The POWR Ratings calculations highlight dozens of stocks that have moved up to either a “Strong Buy” or “Buy” rating. Sort through the list of the upgrades on your own, and you will find stocks spanning all sorts of different industries that are now worthy of your investing dollars.
If you are not invested in stocks recently upgraded to either an “A” or “B” grade, it is time to consider adding them to your holdings. If you are already invested in some of these stocks, the vote of confidence from the POWR Ratings justifies your position.
Below, we provide a look at four of the latest POWR Ratings upgrades: Netflix (NFLX), McDonald’s Corporation (MCD), FormFactor (FORM), and Super Micro Computer (SMCI).
As a streaming industry pioneer, NFLX is clearly in a good position heading into 2021, when even more people will cut the cord on cable in favor of affordable streaming services. NFLX executives deserve credit for shifting away from mailing DVDs to homes across the United States to streaming entertainment content directly to customers’ homes. NFLX has even advanced to the point that it finances its own programming. Though there are certainly plenty of competitors in the streaming space, ranging from Hulu to Apple TV and Disney Plus, NFLX is still a favorite amongst the streaming crowd.
NFLX is currently trading at $522, a mere $53 away from its 52-week high. The stock has a forward P/E ratio of 59.50, a figure that seems fairly high on the surface yet is quite reasonable when you consider the fact that NFLX is a tech stock with considerable growth prospects. Analysts are high on NFLX, setting an average price target of $579.61 for the stock, indicating it has more than 11% upside. Of the 26 analysts who have studied NFLX, 18 recommend buying, five recommend holding, and only three advise selling.
The POWR Ratings show NFLX has “A” grades in the Industry Rank, Trade Grade, and Buy & Hold Grade components. NFLX is ranked third out of 62 stocks in the Internet industry. NFLX has a one-year price return of 60.22% along with a three-year price return of 148.66%. Though NFLX is burning through cash in the quest to fund its programming and reduce its dependence on outside studios, it is not cause for concern. After all, NFLX has around 200 million subscribers and could easily hike its prices by a couple of bucks without losing a significant percentage of its customer base. As long as NFLX continues to add to its library, its outlook will likely remain bullish.
McDonald’s Corporation (MCD)
MCD has been going strong since 1948. Though the company’s menu has not evolved as quickly as those of competitors in recent years, MCD still serves up tasty fare at affordable prices in surprisingly little time. All in all, MCD operates nearly 40,000 restaurants in more than 100 countries. The vast majority of these restaurants are independently owned and operated. However, a considerable portion of franchisees’ revenue is returned to the corporate parent.
MCD recently announced it would soon add McPlant, meat-free offerings to its menu in an attempt to capture more of the ever-growing vegan market. Though MCD’s vegan offerings lag behind those of the competition and the “McPlant” moniker sounds pretty lame, it might work, especially if MCD vegan offerings undercut the competition when it comes to price. Add in the fact that MCD restaurants should return to business as normal in the months ahead, and investors have even more reason to be bullish.
If you are still hesitant to add MCD to your portfolio, consider its fantastic POWR Ratings. MCD has “A” grades in the Buy & Hold, Industry Rank, and Trade Grade components. MCD is ranked first out of 50 stocks in the Restaurants industry. In terms of returns, MCD had a 2020 return of 11.30% and a three-year return of 29.75%.
FORM designs, makes, and sells wafer probe cards used in advanced semiconductors. FORM has a relatively low forward P/E ratio of 28. The analysts are bullish on FORM, setting an average price target of $45 for the stock, indicating a potential 5% upside.
The FORM POWR Ratings are nearly flawless, highlighted by an “A” grade in the Buy & Hold and Trade Grade components. FORM is ranked 29th out of 88 stocks in the Semiconductor & Wireless Chip industry. FORM had an impressive 2020, with a return of 65.65%. As long as the demand for semiconductors remains strong, FORM should continue to do well.
Super Micro Computer (SMCI)
SMCI develops, produces, and sells performance server solutions optimized for applications. Though SMCI dipped down to $25 in November, the stock has moved right back to the $30 mark. SMCI has a forward P/E ratio of 13.95, indicating it might be underpriced at its current trading level of $31.
SMCI’s impressive earnings combined with optimistic guidance and the announcement of a share buyback program bode well for the company’s future. Analysts are believers in SMCI, establishing an average price target of $41 for the stock, indicating a potential 30% upside for the stock.
SMCI has an “A” grade in the Buy & Hold Grade and Trade Grade POWR Rating components, along with a “B” grade in the Industry Rank and Peer Grade components. In terms of returns, SMCI had a 2020 return of 31.81% and a 2019 return of 74.06%.
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NFLX shares were trading at $522.78 per share on Tuesday morning, down $0.08 (-0.02%). Year-to-date, NFLX has declined -3.32%, versus a -1.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…
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