Founded back in 1979, when it acted as a floor broker on the New York Stock Exchange, Rosenblatt Securities has grown and adapted, becoming a major figure in the agency brokerage niche and the largest single broker on the NYSE floor.
Analytics and research are key to success in investment banking and floor trading. After all, it’s impossible to know the right market moves without knowing what’s happening behind the scenes of potential equity investments. Rosenblatt’s market research arm delves into the depths, finding out what makes stocks tick, so the firm’s clients can make the best-informed decisions.
Today, we’ll look at Rosenblatt’s annual report, entitled "Our Top Core Holdings Ideas to Celebrate Rosenblatt's 40th Anniversary," to outline the firm's ‘top picks.’ These stocks picked out by top-rated analysts and investors should take note.
Specifically, we'll take a look at three stocks that are more purely tech-oriented, that have changed the game in their particular niches, and brought impressive gains to investors. Adding to the good news, TipRanks’ Stock Screener shows that each has racked up enough analyst support in the last three months to earn a “strong buy” consensus rating.
Let's take a closer look and see why these stocks truly are top picks:
As if to underscore the importance of data analysis, Splunk is first on our list here. This San Francisco-based software company offers products that monitor, search, and analyze the machine generated big data, indexes and correlates the results, and makes the whole available to customers through a browser-style interface. In short, Splunk makes it easy for its customers to use all of their accumulated information. In recent years, Splunk has also begun offering software products for security analytics and Internet of Things applications.
Businesses need Splunk’s products, and that need has powered Splunk’s success. The company’s EPS, at 58 cents, beat the estimate by a significant margin and was also 52% higher than the year-ago quarter. Revenues were strong, too, and at $602 million showed a 29% year-over-year gain. With fast growth rates like those, you won’t be surprised to learn that SPLK is up 44% in 2019.
5-star Rosenblatt analyst Yun Kim reviewed SPLK and came away deeply impressed. In a list of reasons to own shares in the company, he wrote, “[Splunk is the] emerging de facto enterprise standard in IT, along with the likes of CRM, ORCL, SAP and MSFT... It is at the foundation of the current data-driven digital transformation secular trend… We also note that SPLK closed 24 $10M+ deals last year and 10 such deals two years ago, indicating more of its customers are adopting SPLK as its enterprise standard.”
A growing industry consensus that Splunk is the way forward for data aggregation, combined with an increasing number of major sales, led Kim to give SPLK a Buy rating and a $200 price target – suggesting an impressive 32% upside. (To watch Kim's track record, click here)
Kim’s bullish stance on Splunk is in line with Wall Street’s view. SPLK has a Strong Buy consensus rating, based on no less than 25 Buy ratings set in recent weeks. Shares are trading for $149.37, and the stock’s recent strong gains have pushed that price close to the average price target of $158.43, leaving a modest 6% upside. If Splunk continues to perform, expect the analysts to adjust the target upwards. (See Splunk stock analysis on TipRanks)
PayPal’s impressive growth has been powered by its domination of the payment processing niche. The company has turned digital payments into the preferred method for online transactions, helping move along the dramatic expansion of e-commerce in recent years. The rewards have been substantial: in fiscal 2018, PayPal saw more than $15 billion in revenues, and over $2 billion in net profits. For 2019 the stock has gained 28%, even after slipping from its peak price in July. This gives PayPal a 3-point advantage over the S&P 500’s year-to-date growth.
A look at the company’s Q3 report will show some details of the growth. Total payment volume, a key metric of the value of transactions put through PayPal’s system, rose to $178.67 billion, growing 25%. Revenue was up 19% to $4.38 billion, and EPS showed an 8% year-over-year gain to 39 cents. But the best news for investors was the revision to full-year 2019 EPS. The company bumped it up to $3.07, 3.3% higher than the Street’s expectations. Growth in every metric, and plenty of share price appreciation make PYPL a winner for investors.
5-star Rosenblatt analyst Kenneth Hill sees room for an additional 18% upside in PYPL shares. Hill points out several of PayPal’s positional advantages: “Best-in-class, two-sided ecosystem with PayPal’s and Venmo's more than 275mn active Consumer accounts and 24mn Merchant accounts… Clear path ahead to increasing Venmo monetization from Pay with Venmo and Venmo Debit/ Credit, in addition to Instant Transfer… Long-term potential to be a first mover in Asia… complimenting efforts in Europe and Latin America…”
Hill sees PayPal with a strong competitive advantage, and puts a $128 price target on the stock to compliment his Buy rating. (To watch Hill's track record, click here)
Wall Street generally agrees with Hill. PayPal’s Strong Buy consensus rating is based on 22 Buys, and only 3 Holds. The average price target, $125.86 suggests that PYPL still has room for 16% growth. (See PayPal stock analysis on TipRanks)
The emergence of cloud computing has brought sea-changes to every imaginable niche in the business world. RingCentral has connected it to the world of communications, providing software solutions to combine office computer and telephone systems. The company’s core product, RingCentral Office, is compatible with other popular applications like Salesforce, Outlook, Google Docs, and DropBox, while providing unique features in call forwarding, multiple telephone extensions, video conferencing, and screen sharing. In short, RingCentral lets customers link and control all of their office communication systems.
In Q3, RingCentral posted EPS of 22 cents, beating both the analyst consensus and the year-ago number by 15%. The company’s stock has surged in recent months, bringing its year-to-date gain up to 108% – RNG has more than doubled in value in 2019, and the year’s not over yet. A couple of additional numbers from the recent quarter make it clear why RNG has gained so much. The company’s software subscription increased 33% year-over-year, to reach $210.9 million, while revenues grew to $233.4 million. And while the company was posting this growth, it was also boosting R&D expenditures by 30%.
Analyst Ryan Koontz wrote up Rosenblatt’s note on RingCentral, summing up the bottom line in a clear, bullish stand. He wrote, “While RingCentral’s products are strong and arguably the best in the industry, we are most impressed with RingCentral’s commanding go-to-market strategy and execution. The company has built an industry leading team... RingCentral is the largest UCaaS vendor in the market and has continued to take share, growing revenues faster than all of its major competitors.” Koontz was especially cognizant of RingCentral’s new strategic partnership with Avaya, a leader in contact center technology. The joint endeavor was announced this past October and has generated great excitement in the industry.
Koontz puts a $210 price target on RNG shares, implying a 22% upside to the stock. Wall Street is in general agreement with his stance, although more conservative on the price target. RNG’s Strong Buy analyst consensus is built from 14 Buy ratings and a single Hold, while the $186 average price target is 8.6% higher than the current $171 share price. (See RingCentral stock analysis on TipRanks)