Tuesday was another rollercoaster ride for the stock markets. U.S. stocks increased and oil prices fell. U.S. producer price rose for the month February. While tensions between Russia, Ukraine and other countries continued, investors have turned their attention to rising inflation in the U.S.
Investors are hopeful that the Fed will raise interest rates following today’s policy meeting.
Where does this leave investors in such an inflationary climate? This turmoil has led to a stock market sell-off. Some of the most important technology stocks have seen their shares drop anywhere from 10% up to 50% over the past year.
Robert W. Baird’s equity research analysts see inflation as deeply embedded in our economies. They chose a few technology companies, in addition to the well-known names, that could be better able to withstand macro pressures.
Let us look at the firm’s picks.
Take-Two Interactive, a video game developer, has seen its stock price fall by 20% in this volatile environment. In a time of inflation, this stock pick might seem surprising to investors. But Colin Sebastian, Baird analyst, says that it is not. He stated that interactive entertainment can be a lucrative sector in times of economic downturn.
According to the analyst, people also turn to video games to entertain themselves during times when many consumers are cocooning (similarly to the early stages in the pandemic). Sebastian believes that this period could return if people don’t want to drive their cars when oil prices rises.
The analyst favors TTWO because he believes video games offer a higher level of entertainment than other paid options. Sebastian also believes that video-game companies have limited exposure to higher input prices because the majority of content can be downloaded.
Sebastian expects TTWOs core title titles to include this scenario. Grand Theft Auto, NBA 2K And Red Dead to perform relatively well. The analyst also expects TTWO shares will benefit from the anticipation for the launch of GTA 6, which is expected to be launched in FY24. Sebastian believes Zynga will be a major player in the casual gaming market when TTWOs acquisition makes it a leader.
The analyst with the highest rating is positive about the stock and has given it a Buy rating with a $210 price target.
Sebastian is not alone. Other analysts are bullish. They have a Strong Buy consensus recommendation based upon 14 Buys and two holds. The stock’s upside potential is around 44.4% according to the average TTWO stock prediction of $207.13.
Navitas Semiconductor in Ireland was established in 2014. The stock fell 16% in the last month after the power electronics company was listed on Nasdaq. The stock is currently hovering around its lowest price range, closing at $8 on March 15. Navitas manufactures power integrated circuits (ICs), which include gallium-nitride power (GaN). The company has shipped more than 35,000,000 GaNFast ICs.
The company’s ICs are compatible with mobile chargers. According to the company, they can charge up to three times faster than silicon-based chargers.
Tristan Gerras, Baird analyst estimates Navitas holds approximately 50% of the market in GaN-based smartphone charging systems. GaN-powered ICs are an emerging technology that could also gain a foothold in EVs, data centers power suppliers and solar applications, according to the analyst.
This trend could benefit Navitas, and Gerra is positive about the stock with a Buy rating. The price target is $22.
Other Wall Street analysts are similarly positive, with a Strong Buy consensus recommendation based upon a unanimous five Buy ratings. The average Navitas stock prediction was $18.60.
STMicroelectronics NV (NYSE: STM)
STMicroelectronics (based in the Netherlands) is a semiconductor company that designs, develops, manufactures a wide variety of products. The company’s four end markets are automotive, industrial, personal electronics, communications equipment, computers and peripherals.
Apple (and other major customers) are just a few of STM’s biggest customers.AAPL), Tesla (TSLA), and Seagate (STX).
STM shares have dropped 22.6% in the last year. The stock’s closing share price of $35.87 on March 15 is closer to its 52-week low price of $34.16. However, the stock could have upside potential.
Tristan Gerra, analyst, considers STM an established SiC [silicon carbide semiconductor products]Leader (with Tesla being its key client). The analyst also projects that SIC devices from STM will generate 6% to $1 billion in total semiconductor revenues by 2024.
The stock was upgraded by the top-rated analyst from a Hold rating to a Buy rating with a price target $62.
Other analysts on the Street are bullish, with a Strong Buy consensus Rating based upon a unanimous three Buys. The current average STMicroelectronics stock prediction stands at $59.
Additionally, the stock has a high TipRanks Smart score of 9, supported both by positive sentiment from investors and bloggers, as well increased purchases by hedge fund managers. This indicates that the stock has a high probability of outperforming the market.
Five9, a provider cloud contact center software, has seen its stock drop by half in the last six months despite strong Q4 results.
FIVN posted record quarterly revenues, $173.6 million, an increase of 36% year-overyear. Analysts had expected $165.38million. The earnings per share were $0.42, up 23.5% compared to the same quarter last.
William Power, Baird analyst, believes that cloud software companies such as FIVN are less exposed to supply chain costs and could be better positioned for inflationary pressures.
Powers top pick for this year is the stock. The analyst is positive about the company’s ability to sustain a 30%+ long-term growth rate, along with margin expansion. The analyst believes that Five9 has long-term growth potential because of the rising adoption of cloud computing, digital transformation and the increasing functionality of artificial intelligence (AI).
Power is optimistic about the stock, with a Buy rating. The stock also has a $125 price target.
The remaining analysts covering the stock echo Power, with a Strong Buy consensus rating. This is based on 16 Buys and one Hold. The average FIVN stock prediction for the year is $150.59.
Twilio is a communications platform-as-a-service company that is known for its messaging, phone, and application programming interface tools.
Despite the company’s impressive fourth quarter results, the stock has seen a selloff from investors and is currently down 49.3% for the year.
Twilios revenues increased 54% year-overyear to $842.7million in Q4, surpassing the consensus estimate at $767.83million. The company reported a quarterly loss, however, of $0.20 per shares, compared with earnings of $0.04/share in the same period a decade ago.
Despite the fact that the stock was not profitable in Q4, William Power, Baird analyst, remains positive about the stock’s long-term prospects due to its rapid growth rate and the vast market opportunity it is pioneering.
The analyst has rated this stock a Buy with a $290 price target, which indicates a significant upside potential.
Other Street analysts have sided with Power, which has resulted in a consensus rating Strong Buy, based 25 Buys and one hold. The average TWLO stock prediction for the next year is $323.33.
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