Both the S&P 500 and the Dow Jones average have closed at record highs, and the NASDAQ has reversed the brief foray it took into correction territory in the second week of March. The market gains reflect several factors: relief that the $1.9 trillion COVID aid bill passed Congress and was signed by the President; a general optimism that the ongoing vaccination program will allow a normal economic environment sooner rather than later; and a growing sense that recent inflationary indicators will remain low-grade.
In short, the sentiment among investors is generally positive, and looks to remain so, despite a rally by Treasury bonds that saw the 10-year note reach its highest yield in over a year and the 30-year note yield hit a year-to-date high. As Oppenheimer’s chief investment strategist John Stoltzfus points out in a recent macro note, “…government bond prices tend to suffer as economies exit a recession while equities tend to benefit from an improvement in economic growth…” Per Stoltzfus’s reminder, what we’re seeing should be expected: rising equities, falling bond prices – and rising bond yields.
The Oppenheimer strategy chief goes on to outline his view of the right investment stance given current conditions, saying, “We continue to favor equities in the current transitionary environment…. We persist in favoring information technology and cyclicals over defensive sectors as well as exposure across large, mid and small capitalizations.”
Keeping that in mind, we’re taking a look at two stocks recommended by some of Oppenheimer’s top analysts. These are analysts who stand tall among their peers, ranking the Top 25 out of more than 7,300 Wall Street pros covered by TipRanks, and their recommendations command respect.
Running the tickers through TipRanks’ database, we learned that the stocks they’ve tagged as winners have earned a “Strong Buy” consensus rating from the rest of the Street. Let's take a closer look.
The first stock we’ll look at, ChargePoint, operates the necessary infrastructure in the background of the electric car industry. EVs are the ‘in’ thing, and as adoption grows they will change the way that we view our motor transport. ChargePoint works to make that possible, and has a leading position as the largest EV charging station operator in North America, and with a growing position in Europe.
The company went public this month in a SPAC transaction. The SPAC merger that took the company public saw ChargePoint start trading as CHPT on the NASDAQ on March 1. After the transaction, ChargePoint had $615 million in available cash, for use in paying down debt and funding business operations.
Those business operations are extensive. ChargePoint boasts over 70% market share in the North American EV charging infrastructure segment, and more than 4,000 commercial and fleet customers. The company’s network includes over 132,000 charging stations in North America and Europe.
Among the fans is Oppenheimer analyst Colin Rusch, ranked #4 overall in the TipRanks database. Rusch sees a bright future for CHPT and an opportunity for investors.
“We view CHPT as the leading play on electric vehicle charging infrastructure... As a pioneer in electric vehicle charging, ChargePoint is building a highly defensible business by designing smart charging infrastructure… We believe this product design is crucial for enabling functionality driven through ChargePoint’s cloud-based platform," Rusch opined.
The analyst added, "We believe that ranks CHPT among the largest EV charging networks globally and positions the company for accelerating growth given its technology leadership.”
To this end, Rusch gives ChargePoint an Outperform (i.e. Buy) rating, along with a $39 price target that suggests a 62% one-year upside. (To watch Rusch’s track record, click here)
This stock, new to the public markets, has already picked up three analyst reviews – and all are to Buy, making the Strong Buy consensus rating unanimous. CHPT shares are selling for $24.01, and their $42.67 average price target – even more bullish than Rusch allows – implies a robust upside of ~78%. (See CHPT stock analysis on TipRanks)
EVs are not the only realm where high tech innovation can impact consumers’ daily lives. Purple, a company founded in 2015, offers a new technological twist on products that we are all intimately familiar with: mattresses, seat cushions, and pillows. The company uses a ‘hyper-elastic polymer’ technology to create soft, heat-dissipating mattresses and cushions. All of Purple’s products are made in the USA, and the product line includes, in addition to mattresses and cushions, bedding, pajamas, and even pet beds.
Through Q3 of 2020, Purple saw a strong, multi-year run of growth. The stock more than tripled in value (248% growth) over than time period, while sales revenue has showed consistent growth for over two years. That hit a snag in 4Q20, when the company missed expectations on revenues and earnings. The top line in that quarter, at $173.89 million, was down 7% sequentially (although up 39% year-over-year), while EPS, at 7 cents, was below the forecast of 11 cents.
On the positive side, the company’s full-year revenue for 2020, $648.5 million, was up 51% from 2019 – and was a company record. Purple finished 2020 with an annual EPS of 78 cents, up from 16 cents in the prior year, and grew its cash holdings by $89.5 million.
Still, the stock lost 33% when the Q4 report was released, and has not yet regained that ground. Oppenheimer’s Brian Nagel, however, is not put off by this recent downturn in the stock.
The 5-star analyst, rated #2 overall on TipRanks, describes Purple “as a disruptor within the market for premium mattresses and bedding products and one of the most exciting growth stories in consumer, broadly.”
Turning to the company’s prospects, Nagel says, “…while over the past several quarters, market share figures for the company have improved significantly, PRPL still controls just 3% of the overall mattress sector and only 6% of the market for premium mattresses. This suggests still meaningful sales expansion opportunities going forward.”
Nagel gives PRPL shares an Outperform (i.e. Buy) rating, along with a $45 price target that indicates confidence in a 42% upside for the next 12 months. (To watch Nagel’s track record, click here)
Purple mattresses maybe comfortable, but Wall Street’s analysts are not sleeping on this stock. They’ve given it a unanimous 9 recent Buy reviews, for a Strong Buy consensus rating. The shares have an average price target of $36.78, which suggests a 16% one-year upside from the trading price of $31.67. (See PRPL stock analysis on TipRanks)
To find good ideas for stocks recommended by top-performing analysts, visit TipRanks’ Analysts' Top Stocks.
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.
