💵 5 stocks to invest in

Good morning Pros. In today’s issue, we’ll discuss the top 5 stocks to invest in for the remainder of the year and look at our Investment of the Week, Nike.

📊 Stock analysis: Five Best Stocks for the Rest of the Year

This year has been great for most of our Pro members. But, it’s time to shuffle your picks a little.

Check our previous 5 picks that have gone up about +30% since publication and check below for the latest suggestions.

Note: Our previous five picks are still great but if you have the capacity to add some more then consider these:

PayPal

Currently trading at $60.61, PayPal is a juggernaut in the fintech realm. It hasn’t had a great run but it looks like the stock is ready to pick up.

It is down -1.38% YTD and has a lot of potential given its 52-week high is $76.54. It appears to be doing a lot right.

With a recent market value topping $70 billion, PayPal recently boasted 426 million active consumer and merchant accounts, $1.53 trillion in total payment volume, and 25 billion payment transactions (as of the end of 2023).

The company includes not just the name PayPal, but also other major brands like Braintree, Paidy, Hyperwallet, and Zettle.

In 2023, PayPal recorded revenue of $29.8 billion. That was up 8% year over year. And during the first three months of 2024, sales increased by 9%. Perhaps more importantly, the company's revenue base is significantly higher than it was prior to the pandemic.

This indicates it is preparing to roar, which makes it a good pick for people looking to invest. The stock, however, may not offer good returns until the year end.

In the fourth quarter, the company saw a small dip in active accounts, down by 2%. While that's not ideal, there's good news too: the number of payment transactions increased by 13% compared to last year, and transactions per active account grew by 14%. Despite the slight decline in active accounts, which indicates some current challenges for PayPal, they anticipate this year to be a period of transition. There’s reason to be optimistic, though, with a new CEO on board from Intuit bringing fresh leadership and ideas.

PayPal's 2024 may not have been phenomenal, which makes this an attractive entry point for people interested in long-term investments as the stock is quite cheap with a (P/S) ratio of 2.45, well below its five-year average of 4.91. In fact, its forward-looking, (P/E) ratio is also very impressive at 12.9, below the five-year average of 22.8.

The company has been rewarding in a lot of ways. Don’t expect dividends but share buyback programs are common.

All in all, PayPal has a great future with an average price target of $74.55, representing a 24.21% increase from the current price of $60.02.

Vanguard S&P 500 ETF

This might come as a surprise to some since this isn’t a stock, but this ETF is traded like one and can prove to be highly rewarding.

This index ETF follows the S&P 500, which includes 500 of America’s largest and most successful companies. Among these are the "Magnificent Seven" stocks, many dividend-paying companies, and most of the major names you’d likely want to own.

Investing in this ETF is like betting on America's future. It also saves you the hassle and worry of picking the best individual stocks yourself, though you can still do that if you prefer.

The ETF has a tiny annual fee of just 0.03%, and over the past decade, it has delivered an average annual return of 13%. It also currently offers a dividend yield of 1.4%.

Any of these investments can help build your wealth over time. While they might not skyrocket in value this year or next, they are likely to perform well over the long run.

Meta Platforms

Finally, the big one is making an entry. We had to pick between Microsoft, Nvidia, and Meta Platforms, and we went for Meta as its market value recently reached an astonishing $1 trillion, and it has a lot of potential. But, those interested can consider other Magnificent 7 names too.

The company encompasses not only Facebook but some other names you might know, such as Instagram, Messenger, and WhatsApp.

The stock has had a great 2024 so far and is already up +42.88%. It is trading at $394, very close to its 52-week high of $531.49. Still, we think it’s a buy.

Meta's main attraction is its enormous reach. Recently, it announced over 3 billion "daily active people" using its family of apps, a 7% increase from the previous year. In the first quarter of 2024, ad impressions across its apps grew by 20% year over year, and the average price per ad increased by 6%. Overall, revenue for the quarter jumped 27%, with net income soaring by an impressive 117%.

If all that isn't exciting enough, the stock is also reasonably valued, with a recent forward P/E of 22, near its five-year average of 21, though its P/S ratio of 8.2 is above the five-year average of 6.5.

However, there are some concerns too. Some investors are worried about the company's plan to spend heavily developing artificial intelligence (AI) technology and about growth possibly slowing.

But, there isn’t much to worry about since bulls love it too. Moreover, its heavy investments in research may well pay off, driving even more growth.

Overall, it seems to be a safe investment but there may be some major ups and downs. Overall, investors are bullish.

The average price target for Meta Platforms is $525.32. The highest analyst price target is $593.00, the lowest forecast is $360.00. The average price target represents a 6.15% increase from the current price of $494.9.

