August 23, 2022, Trade Desk, Inc. (NASDAQ:TTD) and Abbott Laboratories (NYSE: ABT)
Recent blowout earnings reports have these companies looking like the best stocks to buy now.
The summer rally is officially over. After the market ended its four-week winning streak last week, the Dow dropped -643.13 points (-1.91%), the S&P 500 tanked -2.14%, and the Nasdaq plummeted -2.55%. However, following blowout earnings, Trade Desk, Inc. (NASDAQ:TTD) and Abbott Laboratories (NYSE: ABT) remain going into September with momentum as the best stocks to buy now.
Both Trade Desk and Abbott Laboratories had rough 2022s. Trade Desk is a prominent digital advertising player, and much of the year had severe doubts about companies’ ad budgets. Abbott Labs was the face of the baby formula shortage and also faced questions about the long-term viability of its diagnostics business with people tuning out COVID.
The earnings reports that these companies just reported, though, put much of those doubts to rest. The Trade Desk stock is on fire, while Abbott’s fundamentals look flawless.
Both stocks also have 20+% of potential analyst upside.
The catalysts are in motion for these stocks to continue seeing momentum into September as the best stocks to buy now, even though the broader market has lost some steam.
Trade Desk, Inc. (NASDAQ:TTD)
A STRONG BUY, this digital advertising leader boasts potentially triple-digit earnings growth, triple-digit net income growth, and a 21+% upside.
Digital advertising is dead. At least that’s what we thought earlier in the year.
Sentiment has gradually changed for the space, following Netflix’s plans to launch an ad-supported tier of its streaming service and that Netflix would partner with Microsoft to make it happen.
Although The Trade Desk won’t directly benefit from this arrangement, it showed that digital ad sales were alive and well in this economic climate. Plus, Microsoft’s sell-side ad tech platform “has been a great partner of ours for years,” according to The Trade Desk’s CEO Jeff Green.
Data-driven ad platform provider The Trade Desk is a central cloud-based platform that serves advertising agencies and other advertising service providers. It allows buyers to create, manage, and optimize data-driven digital advertising campaigns across the following ad formats and channels.
- Connected TV
TTD has an excellent customer retention rate of 95% and powers some of the world’s biggest consumer brands’ omnichannel marketing campaigns. For example, grocery store chain operator Albertson’s just signed on as a TTD client.
The Company is amid a furious rally following an outstanding earnings report. After seeing its stock fall off a cliff earlier in the year, and trading as low as $39.00 a share on July 14, 2022, the stock has rocketed almost 64%. Both investors and analysts have taken notice.
With TTD’s track record of outperformance, once it sees a window of momentum, there’s reason to believe it could eventually retouch record highs. Whether that happens in 2022 or not is anyone’s guess. However, there are several reasons why TTD is one of the best stocks to buy now.
Investors Cheered TTD’s Q2 Revenue Growth Because History Tells Us Bigger Things are Coming
Trade Desk reported Q2 2022 earnings on August 9, 2022, and primarily matched Wall Street’s EPS forecast of $0.20.
However, its top line got investors talking because it revealed incredible resilience in the face of economic uncertainty. There were doubts that companies would keep up their ad spending. However, revenue came in at $376.96 million, beating analyst projections by over $10 million and marking a 35% year-over-year increase.
To make TTD’s case as the best stock to buy now even more potent, the Company raised its Q3 2022 revenue guidance to at least $385 million beating $382.3 million consensus analyst estimates. The Company also increased adjusted EBITDA forecasts to $140 million.
Trade Desk volume skyrocketed on its earnings report, and shares flew as high as 37%. The last time TTD had this kind of reaction from an earnings report in November 2021, shares reached a record high above $110 (split-adjusted).
We will dive deeper into what analysts had to say about this earnings report. But let’s say there’s almost unanimous consensus that TTD is one of the best stocks to buy now. 6 analysts in the week of its earnings boosted price targets.
History tells us that TTD, when it has momentum, it’s hard to stop. Both earnings and net income could surge triple digits by 142.86% and 260.8% in the coming year, respectively. Net income may also average 67.3% growth over the next five fiscal years with a median forecast of 29.9%, while revenue could also see a 42.6% 5-year CAGR.
Strong Profit Margins, Fundamentals, and Technical Indicators
Although many of TTD’s fundamental margins are a bit tighter than ideal, and it’s not a cheap stock by any valuation, TTD has a solid fundamental backbone. Cash flows can sufficiently cover interest payments, and its 81.8% gross margin is fantastic.
Its 8 out of 9 Piotroski Score is also nearly perfect and indicates healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.
Moreover, TTD has no debt, which is crucial in times of rising rates and inflation. Its $1.2 billion worth of cash, cash equivalents, and short-term investments also bolster its balance sheet.
Helping the Company’s case as one of the best stocks to buy now, Barchart notes that TTD has several technical indicators signaling a BUY.
