(Brian Stoffel, Keith Spits, Tyler Crowe, Adam Levy, and Timothy Green)
Investors come in all shapes and sizes. Certainly, this means that investors run the gamut in terms of age, experience, and socioeconomic backgrounds. But there are several types of Investors Also: Low-risk investors who offer big profits, and high-risk investors who prefer social media startups — and everything in between.
We asked five of our analysts about their top picks for the month of May. What we got has something for everyone. The list includes dividend payers such as AT&T (NYSE: T) And Black stone (NYSE: BX)who is a biopharmaceutical in Vertex Pharmaceuticals (NASDAQ: VRTX)and high-growth names including Pinterest (NYSE: PINS) And Shopify (NYSE: Store). Read below to find out what’s right for you to add to your portfolio in May.
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Back to basics
Tim Green (AT&T): Telecom giant AT&T has officially stopped media work. With WarnerMedia’s offering now complete, AT&T can refocus on its core wireless and fiber-optic communications business.
There’s no doubt that AT&T destroyed a lot of value with its media acquisitions, but those mistakes are now in the rearview mirror. The new AT&T is a direct investment. The company’s wireless business is strong, its fiber broadband business is growing, its balance sheet has improved significantly, and earnings are well covered by free cash flow.
AT&T reported nearly 700,000 postpaid phone network additions in the first quarter, along with nearly 300,000 additional fiber networks. Mobility revenue jumped 5.5%, driven by growth in services and equipment, and broadband revenue increased 6.8% thanks to a 24.7% jump in fiber revenue. AT&T’s growth story now revolves around 5G and fiber.
By 2023, AT&T expects to generate about $20 billion in free cash flow annually. Dividends will eat up $8 billion of that total, leaving plenty of cash to pay off debt. At the current stock price, AT&T is trading at about 7 times its free cash flow estimate and yielding a dividend yield of nearly 6%.
Of course, AT&T could come in short of its expectations. Consumer appetite for new phones may not hold up as inflation is taking its toll, which could negatively impact the wireless business. But with such a pessimistic assessment, there is room for some things to go wrong.
If you’ve been avoiding AT&T for the past few years due to its costly foray into the media, it’s time to reconsider the telecom giant.
Own a piece of the asset management beast
Tyler Crowe (Blackstone): Surprisingly little attention Black stone (NYSE: BX) and other large asset managers that have experienced rapid growth as they have in recent quarters. Over the past 12 months, Blackstone has reported $288 billion in capital inflows. That’s how much institutional investors and high net-worth clients have handed over to Blackstone for management. As a result, the company’s total assets under management (AUM) ballooned 41% year over year to $915.5 billion.
For asset managers, AUM Asset is incredibly important because it generates fees for managing capital and performance generated. As a result of the growth in AUM, distributable earnings per share — revenue from fees and performance minus operating expenses and compensation — over the past twelve months have increased 70% over the previous twelve-month period, and management has been allowed to return $7.2 billion to investors through dividends and buybacks. stock. Moreover, the investments you make — real estate, credit and insurance contracts, and private equity — are virtually unaffected by general market volatility.
Investing in companies like Blackstone can feel like a bit of a black box, because it’s hard to know what happens with every investment in a portfolio approaching a trillion dollars. However, the company has circled the S&P 500 over the past 10 years with a total return of 1,330%, so it’s worth giving management some credit for the outstanding performance. With $139 billion in “dry powder” investing right now, a proven track record of value creation, and a 3.8% dividend yield, Blackstone is well worth a look.
Pin your hopes on this
Adam Levy (Pinterest): Pinterest’s stock price rebounded from a 52-week low after the social media company reported better-than-expected first-quarter earnings. The stock still looks like a bargain as Pinterest management invests in long-term user growth and improved monetization.
In the short and medium term, Pinterest will continue to see very little user growth, but revenue growth should come from better monetization from users. That was the case in the first quarter, when the company increased revenue per user by 28%, more than offsetting the 9% annual decline in users.
However, Pinterest’s investments are putting near-term pressure on its profit margin. Adjusted EBITDA margin declined to 13% in the first quarter, down from 17% in the first quarter of 2021.
Investors should expect more user growth towards the end of the year as Pinterest weathers the impact of the COVID-19 pandemic and changes to its search algorithm. It should see an increase in engagement as it improves its content algorithm and builds a creator ecosystem, stimulating more shoppable videos and posts. User monetization should continue to grow as well.
