RBC Capital’s senior tech analyst Mark Mahaney – top 15 analyst on the Street – just offered some key insights into betting on tech stocks. On Tuesday, Mahaney dished advice at Fortune’s Brainstorm Tech conference in a presentation called, "10 Lessons, 10 Minutes: The Perils of Stock Picking in Tech."
Investors, when is the time to pick a tech stock? Mahaney says: “Look for the lucky lexicon.” You know the ones -- those pop culture names dominating everyday conversation. That’s when you know “it’s a really good time to invest in the stock.”
Using TipRanks’ Top 25 Experts tool, we can see Mahaney has earned a high ranking of #11 out of over 4,800 analysts on Wall Street. TipRanks compiles market data to track analyst accountability based on how financial calls perform. To put it bluntly, veteran market watcher Mahaney’s track record is on fire.
We have cherry-picked three internet stocks the five-star analyst says are gains-makers to watch. Let’s dive in.
Netflix (NFLX) is the video streaming king dominating Wall Street talk this week, just maybe not in the way bulls had anticipated. This internet leader surprised investors with a rocky second quarter earnings show, specifically on key metric new subscriber additions. It comes as a particular plot twist, considering Netflix hasn’t fallen short of quarterly subscriber forecasts in five quarters. That run has come to an end, and bearish frenzy got stirred up in the process.
That said, since the print, the ‘Moderate Buy’ stock has racked up 14 buy ratings in two days, a total bullish camp of 22 analysts in the last 3 months firmly in Netflix’s corner. Consensus analyst expectations call for 6% in return potential within the next 12-months. Don’t give up on this tech giant just yet. See NFLX Price Target and Analyst Ratings Detail.
Even before the earnings call, Mahaney saw a company that “still” unleashed “a significant lead over YouTube, Amazon & Hulu, all of which also dropped vs. March” in terms of his latest poll. The poll indicated 55% - over half – of respondents watched Netflix during the second quarter. Though this marks a fall compared to the 60% in March, Mahaney highlighted a rise against the 53% seen in May 2017.
Moreover, satisfaction trends continue to shine “consistently positive.” After all, Mahaney ran encouraging numbers here: “68% of Netflix subs were ‘Extremely’ or ‘Very Satisfied’ - same as last four quarters.” Internationally, France and Germany surveys show that “Netflix is taking over Europe.” Mahaney sees room for Netflix to fly 20% more to $450 within the next three years and says shares could spiral up to $750.
Bottom line: Netflix’s “long-term fundamental trends remain intact.” Mahaney rates NFLX an Outperform. Consider that the analyst reaps 55.5% in average profits when betting bullish on Netflix. In other words, it does not seem Mahaney’s upbeat sentiment on the stock is bound to change any time soon. (See Mark Mahaney’s other stock recommendations)
Online travel giant Booking Holdings Inc (BKNG) CEO Glenn Fogel wanted to rebrand the company formerly known as Priceline Group. Fogel’s intent: make it clear that flagship “Booking.com is the biggest in the group.”
By February, the trip giant changed its name, putting BKNG’s hotel-and-home-rental unit center-stage. The priority transition is fitting, considering the unit stands as Booking Holding’s largest. Booking Holdings is an internet favorite on Wall Street, as the ‘Strong Buy’ stock has received 11 buy ratings in 3 months. Consensus believes the stock could reach $2,288.08 (13% upside potential). See BKNG’s Price Target and Analyst Ratings Detail.
While Mahaney dialed his price target down to $2,500 following BKNG’s first quarter earnings show in May, this still suggests nearly 24% in return potential for the stock. Mahaney holds tight to his Outperform rating on Booking Holdings, as he explains: “marketing has clearly been one of Booking's core competencies over the last dozen years."
Mahaney’s call: look for growth and profitability to make a comeback in the back half of this year and in 2019. Additionally, the company is shifting focus to the “local attractions market,” one that ought to be “a very robust addition to its platform.”
Audiophile favorite Spotify (SPOT) has gained popularity as a music streaming giant over the last ten years. It wasn’t until early April 2018 that Spotify had an IPO. Mahaney surveyed the internet giant with enthusiasm: he initiated ahead of the IPO with an Outperform rating on Spotify and a $220 price target. Keep in mind, “scale matters,” says Mahaney.
The ‘Moderate Buy’ stock has received 14 buy ratings in the last 3 months. Mahaney sees 18% in return potential still to go for Spotify within the next 12 months and “70%+ upside vs. recent private transaction price of $127.50.” Personalization is an asset to Spotify; and via personalization, the company can grow an already loud fan base even further.
Look for the company to continue to outpace Apple with sales that could reach $8.32 billion by next year. Bet on this “global music streaming leader,” if you want to play the Wall Street game as well as Mahaney. See SPOT’s Price Target and Analyst Ratings Detail.
Our database spans more than 5,000 stocks. Discover your own top stock picks that showcase strong upside potential- in any sector you choose. Go to the Nasdaq Smart Portfolio stock screener now.
This article was written by Julie Lamb