TipRanks has built a reputation on collecting the right information for investors looking to make informed decisions on their stock purchases. The database includes more than 5,500 of Wall Street’s most prolific financial analysts, rated and ranked by their success rate and average return.
As the database has grown, TipRanks has added new features and tools to make the data more flexible for users. Over 10,000 financial bloggers, 44,000 corporate insiders, and 99,000 individual investors have made their stock reviews, purchase decisions, and portfolios available to TipRanks’ algorithms.
Today, we’ll look at three stocks through the lens of the TipRanks' Individual Investor Sentiment tool. This nifty tool enables you to pinpoint the most popular stocks from the best-performing investors in any sector. We can also see if top investors are ramping up their holdings over the last month/week, as well as the proportion of the portfolio these investors (on average) dedicate to that stock.
Taiwan Semiconductor Manufacturing (TSM)
The only company from Taiwan among the world’s top 15 semiconductor manufacturers, Taiwan Semi recorded $34.2 billion in total sales for 2018. The only US company to post higher sales numbers was industry giant Intel, but TSM shows a higher market cap, at $260 billion. Taiwan Semi also pleases shareholders with a generous dividend, paying out a yield of 3.19%, or 62% more than the average yield on the S&P 500.
TSM shares make up a modest part of TipRanks’ tracked portfolios, but a slightly larger portion of best performing investors’ holdings. These top sock buyers allocate 2.6% of their holdings to TSM, and sentiment on the stock registers as ‘Very Positive.’ Share holdings among the best performing individual investors have increased in both the last week and the last 30 days.
The positive investor sentiment on TSM is reflected in the stock’s share price performance. TSM has been rising steadily (despite a minor slip in July) in the markets since mid-June of this year. The stock is 37.5% higher than its June 17 bottom of $36.47.
The Street’s analysts are also bullish on TSM. From Goldman Sachs, Bruce Lu puts a Buy on the stock along with a $55 price target. He writes, “Following a re-examination of industry capacity builds and order revisions, we think we are underestimating the positive impacts on TSMC arising from trade uncertainty.” Lu’s price target indicates a possible 9% upside.
Credit Suisse’s 4-star analyst Randy Abrams puts another Buy rating on TSM. He said, “While the stock may see profit taking on the rally and high capex with some risks on magnitude of 5G ramps, we remain positive into 2020 from higher share, content, and units in mobile and drivers for its HPC business, which could accelerate 2020 sales +14% YoY.”
All in all, the chip maker remains a 'Strong Buy' name among Wall Street analysts. In the last three months, TSM has won 5 back-to-back bullish recommendations. With a return potential of close to 8%, the stock's consensus price target stands at $55.00.
Alexion Pharmaceuticals (ALXN)
Top investors are definitely keeping their eyes open on Alexion, a large-cap ($23.9 billion) bio-pharma. While only 1.9% of all portfolios in the TipRanks database hold Alexion, significantly more, 2.6%, of the top investors are buying this stock. And their holdings have increased by nearly a half-percent in the last month. Taken together, this puts a Very Positive investor outlook on ALXN.
ALXN has seen its share price slip 29% since April despite steady gains in the quarterly earnings for the last two years. The company is best-known for Soliris, launched in 2007 as a treatment for two diseases, atypical hemolytic uremic syndrome and paroxysmal nocturnal hemoglobinuria. The drug received approval in 2011, and at that time was considered the world’s most expensive medication, costing more than $400,000 per patient per year of treatment in the US. Soliris sales exceeded $600 million annually by 2015.
In 2015, Alexion received FDA approval for a second rare-disorder treatment, Strensiq, and acquired the rights to a third drug, Kanuma, through acquisition of the parent company. Alexion estimates that Kanuma may generate more than $1 billion in annual sales.
Sales numbers like that are reflected in ALXN’s earnings and revenues. In its just-released Q3 report, the company showed $1.26 billion in revenue, far above the year-ago quarter’s $1.03 billion. EPS, at $2.49 per share, was 12% higher than the forecast and 23% higher than the previous Q3. Alexion consistently beats the forecasts in its quarterly earnings reports.
5-star analyst Christopher Raymond, of Piper Jaffray, believes that ALXN’s combination of relatively low share price and robust earnings offers a chance to pick up a first-class stock at a discount. He writes, “We remain a buyer of ALXN shares following yet another beat/raise quarter with near flawless execution both commercially and developmentally…” Raymond’s $180 price target suggests an eye-opening 68% upside to this stock
The rest of Wall Street echoes Raymond's bullish play, as TipRanks analytics exhibit ALXN as a Strong Buy. Out of 18 analysts polled in the last 3 months, 16 are bullish on the stock while only two remain sidelined. With a return potential of nearly 46%, the stock’s consensus target price stands at $155.38.
Our third stock with Very Positive investor sentiment is Archer-Daniels-Midland, ADM. This company is leader in the global food production industry. Headquartered in Chicago, ADM operates a global network comprising hundreds of crop procurement facilities and production plants, which it uses in the development and manufacture of food, beverage, animal feed, and nutraceutical products. It’s a massive industry, and in brings ADM over $64 billion in annual revenue.
Like the markets generally, ADM saw losses in 2H18, but earnings have shown moderate rebound since Q2 2019. A hard winter in the US and Canada had a damping effect on earnings, which showed a year-over-year decline, but the 60 cents EPS was a gain of 30% from Q1. Quarterly revenues, at $16.3 billion, were down 4.5% year-over-year, but beat the quarterly forecast by 4.2%. So, a decidedly mixed Q2 report did show some positive signs.
Investors remain sanguine on ADM. Even after the quarterly report, the top investors have increased their holdings in this stock by 0.4%, and in the last seven days have increased holdings by 0.2%. One factor that may attract investors is the 3.44% dividend yield. With the S&P 500 stocks averaging just a 2% yield, ADM is well ahead of the curve. The $1.40 annualized payment represents a steady income, and the company has been increasing dividend payments to shareholders reliably for the last 43 years. The payout ratio of 51% indicates a commitment to both rewarding shareholders and keeping the dividend sustainable.
Stephens’ 4-star analyst Ben Beinvenu sees ADM as a solid stock to anchor a portfolio. He lays out the bottom line on this one in clear terms: “We think ADM offers investors a consistent capital allocation strategy and solid long-term secular demand exposure at an attractive valuation… fundamentals have been under pressure and earnings are well below average. We think that the current stock price offers patient, value-oriented investors a solid entry point to buy a company that will pay a healthy dividend while we wait for the maturation of new businesses … to drive a return to more normalized earnings power.”
Beinvenu gives ADM a $50 price target, suggesting a 22% upside from the current share price of $40.73. On average, the Street’s analysts agree with him; this stock has a Strong Buy analyst consensus rating, based on 3 Buys and 1 Hold. The average price target is $48, implying room for an 18% upside.