These are challenging times for the markets. After several weeks of building up a crisis, Russia finally invaded Ukraine on February 24. This has left investors confused. However, Ukrainian forces have put up stiff resistance against the Russian army’s weak performance, complicating watchers.
Investors have also had to grapple in the background with the anticipation that the US Federal Reserve will tighten monetary policy and raise interest rates. In addition, there is the fear of slow growth this year which has stuttered the stock markets. At the beginning of this month, the NASDAQ is already in correction territory, down 13%.
Therefore, the analysts at Morgan Stanley have picked three stocks they believe will gain in this tough environment. Moreover, they predict more than 60% upside for these stocks.
IronSource Ltd (NYSE: IS)
Apps are the drivers of the digital economy. IronSource helps app developers to build apps and monetize them while the company takes care of promoting them. Some of the functions of its platform include monetizing apps, promoting user growth, publishing apps, analyzing app data, and creative management.
The company has nine offices worldwide, and 87% of the top online games use it. It boasts of 2.3 million active users. In Q4 2021, IronSource reported profits of $158.2 million, a 46% growth for the previous year's same quarter. The earnings per share were 2 cents and were lower than the 3 cents predicted by the market. There was $553 million in profits for the full year, which showed a growth of 66% year over year. The sales forecast for 2022 is $820 million, a 67% growth year over year if achieved.
Despite being a greenhorn in the stock market, Morgan Stanley analyst, Matthew Cost said that he is bullish on the stock. For one, the Q4 report showed that the company is diversifying, and it would reap enormous benefits from that. Also, there were two new telecom customer signups that will propel the profits of the company in 2022. And finally, the company will benefit from the recent changes in the mobile telecoms industry.
Werner Enterprises (NASDAQ: WERN)
Werner Enterprises (NASDAQ: WERN) is a trucking company headquartered in Nebraska and operating in the U.S, Canada, and Mexico. Its shipping services are the full range of one-way trucking, intermodal shipments, expedited transport, dedicated shipments, ‘final mile’ transport, and cross-border trucking.
Supply headwinds of 2021 affected the company’s performance, but it has been able to weather the storm. Its Q4 earnings report showed $764.2 million in profits, and it was $2.73 billion for the full year. Earnings per share for Q4 was $1.13 per share, and it beat forecasts which were 96 cents.
Morgan Stanley analyst Ravi Shanker believes this stock is a buy. He explains that management has shown resilience in overcoming the supply headwinds it faced. It is also clear that management is building a long-term earning machine. He says that the earnings per share will grow over the long term to $6-$7. “This company is a strong compounder over time,” he said.
Allbirds, Inc. (NASDAQ: BIRD)
Allbirds Inc. (NASDAQ: BIRD) is a New Zealand-based company that sells footwear. Notably, its products are sustainable and have lower carbon footprints than classic sneakers. In addition, the company says it's committed to producing environmentally friendly products with all-natural materials. Some of the materials used in production include sugar cane, merino wool, and eucalyptus wood.
The company has 4 million customers, 82% from the United States. It went public last November, raising $303 million in new capital. So it has a solid base for production.
Morgan Stanley analyst, Kimberley Greenberg, covers Allbirds, and she is impressed with the company. “The company’s brand momentum has not slowed down. Therefore, I give it a buy signal because it shows the most momentum for the next few years.”
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