Pfizer

We picked Eli Lily as the best stock for the first half of the year and now that it has gone up 49.25% YTD, we believe it may be time to consider some other pharma stocks. But, remember, Eli Lily still has more to offer.

Currently trading at $27.74, it has a 52-week high of $38.99 and a good chance to make it big. But, this is not the only reason to add this to your portfolio. The stock is rewarding in many ways, including a fat dividend yield of 5.8%. (That's no accident, because a falling stock price will boost a dividend yield, and vice versa, and Pfizer's stock was recently down 29% from its 52-week high.)

Pfizer's first-quarter report featured revenue of $14.9 billion, down some 20% from the year before. However, this drop was mainly because of declining sales of its COVID-19 vaccine and Paxlovid treatment. If you exclude those sales, revenue actually increased by 11%.

CEO Albert Bourla credited "revenue from several of our recent commercial launches and acquired products, as well as robust year-over-year growth for several key in-line brands, namely the Vyndaqel family, Eliquis, and the Prevnar family. In addition, we had strong oncology revenue contributions from Ibrance, Xtandi, Padcev and Adcetris."

Pfizer's recent price-to-sales ratio of 2.9 is below its five-year average of 3.4, suggesting an appealingly valued stock. Indeed, some see it as "one of the biggest bargains" in the stock market.

But, you have to be careful because pharma is riskier than others. One failed trial could cause a stock to fall. Nonetheless, investors are positive.

The average price target for Pfizer is $33.50. The highest analyst price target is $53.00, the lowest forecast is $27.00. The average price target represents a 20.76% increase from the current price of $27.74.

Fiverr

Fiverr isn’t a name one thinks of when it comes to investing, but this company has proven to be a major success and could double in the next 12 months.

If you look at numbers, you might not find it to be a very impressive name. After all, revenue increased by a relatively modest 7.1% throughout 2023. However, once you factor in other considerations it starts to become more evident why Fiverr could rise as high as $50, more than double its current price. 

Why? Because the company has become profitable this year. It reported a net loss of $71.48 million in 2022. In 2023, that loss became a net income of $3.68 million and we expect the numbers to only get better this year.

Plus, it is considered a contender in the AI race. The company may not be creating AI tools but its AI category is fast growing, helping it attract more service providers and clients.

"Overall, we estimate AI created a net positive impact of 4% to our business in 2023 as we see a category mix shift from simple services such as translation and voice-over to more complex services such as mobile app development, e-commerce management, or financial consulting," CEO Micha Kaufman said in February's fourth-quarter earnings call. "In 2023, complex services represented nearly one-third of our market base, a significant step-up from 2022."

Combine recent profitability with a strong position as one of the leading names in the freelance work platform space and its potential becomes clearer. It’s a sector that is expected to continue to grow at rates well into the double digits into the early 2030s. All in all, that makes Fiverr International one of the least risky stocks by which to chase.

The average price target for the stock is $33.50 with a high forecast of $44.00 and a low forecast of $26.00. The average price target represents a 52.41% change from the last price of $21.98.

📰 Investment of the Week: Nike

Our Investment of the Week is Nike, set to report earnings on June 27th.

Expected results: Analysts expect Nike's top- and bottom-line results to increase from the same time last year, with the company projected to post net income of $1.28 billion, or 84 cents per share, on $12.9 billion in revenue, according to estimates compiled by Visible Alpha.

In the fourth quarter a year ago, Nike reported profit of $1.03 billion, or 66 cents per share, on $12.83 billion in revenue.

Predictions: Oppenheimer analyst Brian Nagel sees a turnaround on the horizon for Nike. He upgraded shares to Outperform from Perform, and lifted his price target to $120 from $110.

Wedbush Securities analysts wrote in a Friday note that Nike's fourth-quarter earnings may not have a substantial impact on its stock price because they don't expect results significantly off the consensus estimates, plus the company already gave some guidance for fiscal 2025 in its third-quarter earnings call.

Bank of America Securities analysts expressed a similar sentiment in a note Tuesday, writing that guidance for fiscal 2025 "will be the most important topic on Nike's earnings call, with 4Q results only an indicator of sales and margin trajectories entering the year."

How to profit? It can help you make money in both directions as a bad report could cause it to lose about 4%, and a good one could help it gain about 3%.

Historical data: NKE historically moved higher heading into earnings more often than not. On average, the stock dropped -0.8% for the 2 week period before earnings (based on the last 12 quarters of data).

NKE shares have moved lower in the immediate aftermath of earnings 7 out of 12 previous reports. On average the stock moved down -0.8% in the first day of trading after the company reported earnings.

Based on the previous 12 earnings releases, NKE is more likely to trade lower 1 day after earnings for an average loss of 0.0%.

Nike has an Earnings ESP of +1.30% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. But, this week, judge it based on the upcoming report.

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.