- 20 Day Moving Average
- 20 – 50 Day MACD Oscillator
- 20 – 100 Day MACD Oscillator
- 50 Day Moving Average
- 100 Day Moving Average
- 150 Day Moving Average
Furthermore, the stock is trading around its first Support Level and has plenty of room to go before touching any potential resistance points at $67.36, $69.04, and $70.13.
A Recent Oppenheimer Price Target Sees a 21.99% Upside- Other Analysts Could Soon Follow
Ever since TTD reported earnings, 6 analysts boosted price targets. Oppenheimer had the highest target bump of the bunch, tacking on a $78.00 projection which represents a 21.99% upside from August 22, 2022’s close.
The other analysts include
- Evercore ISI- $75.00
- Needham & Company LLC- $65.00
- DA Davidson-$70.00
The amount of bullish analyst activity reflects TipRanks STRONG BUY rating. Of the 11 Wall Street analysts offering 12-month price targets for Trade Desk in the last 3 months, 9 rate it a BUY. TTD has a high forecast of $100.00 from Wells Fargo. It also has a low forecast of $50.00 and an average price target of $74.56. The average price target represents a 16.61% upside from August 22, 2022’s $63.94 closing price.
TTD’s year-to-date low and high are $39.00 and $86.88, respectively.
Abbott Laboratories (NYSE: ABT)
Continuous demand for diagnostics and flawless fundamentals has this prominent healthcare stock trading with a 20+% upside.
If there’s one thing that Abbott Laboratories taught us in its latest earnings call, it’s that COVID is not dead. Diagnostics could be a recurring revenue stream for the foreseeable future.
However, Abbott isn’t just a COVID play. We will dive deeper into its earnings, but even without Covid testing, Abbott Labs generated 6% organic sales growth.
That’s because Abbott is a prominent player in the healthcare equipment & supplies industry and has a multifaceted, robust foundation full of diversified operations in pharmaceuticals and medical devices.
You might be especially familiar with the name from this year’s baby formula shortage, considering Abbott is the parent company for Similac.
Why Abbott is one of the best stocks to buy now goes beyond COVID tests, medical devices, and baby formula. The Company is a well-run machine, with flawless fundamentals and a dividend growth track record of 50 years. It also has considerable analyst upside following an outstanding earnings report.
Not bad for a stock that still sits -13.6% below its highs and is overdue for a breakout.
Abbott has several catalysts working in its favor to be the best stock to buy now. It starts with an outstanding Q2 earnings report.
It Goes Deeper Than Just COVID Diagnostics for ABT’s Growing Earnings
Abbott posted Q2 earnings last month (July 20, 2022), and it crushed consensus estimates while marking impressive year-over-year growth.
First, EPS came in at $1.43. That marked a 22% year-over-year improvement and shattered consensus estimates by more than 25%.
Revenue also came in at $11.26 billion and clobbered analyst estimates by almost $1 billion. Revenue also rose 10.1% year-over-year and was led by 36% revenue growth in its diagnostics business. Although the COVID pandemic may or may not be endemic by this point, there is still robust demand for Abbott’s rapid COVID-19 tests. COVID testing sales increased by $1 billion year-over-year, and Abbott raised its full-year COVID test revenue guidance from $4.5 billion to $6.1 billion.
Abbott looks even more potent as one of the best stocks to buy now and a healthcare juggernaut because its organic sales still grew 6% even without COVID testing revenue. It’s a well-balanced company with multiple revenue streams and business operations.
With a relaunch of infant formula expected to boost its H2 revenue, watch out.
Flawless Fundamentals and Dividend Consistency
Abbott’s fundamentals look flawless no matter which way you look at it. Its Piotroski Score, after all, is a perfect 9 out of 9 indicating healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.
Its margins back this score up and are some of the top reasons why it’s one of the best stocks to buy now.
The Company’s cash flows are also consistent and stable based on its 4.5% free cash flow yield and 4.4% shareholder yield. However, Abbott’s dividend track record alone could justify it as one of the best stocks to buy now.
Abbott knows what it’s doing, considering it has a 1.75% dividend yield that’s increased at a 16.20% 3-year CAGR. Most importantly, its dividend has increased for 50 consecutive years and could be on pace to increase for the foreseeable future based on its low payout ratios. With its dividend on track to grow 4.4% at a 12.1% 5-year CAGR, Abbott is the definition of a dividend aristocrat.
Analysts See a 20+% Upside
TipRanks data reveals that 14 Wall Street analysts offered 12-month price targets for ABT in the last 3 months, with a high of $135.00, a low of $95.00, and an average of $122.14. The average price target represents a limited 13.67% upside from August 22, 2022’s $107.45 closing price.
However, some recent analyst activity sees a considerably higher upside than its average price target. Royal Bank of Canada and Morgan Stanley, for instance, on July 21, 2022, gave ABT a $132.00 price target representing a 22.85% upside. On July 13, 2022, Cowen also gave the stock a $130.00 price target, representing a 20.99% upside.
Do what you want with this data, but the numbers don’t lie. ABT is one of the best stocks to buy now, and an increasing amount of analysts see it.
ABT’s year-to-date low and high are $101.24 and $124.36, respectively.