It has been a volatile September with the market experiencing some painful dips. Nevertheless, zoom out and the past year charts show strong growth, with all the main indexes still hovering near all-time highs.
The large caps’ performance has been robust and has driven the main indexes’ gains. As such, several heavyweight stocks currently sit at or very near 12-month or even all-time highs.
The question here is: is it wise to invest in names which have already accrued big share gains over the past year? It could be, if more growth is anticipated in the months ahead by those in the know.
With this in mind, we pulled up three such heavyweight stocks from the TipRanks database whose share prices not only sit at near yearly peaks, but which are also projected to keep pushing forward in the coming months. Even better, all three are rated as Strong Buys by the analyst consensus. Let’s take a deeper look.
Salesforce is a well-known name in cloud software, as the company was an early leader in the CRM niche – in fact, it took its ticker from its Customer Relationship Management products. Salesforce’s cloud-based software products provide solutions for the customer-facing issues businesses face: tracking sales and commerce, managing databases, customer service, market analytics. A major selling point is scalability; Salesforce software can work with companies of all sizes.
With a market cap just under $270 billion, this stock sits firmly in the mega-cap territory, and in fact, its share price is currently nesting at its highest ever peak.
The share gains reflect real-world success, as exhibited by the latest quarterly results for F2Q22. Revenue increased by 24.3% year-over-year to $6.34 billion, coming in ahead of the estimates by $90 million. Adjusted EPS of $1.48 also beat the Street’s $0.92 forecast.
With recent new additions to the leadership team and the Q2 closing of the $27.7 billion acquisition of workplace collaboration software maker Slack, one of Wall Street’s top analysts, Piper Sandler’s Brent Bracelin, has been paying attention.
“In-person conversations with new leadership give us confidence we could see a multi-year period of multiple and profit expansion tied to operating discipline and organic investments that can sustain growth... The new team, new model, and new post-COVID reality point to a structural change that could result in a material boost to profits as it scales revenue to $50B+… Both growth and margin expansion could become a more permanent and durable component of the CRM model going forward,” Bracelin opined.
Accordingly, Bracelin rates CRM an Overweight (i.e. Buy) along with a $365 price target, suggesting upside of a further 34% from current levels. (To watch Bracelin’s track record, click here)
Bracelin is by no means alone in his positive stance. Of the 37 reviews on record, while 6 say Hold, 31 are to Buy, culminating in a Strong Buy consensus rating. With a return potential of nearly 17%, the stock’s consensus target price stands at $318.63. (See CRM stock analysis on TipRanks)
Analog Devices (ADI)
Analog Devices is a world-renowned name in the semiconductor industry, where practically the whole gamut of electronic equipment has need for the company’s high-performance analog, mixed-signal, and digital signal processing (DSP) integrated circuits (ICs). This is a company with a $92 billion market cap, almost 16,000 employees and a global footprint; More than 100,000 customers worldwide use ADI’s signal processing, data conversion, and power management tech.
In F3Q21, ADI generated revenue of $1.76 billion, a 20.5% increase on the same period last year and $50 million above Street expectations. The bottom-line delivered a beat too, as adjusted EPS of $1.72 came in ahead of the analysts’ forecast by $0.11.
Furthermore, the company has recently closed a big acquisition. At the end of August ADI finalized the deal to bring Maxim Integrated Products on board, in a purchase costing the company $21 billion - its biggest ever buy.
ADI share price sits near all-time highs, with the past 12 months delivering to investors returns of 50%. The solid performance has caught the eye of J.P. Morgan’s Harlan Sur, who sees the company in a sound position.
Explaining his stance following the Maxim deal, the 5-star analyst wrote: “Amidst a strong demand environment, we expect Analog Devices to drive strong execution of achieving synergies as the team has done so with prior acquisitions. The combined company is set to benefit from the positive macro demand fundamentals and with improved positioning in automotive (e.g., GMSL high speed data serial link and EV battery management) wired communications, and datacenter markets (e.g., processor/compute acceleration power management for customers like NVIDIA and Google).”
To this end, Sur rates ADI an Overweight (i.e. Buy) along with a $215 price target. This figure implies ~25% upside from current levels. (To watch Sur’s track record, click here)
Overall, ADI has a Strong Buy rating from the analyst consensus, with 13 recent reviews breaking down to 10 Buys and 3 Holds. Shares are priced at $171.29, and the average price target, at $192.09 implies an upside potential of 12%. (See ADI stock analysis on TipRanks)
Conocophillips is another industry leader, this time in the oil and gas sector, boasting a market cap of $91 billion. Based on production and proved reserves, ConocoPhillips is the world’s biggest independent E&P (exploration & production) company. It is also Alaska's largest crude oil producer and largest owner of exploration leases, and numbers 10,300 employees and operations in 15 countries.
For 2Q21, the company posted clock adjusted earnings of $1.7 billion - or $1.27 per share, well ahead of the $1.10 consensus estimate and the company’s best performance since 2018. It is also a significant turnaround from the $1 billion adjusted loss the company recorded a year-ago.
Acquisitions have been high on the COP agenda, with the company’s recent purchase of Shell’s Permian assets expected to make it the world’s top shale basin’s second-largest producer. The deal should close in Q4 with a $9.5 billion price tag and follows on from the $13.3 billion acquisition of Concho Resources, which closed back in January.
Looking at the Shell deal, Raymond James’ John Freeman believes investors are in good hands here.
“Forecasted 2022E production comes in at ~1.75 MMBoe/d with estimated capex of ~$7.1B, which is up roughly $700M from our pre-acquisition model,” the 5-star analyst said. “Overall, this accretive transaction directly benefits shareholders, increasing COP’s 10-year distribution and free cash flow targets while further solidifying the company’s extensive, low-cost L48 asset base. As such, Conoco remains one of our top picks.”
In line with these comments, Freeman sets a Strong Buy rating on COP shares, with a $90 price target to suggest an upside of ~33% for the coming year. (To watch Freeman’s track record, click here)
Looking at the consensus breakdown, only one analyst is currently sitting on the COP sidelines, with all 18 other recent reviews saying Buy. Accordingly, the stock has a Strong Buy consensus rating, backed by a $80.63 average price target. The implication for investors? Upside of ~19% from current levels. (See COP stock analysis on TipRanks)
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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.