1H20 reflected this new reality. Shares in ZEN are up 27% this year, and revenues have been growing steadily for the past four quarters, reaching $246.7 million in the most recent report.
Bracelin likes Zendesk’s options going forward, and he upgraded his stance on the stock from Neutral to Overweight (i.e. Buy). His price target of $123 implies a 26% one-year upside potential. (To watch Bracelin’s track record, click here)
In his comments, Bracelin writes, “We see several underappreciated levers that could spark a demand recovery into 2021 and recommend growth investors begin building positions in ZEN ahead of a recovery based on a compelling risk-reward [...] Based on a market leading position in the increasingly strategic customer experience software market, we consider ZEN to be an important asset that would be complementary to the cloud portfolio of Microsoft, Adobe, ServiceNow, or Qualtrics-SAP. Investors could benefit from either a demand recovery or strategic M&A.”
Overall, Zendesk has a Strong Buy analyst consensus rating, based on 15 reviews breaking down to 12 Buys and 3 Holds. The stock is selling for $97.54, and the $111 average price target suggests an upside potential of ~14% for the coming year. (See ZEN stock analysis on TipRanks)
Bill.com Holdings (BILL)
Next on the list of Bracelin’s picks is Bill.com. This company brings cloud computing and automation to paperwork bane of the small business world, day to day accounting. Bill.com’s platform allows companies to automate their financial data and accounting systems, simplifying the process of billing and invoicing, receiving payment, and making payments. The value of the system is clear from the stock performance: BILL shares are up 133% this year.
Revenues are also strong this year, growing from $32.9 million in the final quarter of 2019 to $38.8 million in the most recently reported fiscal quarter. That quarter, the company’s fiscal Q4 showed 45% year-over-year revenue growth. For FY 2020, total revenues were $157.6 million. A 59% yoy gain in subscription revenue powered the strong sales gains.
Reviewing Bill.com’s performance and forward prospects, Bracelin is clearly impressed. He writes, “The record number of new customers 6,700 in Q2 suggest remote work headwinds have now turned into automation tailwinds [...] New multi-year contracts contributed to a material increase in RPO backlog to $152M, including new contracts with Wells Fargo and Key Bank in addition to a contract expansion with an existing Top 3 commercial bank…”
These comments support Bracelin’s Overweight (i.e. Buy) rating on the stock, and his $112 price target suggests that BILL has room for 26% in the next 12 months.
In terms of BILL's Street consensus, analysts are split almost right down the middle. Out of 7 analyst ratings published in the last three months, the Buys beat out the Holds by just 1, making the consensus a Moderate Buy. In addition, the average price target of $109.38 amounts to 23% upside potential. (See BILL stock analysis on TipRanks)
Last on our list is the cloud communications company, Twilio. Another denizen of Silicon Valley, Twilio puts telecom services onto the computer, letting customers make chats, texts, video conversations, and even traditional phone calls from the computer. User verification and other security features keep the communications safe.
Twilio has been a direct beneficiary of the shift to remote work, which has placed a premium on telecom technology. Twilio reported sequential revenue growth in the first quarters of 2020, and saw more than $400 million on the top line in Q2. Total customers reached 200,000 in Q1, representing 5% yoy growth, and in Q2 the company added 10,000 more new sign-ups. This surge in growth is reflected in investor confidence and share price: TWLO is up 139% year-to-date.
In a recent comment on Twilio, Bracelin said, “TWLO capitalized on a surge of digital engagement activity that drove $33M upside to Street revenue estimates on 46% revenue growth. Strong new customer additions that crossed over 200K this quarter demonstrate the breadth of customer interest in creating new digital experiences [...] We remain optimistic over the next year and particularly bullish on the 3-5 year growth potential.”
Bracelin backs these bullish statements with an Overweight (i.e. Buy) rating and a $300 price target. His target implies a 28% upside from current levels. (To watch Bracelin’s track record, click here)
All in all, Twilio has 21 recent analyst reviews, breaking down to 17 Buys and 4 Holds – this gives the stock a Strong Buy consensus rating. Shares are selling for $234.32 and have an average price target of $294.50, in line with Bracelin’s, and giving TWLO a 26% upside potential. (See TWLO stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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.