Navigating the stock market is never easy, particularly in these times. Although the markets are on fire, value investors are still squeamish on which stocks to buy. After all, this economy is dominated by electric-vehicle (EV) plays and SPACs, or special purpose acquisition companies.
Understandably, the whole situation can confuse the best trader.
That’s why investors continue to put a lot of stock in analyst opinions. Of course, you have to do your own research to understand if a company can deliver outsized returns in the long run. But analysts’ research can help you better understand where a company is at the moment and where it’s going.
This list is curated to include stocks that have amassed bullish ratings, hence they should be on your radar of stocks to buy:
- Alibaba Group (NYSE:BABA)
- Energy Transfer LP (NYSE:ET)
- S&P Global (NYSE:SPGI)
- Shaw Communications (NYSE:SJR)
- TAL Education Group (NYSE:TAL)
- Horizon Therapeutics (NASDAQ:HZNP)
- Salesforce (NYSE:CRM)
- Adobe (NASDAQ:ADBE)
- Microsoft (NASDAQ:MSFT)
- Autodesk (NASDAQ:ADSK)
Now, let’s dive in and take a closer look at each one.
Stocks to Buy: Alibaba Group (BABA)
TipRanks Consensus Rating: Strong Buy
Alibaba is the largest e-commerce company in China. Considering its success and large domestic consumer base, it seems strange BABA is down 16% year-to-date (YTD). You can chalk that down to intense Chinese regulatory activity in the last few months.
For the period ended March 31, 2021, China’s e-commerce giant reported a $1.2 billion operating loss due to the $2.8 billion fine slapped by China’s State Administration for Market Regulation (SAMR). Alibaba believes its income for the quarter would have been $1.6 billion had it not been for the penalty. For the full fiscal year 2021, Alibaba recorded a 41% year-over-year (YOY) jump in revenue to $109 billion.
The fine came after it said it was looking into complaints that the company was forcing vendors to list its products exclusively on Alibaba platforms. Around the same time, Alibaba’s financial services unit, Ant Group, was forced to put its $35 billion IPO on hold until meeting newly introduced antitrust regulations.
All of these developments have dampened sentiment somewhat. However, the long-term outlook for the company remains solid. It is ubiquitous in the Chinese e-commerce landscape, and its fundamentals highlight how fast it has grown as an enterprise. Even Alibaba understands the value of its own fallen shares, announcing it would boost its share repurchase program by 67%, to $10 billion.
Energy Transfer LP (ET)
TipRanks Consensus Rating: Strong Buy
As a midstream oil and gas company, Energy Transfer LP suffered massive losses during the novel coronavirus pandemic, shedding more than half its value last year.
On a trailing 12-months (TTM) basis, Energy Transfer reported a dip in revenue of 4%. Despite this decline, it did manage to increase earnings per share (EPS) by 143.4%. In its latest earnings report, the company reported quarterly revenue of $17 billion and a net profit of $4.07 billion.
Nevertheless, income investors are not happy. Energy Transfer had to cut its distribution by 50% in October, to 15.25 cents per unit. The move makes sense, it provides $1.7 billion in additional cash flow annually that will be used to pare down debt. Once it gets to a leverage target of 4 to 4.5 times cash flow, the company intends to reward stockholders in the form of share repurchases and increased distributions.
Still, even with the distribution cut, Energy Transfer yields more than 6%, providing a juicy return.
Stocks to Buy: S&P Global (SPGI)
TipRanks Consensus Rating: Strong Buy
SPGI is an interesting company to analyze. It is the market intelligence arm of the company behind the S&P 500 Index and many other benchmarks. Recently, every headline surrounding SPGI tends to be about its $44 billion all-stock combination with IHS Markit, including the assumption of almost $5 billion in debt.
If you ever needed an example of how valuable data is, look no further than this.
S&P Global believes the merger will lead to annual organic revenue growth of between 6.5% and 8% over the next three years while improving its margins. The firm expects the deal will be accretive to earnings by the end of the second year; it plans to find $680 million in annual synergy savings through the merger.
IHS Markit boasts recurring revenue of 88%, almost one-third greater than S&P Global. The combined entity is expected to have $11.6 billion in sales, 76% recurring in nature, with its financial information and rating segments accounting for 62% of overall sales.
Overall, S&P Global is a very solid, asset-light performer that has paid a dividend each year since 1937 and is one of fewer than 25 companies in the S&P 500 that has hiked its dividend annually for at least the last 48 years. No wonder it makes most lists of stocks to buy.
Shaw Communications (SJR)
TipRanks Consensus Rating: Moderate Buy
Shaw Communications is a Calgary-based cable company, which is a household name in western Canada. The company’s business concerns span cable, internet, wireline phone, and wireless communications.
Fiscal 2020, which ended Aug. 31, saw sales increase by 1.3% to 5.41 billion CAD, its wireless business grew by 17.4% to 1.1 billion CAD, with a 69% increase in adjusted EBITDA 163,300 additional net subscribers. Shaw’s free cash flow (FCF) for the year jumped by 39% to 747 million CAD, with an FCF margin of 13.8%.
Shaw Communications used FCF to return 750 million CAD to shareholders in 2020 through a mix of share purchases and dividend distributions. SJR has outperformed the S&P 500 by 33% and its sector by 24.6% in the past year. Expect this performance to continue due to its commanding position in the Canadian market.
Stocks to Buy: TAL Education Group (TAL)
Refinitiv Consensus Rating: Buy
I have a particular affinity for TAL Education Group, one of China’s leading K-12 after-school tutoring providers. Its education network covers 90 cities in China, the world’s largest country, providing an essential service at a competitive cost.
The company offers its students several options. Small classes, personalized premium services, and online courses to students ranging from preschool to the 12th grade. It offers services both in person and through virtual options.
