D.A. Davidson's Top Long-Term Stock Picks for the Fourth Quarter
Market Challenges and the Search for Quality Stocks
D.A. Davidson has identified its favorite long-term plays, offering investors a way to navigate through a challenging month and quarter for the markets. Recent equity drops have raised concerns among investors regarding the potential impact of persistent interest rate hikes. With the S&P 500 set to finish the month down 5.2% and the quarter down approximately 4%, D.A. Davidson analysts have carefully selected quality stocks that are positioned to outperform in the years to come.
Criteria for Stock Selection
In their Thursday note, D.A. Davidson analysts emphasized their focus on durable companies that trade at a significant discount to their "intrinsic value." To make the cut, companies needed to meet specific criteria, including a robust and predictable revenue stream, a sizable market with favorable long-term trends, and a track record of high performance.
Highlighted Stock Picks
Analyst Rudy Kessinger expresses bullish sentiment towards cybersecurity solutions provider CrowdStrike Holdings, which has gained investor confidence due to its innovative "Charlotte" generative AI technology. The stock has shown impressive year-to-date gains, up over 54% in 2023. CrowdStrike Holdings is also favored by Goldman Sachs, which recently raised its price target on the stock to $195 from $175.
Financial services companies F.N.B. Corp. and Axos Financial are among the long-term favorites listed by D.A. Davidson's analysts. F.N.B. Corp. boasts dominant market share in smaller markets and strong positioning in larger markets, enabling it to capture market share from larger banks in specific regions. Despite a nearly 19% decline in its stock price this year, D.A. Davidson sees it as an attractive entry point for long-term gains. Axos Financial, the holding company for nationwide Axos Bank, stands out with its unique one-branch operating structure, providing a cost advantage over other institutions.
Confidence in Workday and Other Firm-Wide Favorites
Despite headwinds facing software firm Workday, D.A. Davidson remains confident in its potential. Although the stock experienced a 9% plunge after a lowered outlook for subscription revenue growth, it has still gained over 24% this year. Other firm-wide favorites include wood-alternative materials provider Trex, retailer Tractor Supply, and technology giant Microsoft.
These carefully selected stock picks by D.A. Davidson aim to provide investors with opportunities for long-term growth and value, considering both market challenges and the potential of each company to deliver solid performance in the future.
Implications of D.A. Davidson's Q4 Stock Picks for New Business Formation
Market Challenges and New Business Ventures
D.A. Davidson's selection of long-term plays amidst a challenging market environment offers valuable insights for new business ventures. The recent equity drops and concerns over persistent interest rate hikes have created a volatile market environment. This situation underscores the need for new businesses to have a robust financial strategy and the ability to adapt to changing market conditions.
Stock Selection Criteria: A Guide for New Businesses
The criteria used by D.A. Davidson analysts for stock selection can serve as a guide for new businesses. The focus on durable companies, predictable revenue streams, sizable markets with favorable long-term trends, and a track record of high performance are all factors that new businesses should strive for to ensure their long-term viability and success.
Highlighted Stock Picks: Lessons for New Businesses
The bullish sentiment towards cybersecurity solutions provider CrowdStrike Holdings and financial services companies F.N.B. Corp. and Axos Financial highlights the importance of innovation, market dominance, and unique operating structures for business success. These are key considerations for new businesses when shaping their business model and strategic direction.
Confidence in Workday: A Case Study for New Businesses
Despite facing headwinds, software firm Workday has maintained investor confidence, demonstrating the importance of resilience for new businesses. The ability to weather market challenges and maintain growth is a crucial attribute for new businesses aiming for long-term success.
In summary, D.A. Davidson's Q4 stock picks and the rationale behind them provide valuable lessons for new businesses, emphasizing the importance of financial strategy, innovation, market dominance, unique operating structures, and resilience in the face of market challenges.