There’s a slew of stocks that are taking market share and poised to outperform, Wall Street analysts said this week. These “share gainers” are best-in-class and analysts see a unique opportunity to own them amid the market uncertainty. CNBC Pro combed through top Wall Street research to find some of the top stocks with outsized growth. They include: HubSpot, GlobalFoundries, Block , Paycom and Shopify. GlobalFoundries The semiconductor manufacturing company is making “significant progress,” according to Morgan Stanley. The firm came away from GlobalFoundries analyst day impressed with the strategy and execution and predicting big upside for the stock which is up 18.8% this month. “The company did not change the longer term earnings model, which is a good outcome, and offered several substantive points highlighting the longer term objectives,” analyst Joseph Moore wrote. In particular, Moore says he was especially impressed with how GlobalFoundries has built long-term partnerships with company’s like Qualcomm and Qorvo. These relationships have even more potential to further diversify revenue in the years ahead, the firm said. “Our take is that the long term agreements demonstrate both customer focus on improving an uncertain supply chain but also customer desire to continue to build on what has become more of a partnership culture rather than a transactional relationship,” he said. The analyst also said the company is well-positioned should geopolitical tensions ratchet up overseas as GlobalFoundries is the only pure U.S. foundry. Moore went on to call Global Foundries a “share gainer, as every company that we talk to wants to expand upon the partnership while geographically diversifying their supply chain.” Paycom KeyBanc analyst Jason Celino is “feeling pretty good” about Paycom. Shares of the payroll and human resources solutions software company are up over 21% the last month and Paycom is coming off a very strong mid-July earnings report, according to the firm. “End market commentary around customer additions, expansion activity, and overall labor/employment trends remained strong,” Celino said. In fact, the firm says it’s seeing no customer slowdown despite an uneasy macro environment. Investor sentiment is improving, too, Celino wrote, and checks show companies still have plans to spend in 2023. “Data from our recent 1H22 CIOs survey suggests positive HCM (human capital mgmt.) budget outlooks for 2023, with companies highlighting HR tasks automation and employee engagement as the top priorities, ” he added. Celino also likes the room for growth opportunities, particularly in payroll automation. “With a proven execution track record, best-in-SaaS EBITDA margin profile, and a consistent share gainer, we highlight PAYC as a quality idea that screens for both growth and strong profitability, and believe a premium valuation is warranted,” Celino said. Block Shares of the payment tech company are down 54% this year, but Wolfe Research said its standing by the stock and so should investors. Block reported a top and bottom line beat earlier this month, however, some shareholders continue to have jitters over the company’s direction. Those fears are likely unwarranted, according to analyst Darrin Peller. While profitability had been a concern in the past, Peller believes Block is finally answering the call. “We believe SQ’s increased focus on how it deploys investments will resonate well investors who have had concerns about the company’s lack of profitability in the past,” he wrote. Additionally, trends in the core business “remain sound,” the firm said. Peller also praised the company’s execution noting that management is scaling back on expenses which should please investors and ease concerns. “We continue to believe that SQ stands out as a material share gainer across its businesses, solidifying its status as a global leader as a challenger bank/digital wallet as well as a differentiated omnichannel provider for merchants,” he said. GlobalFoundries – Morgan Stanley, Overweight rating “The company did not change the longer term earnings model, which is a good outcome, and offered several substantive points highlighting the longer term objectives. … .Our take is that the long term agreements demonstrate both customer focus on improving an uncertain supply chain but also customer desire to continue to build on what has become more of a partnership culture rather than a transactional relationship. … .we see Global Foundries as a substantial share gainer, as every company that we talk to wants to expand upon the partnership while geographically diversifying their supply chain.” Paycom – KeyBanc, Overweight rating “End market commentary around customer additions, expansion activity, & overall labor/employment trends remained strong. … Walking Away Feeling Pretty Good About End-Market Trends. … .Data from recent 1H22 CIOs survey suggests positive HCM budget outlooks for 2023, with companies highlighting HR tasks automation & employee engagement as top priorities. … .With a proven execution track record, best-in-SaaS EBITDA margin profile, & a consistent share gainer, we highlight PAYC as a quality idea that screens for both growth & strong profitability, & believe a premium valuation is warranted.” Shopify – Atlantic Equities, Overweight rating “Shopify remains a high-quality market share gainer and we now see upside to estimates following the recent reset, so we are upgrading the stock to Overweight. … Shopify continues to be a market leader in product innovation, which helps the platform continue taking share of ecommerce volumes and increase its take rate over time. GMV estimates are now seemingly more conservative for Shopify than most peers, so we now see upside to consensus following the recent reset.” Read more about this call here. HubSpot – Raymond James, Strong Buy rating “We reiterate our Strong Buy rating on HUBS following 2Q22 results that exceeded our expectations, with overall growth still exceeding 30% despite meaningful FX headwinds. … With HUBS representing a higher ROI offering that should also benefit from consolidating IT vendor spend, we see the company as a long-term share gainer for front-office software. We don’t believe this is fully reflected in shares at ~8X our revised CY23 revenue estimate, in-line with the 30%+ growth group at ~8x. Block – Wolfe, Outperform rating “We believe SQ’s increased focus on how it deploys investments will resonate well investors who have had concerns about the company’s lack of profitability in the past. … Despite the miss on gross profit, we believe trends in the core business remain sound. … We believe SQ’s increased focus on how it deploys investments will resonate well investors who have had concerns about the company’s lack of profitability in the past.”
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