The new year is rolling with earnings reporting for the fourth quarter in full swing, and many of the top firms that we cover here at 24/7 Wall St. are finalizing their stock and sector picks and prognostications for 2019. This not only gives investors some directional portfolio reshuffling, but it also gives them a look at what the overall macro thoughts for this year are at the big brokerages and banks.
The relentless selling in the markets that started in early October shook the faith of many investors, but it is important to remember that we have enjoyed an almost 10-year bull market run, with the S&P 500 up to 2,940 last fall from an intraday low in March of 2009 of 666. While the market has rallied over 9% from the lows, the massive backup should still give investors a chance with some dry powder to reset and buy some great companies.
A fresh research report from SunTrust features the firm’s top internet and digital media stock picks for 2019, many of which were absolutely battered during the fourth-quarter selling. Here we went with six top picks that have solid upside to the SunTrust price targets. In addition, on Wednesday, we shared SunTrust’s five top internet predictions for 2019.
The search giant continues to expand and, while search is king, the cloud presence is growing fast. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
Back in the fall, Google outlined expanding capabilities to facilitate commerce, capitalizing on the “treasure trove” of data provided by seven different properties, each with at least a billion active users (Android, Search, Chrome, Maps, Play, YouTube and Gmail). Smart shopping campaigns leverage machine learning to make sense of touch points along the consumer purchase path, including better offline attribution capabilities (locally oriented searches up 200% over past two years) and improved purchase conversion rates (20% on average).
The SunTrust price target for the shares is $1,450, and the Wall Street consensus target is $1,355.87 The shares closed Wednesday trading at $1,089.51 apiece.
This is the absolute leader in online retail, and last year it opened its first brick-and-mortar store in New York City. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Consistent with data from 2018, digital marketing users overwhelmingly cited Amazon as the fastest-growing channel for advertising budgets, while many retailers are also leveraging their Amazon advertising data to retarget users on other channels (namely Facebook) to drive traffic/ sales to their own websites (bypassing Amazon marketplace/FBA fees).
SunTrust noted this when discussing upcoming earnings:
Top and bottom line expectations for the fourth quarter of 2019 have been reset to more achievable levels. We believe the fourth quarter 2018 revenue guide (which was shy of consensus) is on the conservative side, as the company is greatly positioned to benefit from a robust holiday season (with a record 100 million Prime manageable items available for free 2-day shipping, for 100 million+ members), and fourth quarter tailwinds in India.
SunTrust has a $2,250 price target, while the consensus target is $2,128.16. The stock closed on Wednesday at $1683.78.
The huge social media leader has been incredibly volatile and had an absolutely wretched 2018. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.