The stock appears to be significantly oversold compared to Pinterest’s long-term potential. Most importantly, it is setting itself up for a solid margin expansion over the next few years. With an enterprise value-to-return ratio of around 4, it’s trading at a huge discount to social media companies of similar size.
Shopify company is as strong as ever
Brian Stoffel (@Shopify): One of the hardest things for novice investors to wrap their minds around is: There is a difference between a company and a stock. Especially in the short term, there can be a significant difference between the direction of a company’s core business and the direction of its stock. There is probably no better example today than Shopify. The company helps any merchant establish an online presence. Shares are down 75% from all-time highs.
Don’t get me wrong: a fall like this is painful. As a contributor, I am aware of this. At the same time, I don’t think there is a single problem with the core business. Unsurprisingly, the company’s stock exploded when the COVID-19 shutdown began, and any business that didn’t have a digital presence… was out of business. In its most recent conference call, the administration said overgrowth will slow as societies open up again. This is not surprising, but it was also bad for many investors.
Where We Are Today Shopify just finished a year that saw total merchandise volume (all things sold on the platform) grow 47% while revenue grew even faster, at 57%. This shows that merchants are selling a lot of stuff, and they are using more Shopify tools to do so. A real ditch builder is also emerging in the form of the Shopify Fulfillment Network, which offers an option to make shipping easier and more streamlined for merchants. Add it all together, and I think now is a great time to buy Shopify stock.
Best Biotech Stock in the Market
Keith Speights (Vertex Pharmaceuticals): Most biotech stocks continue to perform poorly. But not Vertex Pharmaceuticals. Its shares have risen more than 20% since the beginning of the year. I think Vertex’s momentum could pick up.
The company’s cystic fibrosis (CF) franchise continues to be the big winner, with sales jumping 22% in 2021. Earlier this year, Vertex won a brand for Ceftrio in Europe to treat children aged six to 11 year, which would boost sales of the drug. Repayment agreements in Spain and the Netherlands should also make a difference when Vertex reports its first-quarter results on May 5.
It also appears that Vertex is well on its way to expanding beyond CF. CRISPR treatments Vertex expects to apply for regulatory approvals later this year for its gene-editing therapy CTX001 in the treatment of transfusion-dependent rare blood disorders, sickle cell disease and beta thalassemia.
Look for management to run programs other than CF in a Vertex Q1 call as well. The company is evaluating VX-147 in a phase II study for the treatment of APOL1-mediated kidney disease. This indicator presents a greater market opportunity for Vertex than CF. The biotech also plans to push the VX-548 to pivotal Phase 3 testing later this year as a non-opioid treatment for acute pain.
I am particularly intrigued by Vertex’s Type 1 Diabetes Program. The company reported encouraging preliminary results from a phase 1 study of the VX-880 stem cell therapy. It is expected to apply for approval to begin clinical testing for another type 1 diabetes candidate this year. Vertex believes he will eventually be able to develop a functional treatment for the disease.
With a CF monopoly, a promising pipeline, and a growing cash stock of $7.5 billion at the end of 2021, my view is that Vertex ranks as the best biotech stock on the market. Investors who are not considering buying this stock now may be kicking themselves on the road.
Stay focused on the long term
These are all great options for investors. But no matter what type of investment you prefer, All these stocks It requires a long term time horizon. This means that while we’ve identified them as the best buys for May specifically, there’s only one way to help ensure you’re exposed to the big winners: the intent to hold these stocks through May 2025. on the nearest. When you give the companies you invest in time to grow, you greatly increase the chances of increasing your personal wealth.
10 stocks we like better than AT&T
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Adam Levy has no position in any of the listed stocks. Brian Stoffel has positions at Shopify. Keith Speights holds positions at Pinterest and Vertex Pharmaceuticals. Timothy Green has positions at AT&T. Tyler Crowe has no position in any of the listed stocks. Motley Fool has positions at Pinterest, Shopify, and The Blackstone Group Inc. and Vertex Pharmaceuticals recommends it. Motley Fool recommends the following options: long January 2023 calls worth $1,140 on Shopify and short January 2023 calls worth $1,160 on Shopify. Motley Fool has a disclosure policy.