Top Wall Street analysts say these stocks have the best long-term potential – CNBC

Ed Stack, CEO of Dick's Sporting Goods.

David Orrell | CNBC

As the world heads toward another year of the pandemic, investors must adapt to changing macroeconomic forces and trends.

Rising inflation, the Federal Reserve's move to dial back its monetary support, and a workforce that's been disrupted by the current spike in coronavirus cases are all affecting daily price action for stocks.

TipRanks, a financial data aggregation website, gives investors the data they need to navigate the market. Wall Street analysts are highlighting these five stocks, which they believe have staying power.

Take-Two Interactive Software (TTWO) announced on Jan. 10 that it would buy FarmVille creator Zynga for $12.7 billion. The news shook up shares of both companies, with Zynga ending the day up 40% and Take-Two slumping more than 13%. Investors appear split on the deal, but one of Wall Street's top analysts has reiterated his bullish stance. (See Take-Two Interactive Earnings Data on TipRanks)

The analyst is Andrew Uerkwitz of Jefferies, who attributed the sell-off to miscalculations on the appropriateness of Zynga for Take-Two and fears of a possible bidding war for the game developer. However, as far as the merger itself is concerned, Uerkwitz said that simply "no one is doing the math."

Uerkwitz rated the stock a Buy and assigned a price target of $231.

The analyst argued that the recent weakness in TTWO's share price provides for an attractive point of long-term entry for investors.

As far as Take-Two's core business goes, Uerkwitz is optimistic on the company's robust pipeline and the increasing opportunities for mobile gaming led in part by more capable hardware. The fact that "data speeds, screen refresh rates, battery life, [and] chip speeds" are advancing so rapidly, more complex gaming systems can be developed for phones.

Meanwhile, those playing the games are more familiar with using phone platforms than they have ever been before.

On TipRanks, Uerkwitz is rated as No. 189 out of more than 7,000 financial analysts. He has a success rate of 63% when picking stocks and has returned an average of 31.8% on his ratings.

Consumer cyclicals may be radically affected by global supply-side constraints, but the companies mitigating their impacts could be in for considerable upside once they ease out. One of those firms is Dick's Sporting Goods (DKS), which has been managing its inventory well and optimizing its supply chain. (See Dick's Sporting Goods Insider Trading Activity on TipRanks)

Sam Poser of Williams Trading published a report on the stock. He noted that DKS has also been experiencing elevated levels of consumer engagement and has placed a higher priority on maintaining strong vendor relationships with companies like Nike (NKE).

Poser rated the stock a Buy and established a price target of $180.

The analyst also mentioned that Dick's Sporting Goods has been investing "in its people." Moreover, vertically integrated initiatives like curbside pick-up have raised operating margins and brought more convenience to customers.

Thus far, DKS's sales are "off to a good start," driven in part by the company's strategic use of its customer data, according to Poser. In regard to its financial standing, the sporting goods retailer is approaching a possible earnings beat on its fourth-quarter guidance.

TipRanks rates over 7,000 analysts, and Poser currently maintains a spot at No. 145. The analyst's ratings have been correct 54% of the time, and on average, they have netted him a return of 46.2%.

The shift toward digitization is proving to be a boon for companies like Cisco Systems (CSCO).

Ivan Feinseth of Tigress Financial Partners said that Cisco is poised to maintain its "leading position as a global IP-based connectivity and networking equipment provider." The company has benefited from an uptick in enterprise spending on networking infrastructure. (See Cisco Risk Factors on TipRanks)

Feinseth rated the stock a Buy and declared a price target of $73.

The technology firm last fall completed its deal to acquire cloud-analysis platform Epsagon. Feinseth said that the takeover is one of many strategic initiatives which are demonstrating Cisco's commitment to inorganic growth and the strength of its balance sheet.

In the age of increased videoconferencing and all-around necessity for higher networking speeds and capacity, Cisco stands to capitalize. If the company succeeds, its shareholders will, as well. The firm has raised its dividend for a 10th consecutive year, and is expected to do so again in February.

Feinseth sits high in the ranking of over 7,000 analysts on TipRanks, at No. 89. He has been successful 68% of the time when rating stocks and has averaged returns of 18.1% on each.

While many tech companies have their cards in the cloud-computing solutions game, not all are as well positioned to grow in 2022 as Microsoft (MSFT). The tech giant has been making strides in regard to the amount of large deals for its Azure cloud services, as well as for its Office 365 bundle.

Dan Ives of Wedbush Securities published a bullish report on the stock, delineating just how strong Microsoft is looking after going over its December financial checks. He was encouraged by the robust enterprise spending on Azure cloud, and he said that the business will soon be "hitting its next gear of growth." (See Microsoft Hedge Fund Activity on TipRanks)

Ives rated the stock a Buy and assigned a price target of $375.

The technology analyst said that others have been conservative in their perspective on Microsoft's outlook. He said that Wall Street has yet to take into account the reality of remote work trends. Further, the sheer number of enterprise-level deals, up over 50%, is enough for Ives to project higher than his peers have.

Noting that the total addressable market on remote cloud services could be worth up to $1 trillion, Ives sees Microsoft claiming market share gains from established players like AWS (AMZN). Additionally, he wrote that the recent price hike on Office 365 can be considered a possible $5 billion "strategic poker move." Ives believes the company is "on its way to a $3 trillion market cap over the next 12 months."

Ives is rated No. 81 out of over 7,000 professionals on TipRanks. He has seen success 70% of the time, and his ratings have averaged returns of 44.6%.

Alex Henderson of Needham & Co sees cloud-based enterprise and network security company Zscaler (ZS) as a "unique investment vehicle with exceptional long-term value potential."

He said the company has been strengthening its sales capacity and increasing customer conversion rates. (See Zscaler Stock Charts on TipRanks)

The analyst rated the stock a Buy and declared a price target of $418.

Fundamentally, Zscaler is in a highly advantageous position. The company has already been pushing up its sales numbers, operating margin metrics, and is expected to have considerable levels of free cash flow in the long run. Henderson is not concerned by the current wobbling sentiment toward growth stocks, and he is confident that Zscaler could beat the market even with rising interest rates.

As far as advancing its security capabilities, the analyst noted that "ZS is seeing a continuing realization in the C-Suite, CIO, CTO level that the legacy perimeter defense, and Client Server architecture of the last 35-40 years needs to shift to a Cloud Direct Zero Trust design. We see Zscaler as uniquely positioned to deliver this capability."

Heading toward future earnings results, Henderson is anticipating a 5% to 10% beat over Wall Street consensus estimates on average-revenue-per-user growth for the company.

Henderson is rated as No. 42 on a list of over 7,000 financial analysts. His stock ratings have been successful 72% of the time, and they have averaged him returns of 42.3% on each one.

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Top Wall Street analysts say these stocks have the best long-term potential - CNBC