Jim Cramer’s daily rapid fire looks at stocks in the news outside the CNBC Investing Club portfolio. Corning : Shares of the specialty materials company popped more than 10.5% on Monday after pre-announcing better-than-expected earnings. Management is now forecasting higher revenue and earnings-per-share on the high end of previous guidance for the second quarter. The company is set to report on July 30. Shares of Corning, which makes glass for Apple devices, reached their highest levels since February 2022. Tesla : Shares of the electric vehicle leader made a huge, 27% increase last week after the company delivered better-than-expected second-quarter production and deliveries. The stock jumped another nearly 3% on Monday. Cramer called the rally a short squeeze — meaning investors betting Tesla stock would go down were forced to cover as it ripped higher. JPMorgan : The bank caught a rare downgrade, with Wolfe Research taking its rating to peer perform from outperform (hold from buy) on valuation and exposure to lower net interest income given the threat of lower Federal Reserve interest rates approaching. Cramer said he’s concerned heading into JPMorgan’s second-quarter earnings Friday since there was a big sell-off following its Q1 release in April when the bank guided flat NII for 2024. “I don’t want the stock coming in hot,” he added. Domino’s Pizza : The pizza delivery chain was upgraded to an outperform rating from a neutral (buy from hold) at Baird. The analysts also raised their price target to $580 per share from $530. Baird sees the recent 7.4% pullback in Domino’s stock over the last eight sessions as an opportunity. They cited strong fundamentals, product pipeline, and management. Cramer thought this was a fair call since Domino’s CEO Russell Weiner is “crushing it.” ServiceNow : Shares of the enterprise software company took an over 4% dive on Monday after Guggenheim downgraded the stock to sell from neutral. The analysts said the company will get a boost from its generative artificial intelligence business in the second half of this year but won’t see that momentum into 2025. Cramer said the call was contrary to CEO Bill McDermott’s stance that generative AI offerings have been resonating with customers.
The Spotify logo on the New York Stock Exchange, April 3, 2018.
Lucas Jackson | Reuters
With markets facing pressure at least in the short term, investors should try to build a portfolio of stocks that can weather the storm and offer long-term growth potential.
Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
Domino’s Pizza (DPZ) reported mixed results for the second quarter, with the company blaming a decline in its market-basket pricing to stores and lower order volumes for the shortfall in its revenue compared to analysts’ expectations.
Nonetheless, BTIG analyst Peter Saleh reiterated a buy rating on Domino’s with a price target of $465 and said that the stock remains his top pick. (See Domino’s Financial Statements on TipRanks)
In particular, Saleh expects the company’s Uber Eats partnership, changes in the rewards program, and the launch of its pepperoni Stuffed Cheesy Bread to boost the top line in the fourth quarter and into 2024.
The analyst noted that the pizza chain’s entire menu will become available to Uber Eats customers at regular menu prices, without any deals or coupons. Interestingly, the company is targeting the higher-income customers on Uber Eats and reserving the discounts and other benefits for its own ordering channels.
“We expect the improvement in delivery sales, coupled with declining commodities, to translate to healthier unit economics and accelerated domestic development next year and beyond,” said Saleh.
Saleh ranks No. 331 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.9%.
Next up is Meta Platforms (META). The social media platform recently delivered upbeat second-quarter results and issued better-than-anticipated guidance for the third quarter, signaling improved conditions in the digital ad market.
Following the print, Monness analyst Brian White raised his price target for Meta to $370 from $275 and maintained a buy rating, saying that the company’s second-quarter results reflected strong execution and its massive cost-improvement measures.
The analyst noted that management’s commentary during the earnings call reflected positive vibes, backed by an improving digital ad market and a compelling product roadmap. He highlighted the momentum in Meta’s short-video feature Reels, which is growing at a more than $10 billion annual revenue run rate across apps. He also mentioned the better-than-expected traction in Threads and the company’s significant investments in artificial intelligence.
White cautioned investors about regulatory risks and internal headwinds. However, he said that in the long run, “Meta will benefit from the digital ad trend, innovate with AI, and participate in the build-out of the metaverse.”
White holds the 27th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 67% of the time, with each rating delivering an average return of 20.7%. (See Meta Platforms Stock Chart on TipRanks)
White is also bullish on audio streaming company Spotify (SPOT). While Spotify’s second-quarter revenue and Q3 2023 guidance missed analysts’ expectations, the analyst contended that results were “respectable” with meaningful year-over-year growth of 27% in monthly active users (MAU) to 551 million.
Commenting on Spotify’s decision to increase the price of its subscription offerings, White noted that the price hikes will impact most subscribers beginning September, thus having a small impact on the third quarter but contributing meaningfully to the fourth-quarter performance.
While the analyst acknowledges an intense competitive backdrop, he said that “Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure.”
White raised his 2024 estimates and reiterated a buy rating while increasing the price target for SPOT stock to $175 from $160. (See Spotify Blogger Opinions & Sentiment on TipRanks)
Another tech giant in the week’s list is Microsoft (MSFT), which has been making headlines this year due to its generative AI advancements. The company’s fiscal fourth-quarter results topped Wall Street’s estimates. That said, the revenue outlook for the first quarter of fiscal 2024 fell short of expectations.
Nonetheless, Goldman Sachs analyst Kash Rangan, who ranks 459th among more than 8,500 analysts tracked on TipRanks, remains bullish on MSFT stock. (See Microsoft Hedge Fund Trading Activity on TipRanks)
The analyst thinks that in the short term, there might be concerns about when the company’s ramped-up capital investments will pay off. However, he observed that historically, whenever Microsoft increased its capital expenditure in the cloud market, Azure growth rate shot up meaningfully and margins rebounded, driving the stock price higher.
