Finding the right stock signals is a key to success in the market investment game – but knowing what signals to trust takes some learning. Finding the right signaler can shorten that learning curve – but how do you know who to trust?
Follow the data. Every professional stock analyst on Wall Street holds a published record of stock reviews, predictions, and actual results and returns – and the more accurate those are, the better the analyst’s reputation.
Right now, Quinn Bolton, of Needham, holds the number 3 spot out of 7,700+ analysts. His score rests on the 76% accuracy rate of his stock reviews, and the ~50% return brought in by the stocks he’s recommended this past year.
The best way to understand Bolton’s take on the market is to look at some of his recent stock reviews. We’ve done just that, using the TipRanks database to pull up details on three stocks that have gotten recent ‘Buy’ ratings from the top analyst – and that boast Strong Buy consensus ratings from the rest of the Street. Let’s take a closer look.
Marvell Technology Group (MRVL)
The first stock under Bolton’s radar is Marvell, a $65 billion semiconductor chip company. Marvell produces a range of chip products, with a focus on data infrastructure solutions for computing, networking, security, and storage. In addition to data centers, Marvell’s chips have found use in the automotive and wireless industries, and the company saw $3 billion in annual revenue for fiscal year 2021.
For fiscal 2022, the company has already beaten that revenue total. In the fiscal 3Q22 report, released this past December, Marvell reported $1.21 billion at the top line, up 61% year-over-year. The company also saw non-GAAP income of 43 cents per share, and cash flow from operations of $265 million. The data center market segment led the way for Marvell’s growth, expanding 109% yoy and making up 41% of total revenue.
Quinn Bolton describes Marvell has one of his Top Picks for 2022. He sees the chip industry generally on the verge of a slowdown, but explains why Marvell should continue to thrive.
“Following three years of semiconductor industry expansion, we believe a deceleration in industry growth may broadly weigh on valuation multiples across the sector. With Marvell’s growth driven by new products and market gains and with the vast majority of the company’s revenue sole-sourced from the infrastructure markets, we believe Marvell’s revenue should be better insulated than its peers from any period of semiconductor or cloud inventory digestion over the next couple of years. Coupled with its expected high growth across diverse segments, we believe investors will naturally gravitate to MRVL as it will stand out,” Bolton wrote.
Overall, Bolton believes this is a stock worth holding on to. The analyst rates MRVL shares a Buy, and his $115 price target suggests a solid upside potential of ~66%. (To watch Bolton’s track record, click here)
This large-cap chip maker has attracted plenty of attention from the Street – it has 24 recent reviews, including 22 Buys against just 2 Holds, and a Strong Buy consensus rating. The shares are priced at $69.79, and the $102.67 average price target indicates room for ~48% one-year upside. (See MRVL stock forecast on TipRanks)
MACOM Technology Solutions (MTSI)
The second Bolton pick we’re looking at is MACOM Technology, another player in the semiconductor chip industry. The company is the largest private employer in its hometown of Lowell, Massachusetts, and is a major contractor with the Federal Government. MACOM produces a wide range of microwave and millimeter wave band semiconductor components and devices for radio communications systems.
In its recent first quarter report for fiscal year 2022, MACOM showed a record year for revenue – the top line grew 7.4% year-over-year to reach $159.6 million. This was also the eighth quarter in a row to show a sequential revenue gain. Adjusted net income grew from 46 cents per share in the year-ago quarter to 64 cents in current report, a gain of 39%. Gross margins expanded from 54% in 1Q21 to 59% in 1Q22.
However, the company predicted Q2 revenue of $161 million to $165 million; that would be a modest yoy increase of 2.1%, lower than recent yoy growth numbers.
Bolton is unconcerned with the guidance. He notes that it is in-line with expectations, but also notes that the company has a recent history of exceeding those expectations. He writes of MACOM, “We believe the story remains intact and note management reiterated its expectation that revenue should grow at least 10% in FY22, led by the I&D and Telecom segments and a F2H recovery in DC. We remain encouraged by the company’s new product ramps and see continued margin expansion ahead…”
In line with his comments, Bolton rates MTSI a Buy. His $90 price target suggests the stock has a 12-month upside of 56%.
Overall, MACOM’s Strong Buy consensus rating is supported by 9 reviews, which break down 7 to 2 in favor of Buy over Hold. The average price target here is $82.56, which implies an upside of 43% from the current $57.5 trading price. (See MTSI stock forecast on TipRanks)
Onto Innovation (ONTO)
Last on the list of Bolton picks is Onto Innovation, a manufacturer of process and process control equipment for the semiconductor industry. Simply put, Onto makes the text devices that chip makers require for product optimization and quality control. Onto, another Massachusetts-based firm, was formed in the fall of 2019 through the merger of Nanometrics and Rudolph Technology. Since then, the company’s top and bottom lines have both seen solid growth.
At the top line, Onto reported just over $200 million in total revenue for 3Q21 (the most recent released), a company record and the fourth consecutive quarter of sequential growth. Year-over-year, revenues grew 58%. Non-GAAP EPS more than doubled yoy, from 40 cents to 98 cents. Both revenue and earnings beat the forecasts, the top line by 2.5% and the bottom line by 6.5%.
In his coverage of Onto, Bolton sees new product lines as the key point, writing: “In 2020-2021, ONTO introduced 8+ new products that have opened doors to new segments such as compound semis & CIS, planar films, and panel level packaging. Management noted panel level packaging as a larger grower than originally forecast and is contributing significantly ($150M) to the $650M SAM expansion in 2022 brought on by these new products. ONTO currently expects to generate ~$100M in revenue from this new SAM in 2022, reflecting the company’s strong position in the heterogeneous packaging market as well as strength in WFE as a whole.
“We view these new opportunities as significant growth drivers for ONTO for several years and believe the company will meaningfully outgrow WFE again in 2022 given its traction in expanding markets,” the top analyst summed up.
Bolton quantifies his bullish stance with a Buy rating and a $115 price target, suggesting ~33% upside by the end of 2022.
Overall, the Street is in agreement with Bolton on Onto’s prospects, as is clear from the unanimous Strong Buy consensus view. The stock is selling for $86.65 and its $116.25 average price target indicates potential for 34% upside this year. (See ONTO stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.