The year is winding down, and it’s time for Wall Street’s analysts to flag their top picks for the coming year. It’s a time-honored tradition, in most walks of life, to take a sometimes tongue-in-cheek look at what lies ahead, and to start giving advice on the say-so of a metaphorical crystal ball.
Analysts have been analyzing each stock carefully, looking at its past and current performance, its trends on a variety of time frames, management’s plans – the analysts take everything into account. Their recommendations provide valuable direction for building a resilient portfolio in the new year.
So, we’ve used the TipRanks platform to pull up details on three stocks that the Street’s analysts have tapped as Top Picks for 2022. Are these the right stocks for your portfolio this New Year’s? Let’s take a closer look.
Vintage Wine Estates (VWE)
We’ll start in the wine business, with Vintage Wine Estates. This company owns a wide range of brands – mostly wines, but also spirits – along with vineyards and wineries on the West Coast of the US. The company’s holdings include wineries in Washington State and Oregon, and in some of California’s best wine regions, Napa and Sonoma.
Vintage has been around for over 20 years, and is involved in all aspects of the wine business, from growing and harvesting the grapes to bottling and marketing the final product. Vintage has grown to become one of the top 15 wine makers in the US, and sales exceed 2 million nine-liter equivalent cases every year.
Building on its strong market position, Vintage went public this year through a SPAC transaction. The SPAC merger, with Bespoke Capital Acquisition Corporation, was approved on May 28 and the new VWE ticker started trading on the NASDAQ on June 8. Vintage received a total of $306 million in new capital from the SPAC merger and has a current market cap of $665 million.
Vintage closed out the first quarter of its 2022 fiscal year on September 30, and results for that quarter showed gains in some important metrics. Net earnings per share came in at 5 cents, up from the negative results of the two previous quarters. Gross margins improved by 24 basis points year-over-year, to reach 42%. And, the company acquired ACE Cider, a fast growing cider brand that produces 90,000 barrels annually.
In one important highlight from the quarter, the company reported a strong expansion of its direct-to-consumer sales. Revenue in this segment grew by $4 million, or 36%, to reach $14.9 million for the quarter. This comes from a continued push to emphasize e-commerce in the company’s brand line-up.
In coverage of this stock for Canaccord, analyst Luke Hannan describes the stock as a Top Pick. Backing that, he writes: “Vintage’s first two quarters as a public company demonstrated strong growth for its Direct-to-Consumer (DTC) segment, and the company’s ability to deliver on the M&A front with two acquisitions. Between outsized exposure to the higher-growth premium wine category, secular tailwinds for private label brand creation and an attractive acquisition environment, we believe VWE represents a compelling opportunity for investors.”
In line with these bullish comments, Hannan rates VWE shares a Buy and his $16.50 price target suggests a one-year upside of ~50%. (To watch Hannan’s track record, click here)
Hannan’s is one of 3 reviews on this stock, all of which are positive and add up to a Strong Buy consensus rating. The shares are trading for $11.01 and their $14.50 average target implies an upside of ~32% in the next 12 months. (See VWE stock analysis on TipRanks.)
Kornit Digital (KRNT)
The next stock we’ll look at is Kornit, a company involved in both tech and manufacturing. Kornit produces printers for the industrial textile industry. These are high-end inkjet machines, capable of printing complex design on finished textiles. The company also produces the inks, pigments, and other chemical products needed in the printing process.
Textiles and garments are big business, and Kornit has an important niche. The company boats 5 global offices and 800 employees – and more importantly, over 150 million garments printed annually on Kornit systems.
Kornit showed year-over-year gains on revenue and earnings for 3Q21. On revenue, the top line hit $86.7 million, for 51% year-over-year growth, while the EPS of 24 cents was up from 18 cents in the year-ago quarter.
For Needham’s 5-star analyst James Ricchiuti, the key point here is the company’s fast-paced growth. He writes: “We have selected Kornit Digital as our top pick for 2022. KRNT is entering 2022 with strong momentum on most, if not all, fronts. KRNT has registered a 20% CAGR over the last 6 yrs, has grown over 30% in each of the last 2 yrs and is on track to grow over 65% in 2021… From a stock perspective, KRNT has outperformed the Nasdaq in five of the last six years and by a wide margin over the last four years, and we believe that streak can be maintained in 2022.”
Ricciuti’s comments support his Buy rating on the stock, and his $202 price target indicates potential for ~31% gains in the next year. (To watch Ricchiuti’s track record, click here)
Once again, we’re looking at a stock with a unanimous Strong Buy consensus rating. Kornit has 5 reviews from the Street’s stock pros, and they are all positive. The average price target is $194.60, which suggests a 12-month potential upside of 26% from the current share price of $154.38. (See KRNT stock analysis on TipRanks)
Farfetch, Ltd. (FTCH)
Last on the Top Picks list is Farfetch, an e-commerce company in the luxury goods niche. Farfetch acts as an e-commerce platform, connecting buyers and sellers in more than 190 countries. There are more than 1,400 luxury brands on Farfectch’s platform, covering everything from women’s and men’s fashion to shoes to accessories to jewelry. The company is home-based in Portugal, with its headquarters in London and offices around the world.
Farfetch boasts a high level of website traffic, a key metric for an online retailer. The company sees more than 13 million unique visitors per month, and has an active customer base that exceeds 3 million.
This company’s stock soared last year, when the COVID pandemic kept people home and forced a spike in online retail activity. This year, however, has seen the shares fall as more normal economic activity resumed. Farfetch also came under pressure in November, when it’s mixed Q3 results missed expectations on some key metrics.
EPS was solid. At a 14 cent loss, it was better than the 24-cent loss expected, and better also than the 17-cent losses reported in Q2 and 3Q20. Revenue, on the other hand, came in at $582 million. This was up 33% year-over-year, but slightly below the forecast. And finally, the company’s cash flow is badly negative. For the first nine months of 2021, Farfetch showed a $409 million negative cash flow from operations, much deeper than the negative $84 million reported in the same period last year. Shares fell 22% after the quarterly release.
Not everything is grim. Wells Fargo analyst Ike Boruchow is bullish here, and after an investor Q&A with company execs he described FTCH as a Top Pick. One of Boruchow’s key points is the company’s increasing market share in the online luxury good market – and the increasing size of that market.
Describing this, Boruchow writes, “One of the most intriguing aspects of the FTCH story, in our opinion, is the accelerated adoption of online growth through the COVID pandemic, jolting online luxury spending toward 23% of sales in 2020 vs. 12% in 2019. Particularly as barriers to online luxury spending seemingly fell away through COVID, we expect online luxury penetration can continue to grow at a mid- to high-teens CAGR. With the luxury ecommerce market at $57B today, we expect it can approach $140B in the coming years as penetration approaches 30% . As such, we believe FTCH will benefit from accelerating online adoption of luxury goods and a rapid growth in the total addressable market (TAM).”
To this end, Boruchow rates FTCH a Buy, while his $55 price target implies a one-year upside of 67%. (To watch Boruchow’s track record, click here)
Overall, this stock’s Strong Buy consensus rating is backed by 10 positive reviews that overbalance the 3 Holds on the shares. The current trading price is $32.92 and the $50.88 average price target suggests an upside of ~55% in the year ahead. (See FTCH stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.