The stock market is finding support right now from two directions, a perception that the Fed is turning slightly dovish and will be a little less aggressive on its rate hikes going forward, and the Q2 earnings, which are coming in better than analysts had feared.
The S&P 500 might still be down 10% for the year, but the index has gained 17% since its mid-June low, and with the macro environment appearing friendlier, investors will be hoping the change of sentiment won’t be a temporary one.
Against this backdrop, Kash Rangan, a 5-star analyst from Goldman Sachs, has picked out two stocks that show room for plenty of gains in the year ahead – in his view, on the order of 40% or better. In fact, the Goldman view is no outlier. Running the tickers through TipRanks’ database, we found out that each boasts a “Strong Buy” consensus rating from the broader analyst community. Let’s take a closer look.
We’ll start in the world of cloud infrastructure. Dynatrace is a leader in IT observability – that is the ability to assess a system’s present state according to the data it generates, such as metrics, logs, and traces. Observability is considered an essential component in managing a successful company these days and the cloud monitoring market is expected to grow significantly over the next few years. This is no surprise, as enterprises are migrating at ever growing numbers to the more efficient environment of the cloud, making infrastructure software easier to sell. The company boasts a list of big clients, which includes, Kroger, SAP, Carnival, and Experian, amongst many others.
That there’s strong demand for Dynatrace’s cloud and application monitoring platform was evident in its latest quarterly report – for fiscal Q1 2023 (June quarter). Specifically, revenue increased by 27.4% year-over-year to $267.27 million, beating Wall Street’s expectation of $261.83 million. Non-GAAP EPS of $0.18 also beat the $0.17 consensus estimate.
Goldman’s Kash Rangan liked the look of the print, writing: “Results largely validate our thesis…