The pandemic was a tailwind for its online business which grew at a rapid rate last year. The first nine months of its fiscal 2021 saw revenues increase 29.7% to $3.1 billion, mainly driven due to its virtual offerings. No surprise that online education flourished during the pandemic, but the in-person business will also make a recovery this year once the economy reopens.
Horizon Therapeutics (HZNP)
TipRanks Consensus Rating: Strong Buy
Horizon Therapeutics is a specialty and generic drug manufacturing company that develops and commercializes rare and rheumatic diseases. It has a portfolio of medicines in the areas of rare diseases, gout, ophthalmology and inflammation. The drug manufacturer has announced two new KRYSTEXXA development programs it expects to begin in 2021, bringing the total number of programs in its pipeline to 14.
Business is conducted under two operating segments: Orphan Drugs and Inflammation Drugs. Its orphan drugs combined for revenues of $2.2 billion last year, more than double the $231 million a year earlier. Full-year 2020 net sales exceeded the high end of a guidance range of $2.12 billion to $2.14 billion, representing YOY growth of more than 65%.
Its two key growth drivers — Tepezza (treatment of thyroid eye disease) and Krystexxa (treatment of gout flare-ups) — accounted for the bulk of revenues. TEPEZZA full-year 2020 net sales surpassed $800 million and KRYSTEXXA net sales exceeded $400 million, with double-digit sequential growth for both drugs in the fourth quarter of 2020.
Considering its product portfolio and its overall pipeline expect Horizon to keep growing by leaps and bounds.
Stocks to Buy: Salesforce (CRM)
TipRanks Consensus Rating: Strong Buy
Salesforce.com is the largest customer relationship management (CRM) vendor, with a market share of 19.5% in 2020. Approximately 90% of Fortune 100 companies use at least one of CRM’s software. It has successfully leveraged its expertise in on-demand software to expand the scale of operations.
Much like several other tech-focused businesses, Salesforce had a great 2020. Most businesses had to manage their affairs remotely, and there was a rapid shift to the cloud as a result. The rapid adoption of CRM’s cloud-based offerings is not surprising, but the speed over the last year is truly astounding.
In May, the CRM leader reported in the words of Marc Benioff, Chair & CEO, Salesforce, “the best first quarter in our company’s history.” Total first-quarter revenue was $5.96 billion, an increase of 23% YOY. Cash generated from operations for the first quarter was $3.23 billion, increasing 74% YOY.
Its current gross margin is 74.3%, while its net profit margin is 19.9%. Such high margins are not uncommon for asset-light tech companies. But such healthy numbers are still notable, making it one of the most-loved software stocks on Wall Street.
Adobe (ADBE)
TipRanks Consensus Rating: Strong Buy
Adobe generates the bulk of its revenue through licensing fees from customers and dominates the content creation market. Nevertheless, it was now progressively diversifying through electronic document technology and graphic content authoring applications. Much like Salesforce, a heightened remote working environment has helped drive customer engagement and licensing revenue for its product.
So, during the last few quarters, the company has delivered outsized returns. But considering the vast breadth of its services, revenue growth should not stall. Ultimately, creative professionals, developers, and large enterprises value the high-quality services provided by the company, and increased customer engagement won’t slow down as solutions are in the cloud.
Over the last five years, Adobe has increased sales by 22.1% and EPS by 45.4%. Margins are also excellent for this one, with a gross margin of 87.9% and a net margin of 38.8%. Considering all these favorable fundamentals and its preeminent position in content creation software with its Document Cloud, expect this one to remain one of the best stocks to buy out there.
Stocks to Buy: Microsoft (MSFT)
TipRanks Consensus Rating: Strong Buy
Microsoft offers the world’s most popular and most widely used productivity software through its “Office” franchise. The tech giant dominates the PC software market with an 80% share in operating systems functioning as a monopoly in productivity software and operating systems.
In recent years, the company has changed its operating model. Previously, if you used the software it came pre-installed on your computer or on a disc. But now the company is delivering its services through a SaaS (Software-as-a-Service) model. The transformation has helped with margin and revenue growth.
Meanwhile, Azure, its cloud offering, is Microsoft’s largest and fastest-growing business and a dominant company in the space. Microsoft Teams is also giving a tough time to Slack (NYSE:WORK). It is more affordable, offers marginally better free plans, and integrates natively with Office 365 tools, giving it an edge over other business messaging apps.
Surprisingly, despite all these factors, Microsoft does not get a lot of love these days. Despite being one of the original darlings of the dot-com boom, the iconic tech juggernaut has surprisingly gotten overshadowed by upstarts like Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO). And overall, MSFT stock has underperformed the S&P 500 by 2.5% and its sector by 6.4% in the past year.
Nevertheless, MSFT is an evergreen stock that should continue to do well regardless of the wider economic environment. Ups and downs are a part of the stock market. But when dealing with a company as solid as MSFT, you can rest easy.
Autodesk (ADSK)
TipRanks Consensus Rating: Strong Buy
Autodesk is considered the gold standard for computer-aided design software. The platform is used by architecture, engineering and construction by millions of creative people to design and model buildings, manufacture products, and animate films and video games.
Much like Microsoft, ADSK has switched to a SaaS model, which should help in growing its income and margins.
One of the lynchpins of Autodesk’s strategy is to drive revenue growth through relationships with higher-education programs to help professionals understand and use its software. Once introduced to the software, professionals are much more likely to use it when entering the workforce, since it’s cumbersome to learn new software.
TTM, EPS has jumped 326.3% and the top line has increased 13.7%. Margins are excellent for this company as well, with gross margin and net margin at 91.1% and 33.3%. YTD, shares are up just 5% — making this the ideal time to go ahead and load up on this one.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.