What are you looking for in an investment? How about companies that are trying to disrupt the market, potentially generating substantial rewards if they get it right? Here we take a closer look at three top-rated tech stocks primed to outperform in the coming months. By using TipRanks’ data we can also dive in to the latest recommendations from best-performing analysts to gain their investing insights into these top 3 stock picks.
In essence, AutoDesk makes products for people who make things. Its groundbreaking technology enables everyone from architects to engineers to create digital prototypes. And by optimizing plans from early in the process customers can save both time and money. Indeed, ADSK already operates as an industry-standard, must-have technology in nearly every industry it operates in.
However change is afoot. For the last two years, the company has been steadily shifting its business model, moving from the sale and maintenance of software packages and installations to a SaaS mode, selling subscriptions to cloud-based products. The move has been successful; subscription revenues now count for $2.2 billion, 83% of the $2.57 billion annual total. In terms of customer numbers, Autodesk has 4 million subscribers of whom 3.2 million are subscription-based. At current growth rates, AutoDesk could double its subscription rate within three years.
What’s more, the company is at the cusp of a major opportunity in the construction industry. According to estimates, the rapidly-growing construction software market could reach $10 billion market by 2020. So it’s no surprise that Autodesk has worked hard to boost its construction offering recently.
ADSK snapped up construction software platform BuildingConnected for $275 million back in December, supplementing its previous $875 million purchase for PlanGrid the previous month. As CEO Andrew Anagnost explained: “We are investing in digitizing and automating construction workflows. Autodesk’s goal is to connect construction processes across design, build and operations.”
Gladly, the deals received the thumbs up from the Street. Most notably, five-star Oppenheimer analyst Koji Ikeda (Track Record & Ratings) writes: “We believe the business is well positioned in a large but lightly penetrated construction industry that is yearning for next-generation technologies, like Autodesk's, to help digitize the industry, which should act as a pillar for Autodesk's next leg of growth beyond FY2020.” He has a buy rating on the stock, and recently ramped up the price target from $160 to $190 (24% upside potential).
Apple has already demonstrated that its willing to shake things up this year with its much-hyped press event on March 25. The company’s “It’s Show Time” special event ushered in a new wave of monetization opportunities. It also provided users with even more reasons to inhabit Planet Apple in the coming years- all while reducing Apple’s much-slated iPhone dependency.
The only physical product announced at the event was a titanium credit card, but there was still plenty for investors to get excited about. Alongside the new reward card, Apple revealed new media subscription services including the $9.99/ month Apple News Plus (magazine), Apple Arcade (mobile game), and Apple TV Plus (TV and movie streaming). In terms of timelines, Apple News Plus is immediately available while other services will launch later in 2019.
“Apple is offering more user-friendly subscription services to its installed base (largely in North America). We see clear benefits and differentiating features that may appeal to niche audiences” commented five-star Oppenheimer analyst Andrew Uerkwitz (Track Record & Ratings). However, as Uerkwitz points out, there is still much we need to know. Most critically, the price of Apple TV remains one of the biggest unanswered questions- and ultimately could make or break the product in the face of so many rival streaming services.
Not that this has dimmed the enthusiasm of Monness analyst Brian White (Track Record & Ratings). He writes in his post-event report of the new TV offering- dubbed the Netflix killer- “we believe this new service lays the foundation for a significant revenue stream for Apple over the next decade and provides the company with a blank canvas to experiment with original content.”
CarGurus’ mission is to be the world’s most trusted and transparent auto marketplace. It currently offers consumers the largest used cars inventory (5.4MM units), with an active network of over 40,000 US dealers. So far the company is excelling thanks to its savvy consumer focus. Just one example, CARG’s monthly audience size are over 2x competing marketplaces, with traffic continuing to see healthy growth.
“CARG’s differentiated, consumer-centric marketplace is enabling it to quickly grow site traffic while rival platforms seem constrained in their ability to respond/follow” cheers five-star SunTrust Robinson analyst Naved Khan (Track Record & Ratings). The analyst has a $52 price target- suggesting shares have 38% upside potential to run in the coming months.
And recent investor meetings have only served to drive more positive attention from the Street. On March 26, DA Davidson analyst Tom White "enthusiastically" affirmed his Buy rating and $54 price target. From current levels that indicates upside potential of over 40%. Management is confident of having "the wind at its back in virtually all elements of its business in 2018" and fully expects 2019 momentum to continue.
White believes CarGurus can generate significant audience/connections growth thanks to a "growing contribution from upselling" newer products. Just a handful of these innovations include SEM, Dealer Display, Delivery, enhanced listings, and Audience Re-targeting. At the same time, the analyst anticipates that CarGurus delivery offerings for dealers should grow increasing popular with paying customers.
This review wouldn’t be complete without mentioning a recent upgrade from Goldman Sachs. Analyst Daniel Powell upgraded CarGurus to buy after assuming coverage from Heath Terry. Citing traffic growth and marketing efficiency, Powell also boosted the firm’s price target from $43 to $48.
Author: Harriet Lefton