Look for companies with strong financials, including profitability, revenue growth, and a healthy balance sheet.
Consider the company's competitive advantage: Is the company's technology or product unique and difficult for competitors to replicate?
1. for companies with a solid management team: A strong management team can make a difference in a company's success.
2. Consider the market potential: Is the market for the company's product or service large and growing?
3. Pay attention to valuations: Ensure the stock is not overvalued relative to its earnings and growth potential.
Apple Inc. (AAPL)
Apple produces a range of personal computing devices, along with services such as the App Store, Apple Music, iCloud, and licensing businesses. Analyst Angelo Zino says Apple has high customer retention rates, a growing addressable market, and stable free cash flows. In addition, he says Apple has been aggressive with its capital allocation, and the company's management has a track record of successfully adapting and executing. He projects rising average selling prices for Apple devices will improve margins in the coming years. CFRA has a "buy" rating and a $165 price target for AAPL stock, which closed at $143.21 on Dec. 14.
Visa Inc. (V)
Visa is a global credit card leader and operates the world's largest retail electronic payments network. Analyst David Holt says Visa's business model is insulated from cyclical economic downturns, making the stock an excellent defensive investment in an uncertain macroeconomic environment. Holt says the company's diversified exposure to a variety of payment categories will allow Visa to generate sustainable revenue and earnings growth. In addition, he says Visa's size and scale will help the company increase operating leverage and generate high returns on capital for investors. CFRA has a "buy" rating and a $255 price target for V stock, which closed at $213.32 on Dec. 14.
Adobe Inc. (ADBE)
Adobe produces creative content software and other applications used for marketing and e-commerce. Freeman says Adobe has a dominant position in select content creation markets, and it is highly exposed to booming global growth in creative professionals. In addition, Freeman says Adobe has opportunities to monetize its unauthorized users, and its cloud business has been a particularly strong growth source. He says Adobe has impressive operating leverage and the stock is attractively valued relative to its historical average. Freeman projects three-year compound revenue growth of 13%. CFRA has a "buy" rating and a $456 price target for ADBE stock, which closed at $339.92 on Dec. 14.
Nvidia Corp. (NVDA)
Nvidia designs and sells high-end graphics and video processing chips used for personal computers, workstations, and other advanced computing servers and supercomputers. Zino says Nvidia's momentum in data center sales is encouraging, including a strong start for its Hopper-based graphics processing units. In addition, Zino has high expectations for Nvidia's 2023 expansion into the central processing unit market with its Grace products. He is also bullish on Nvidia's automotive segment, which doubled its revenue run rate in the third quarter. CFRA has a "buy" rating and a $200 price target for NVDA stock, which closed at $176.74 on Dec. 14.
Microsoft Corp. (MSFT)
Microsoft is the world's largest software company and is best known for Windows, Office, and Azure cloud services. Even at a nearly $2 trillion market capitalization, analyst John Freeman says Microsoft's successful transition to a cloud-centric business model creates significant long-term growth opportunities. Revenue from cloud-based businesses now makes up roughly two-thirds of Microsoft's total revenue. Freeman projects Microsoft's operating margin will expand to 50% in 2023, up from 42% in 2021. He also forecasts three-year compound annual revenue growth of 15% for Microsoft. CFRA has a "strong-buy" rating and a $330 price target for MSFT stock, which closed at $257.22 on Dec. 14.