With a strong presence across all layers of the cloud stack, Rangan said that Microsoft is well positioned to capture opportunities in several long-term secular trends, including public cloud and SaaS adoption, digital transformation, generative AI and machine learning, analytics and DevOps.
In line with his bullish stance, Rangan reiterated a buy rating with a price target of $400. He has a success rate of 59% and each of his ratings has returned 10% on average.
We now drive toward legacy automaker General Motors (GM), which impressed investors with robust growth in its second-quarter revenue and earnings. Additionally, the company raised its full-year outlook for the second time this year.
Recently, Tigress Financial Partners analyst Ivan Feinseth reaffirmed a buy rating on the stock with a price target of $86, noting the company’s strong execution and the ramp-up of new electric vehicle launches and production.
The analyst highlighted that the company continues to witness robust demand for its full-size SUVs and pickups, which is driving its revenue and cash flow higher and funding the transition and expansion of its EV production.
Feinseth called GM’s Ultium platform and supply chain for EV battery production its significant competitive advantage. The analyst is also positive about the company’s recent initiatives to expand its charging network.
“In addition to the ramp-up of EV production, GM’s ramp-up of high-value software and services as it plans to double company revenue to $275-315 billion by 2030 should drive significant increases in Return on Capital (ROC) and Economic Profit,” the analyst said.
Feinseth holds the 215th position among more than 8,500 analysts on TipRanks. His ratings have been successful 61% of the time, with each rating delivering an average return of 12.9%. (See General Motors Insider Trading Activity on TipRanks)
In this photo illustration, a Burger King Whopper hamburger is displayed on April 05, 2022 in San Anselmo, California.
Justin Sullivan | Getty Images
Seven months after Burger King unveiled a strategy to revive its U.S. business, the chain is selling more Whoppers than ever before.
Burger King U.S. President Tom Curtis told CNBC that preliminary improvements to restaurant operations and new marketing campaigns are already boosting sales and customer satisfaction, although it’s still early innings.
Parent company Restaurant Brands International is scheduled to report its first-quarter earnings and sales results for its divisions, including Burger King U.S., before the bell on May 2. Last quarter, Burger King’s U.S. same-store sales rose 5% on the back of implementing early steps in the turnaround plan.
The $400 million plan to rejuvenate Burger King’s domestic sales was developed in partnership with franchisees and focuses on revamping its restaurants and investing in advertising.
“What’s happened in the last six months is that sense of ‘We’re in this together’ that we have with our franchisees. I think it’s unique in the business, and I think that differs from what you see from some of the competition as well,” Curtis said.
Burger rival McDonald’s has had much-publicized spats with its operators over the years. Recently, tension has been boiling over changes to its franchise policies.
Before Burger King announced its official turnaround strategy, the company spent roughly a year simplifying operations with a goal to improve efficiency and order accuracy, Curtis said. For example, Burger King reformulated and renamed its chicken sandwich. The now-retired Ch’King sandwich involved 21 steps to prepare the final menu item. The Royal Crispy Chicken sandwich takes just five.
After announcing its “Reclaim the Flame” strategy at a franchisee convention in September, Burger King turned its attention to an in-store training program for all of its restaurants that instructed workers to greet customers, make Whoppers properly and give out Burger King’s iconic crowns. Curtis said it was “the most important thing that we did coming out of the convention.”
Burger King also held roundtables for general managers in 45 cities. Those roundtables included training general managers on how to execute a five-week-long deep clean of their restaurants.
“I think those things are foundationally important, and they resulted in a 20% uplift in guest satisfaction,” Curtis said.
Additionally, Burger King launched its “You Rule” marketing campaign in the fall. The chain’s mascot, the Burger King, is nowhere to be seen in the ads. Instead, customers are royalty.
And despite Curtis’ own initial misgivings about the “Whopper Whopper” jingle used in the campaign (he was underwhelmed by the lyrics and asked the marketing team to rethink it), the song went viral and spawned memes across Twitter and TikTok. The company officially released the song in response to the popularity, and it has nearly 3.3 million streams on Spotify as of Friday.
“We’re selling more Whoppers than we ever have. It’s had a really positive impact that we didn’t pay for or foresee on the business … it’s really exceeded my expectations,” Curtis said, adding that he’s excited for Restaurant Brands to release its earnings.
Since the company announced its “Reclaim the Flame” strategy, former Domino’s Pizza CEO Patrick Doyle has joined Restaurant Brands as its executive chair. Doyle oversaw the pizza chain’s transformation into a digital powerhouse in the restaurant industry. Curtis, who started as a Domino’s franchisee, worked alongside Doyle during his long career at Domino’s as an operations executive before joining Burger King in 2021.
One of Doyle’s priorities for Burger King has been improving franchisee profitability. Two Burger King franchisees have filed for bankruptcy so far in 2023. The first franchisee to file for bankruptcy, Toms King Holdings, sold most of its locations at auction for $33 million earlier in April.
“I don’t want to say that it’s welcome, because it’s not, but I do think that if managed correctly, the outcome can be better than where you were before,” Curtis said.
While early signs point to the turnaround taking hold, Curtis is deferring the victory lap for now, emphasizing that “Reclaim the Flame” is meant to be a multiyear growth strategy.
For example, of the $50 million that Restaurant Brands earmarked to improve restaurants’ appearances in conjunction with franchisees’ own investment, Burger King spent just $15 million in 2022.
“We’re not even halfway, and these things just take time,” Curtis said.
