Retail traders who discuss and plan trading strategies on online forums such as Reddit’s r/wallstreetbets last year collectively bet on stocks that possess high short interest to squeeze large hedge funds. The biggest short squeezes in history helped GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC) skyrocket in price. While several other stocks also witnessed huge, short-squeeze rallies last year thanks to Redditors’ interest in them, the euphoria fizzled out quickly, leading the fundamentally weak stocks to significant price declines.
Last year's trading frenzy also marked the emergence of new-age investors who entered the security markets with little or no trading experience. With advances in technology and zero-commission trading platforms, many new investors opened app-based brokerage accounts and began trading in meme stocks like GME and AMC.
However, this year's market sell-offs have led many of these stocks to now be trading at reasonable prices. Therefore, we think quality Reddit stocks ON Semiconductor Corporation (ON), Microsoft Corporation (MSFT), TravelCenters of America Inc. (TA), Gartner, Inc. (IT), and International Business Machines Corporation (IBM) could be solid bets now.
ON Semiconductor Corporation (ON)
ON is a global provider of power and sensing technologies. The Phoenix, Ariz.-based company operates through three broad segments: Power Solutions Group; Advanced Solutions Group; and Intelligent Sensing Group. Its offerings include metal oxide semiconductor field-effect transistors (MOSFET). ON has received 15 mentions in WSBs over the past 24 hours.
On November 1, 2021, ON announced the completion of its acquisition of GT Advanced Technologies (GTAT), a producer of silicon carbide (SiC). The acquisition will enable ON’s ability to secure and grow the supply of SiC. ON’s President and CEO Hassane El-Khoury said, “As we move to a carbon-free economy, SiC technology is a key driver to enable zero emissions in high-efficiency electric vehicles, renewable energy, and charging infrastructure.”
ON’s revenue increased 27.6% year-over-year to $1.84 billion for the fourth quarter, ended Dec. 31, 2021. The company’s non-GAAP net income attributable increased 224.9% y, respectively ear-over-year to $478 million. Also, its non-GAAP EPS came in at $1.09, representing a 211.4% increase year-over-year.
Analysts expect ON’s EPS and revenue for the quarter ending March 31, 2022, to increase 200% and 28.5%, respectively, year-over-year to $1.05 and $1.90 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained in price 44.3% to close the last trading session at $51.78.
ON’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall B rating, which translates to a Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Growth and a B grade for Value. It is ranked #38 out of 96 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the other ratings of ON for Momentum, Stability, Sentiment, and Quality.
Click here to checkout our Semiconductor Industry Report for 2022
Microsoft Corporation (MSFT)
MSFT in Redmond, Wash., develops and supports a range of software products, services, devices, and solutions. The company operates in the Productivity and Business Processes; Intelligent Cloud; and Personal Computing segments. It has received 93 mentions in WSBs over the past 24 hours.
On Jan. 18, 2022, MSFT announced that it would buy gaming giant Activision Blizzard, Inc. (ATVI) in an all-cash deal worth $68.70 billion. The deal should help MSFT realize its vision of building technologies to create a metaverse. The acquisition also makes MSFT the third largest gaming company in terms of revenue.
For the fiscal second quarter, ended Dec. 31, 2021, MSFT’s revenue increased 20% year-over-year to $51.72 billion. The company’s operating income increased 24% year-over-year to $22.24 billion. Also, its net income increased 21% year-over-year to $18.76 billion, while its EPS came in at $2.48, compared to $2.03 in the year-ago period.
For its fiscal year 2022, MSFT’s EPS and revenue are expected to increase 15.9% and 18.4%, respectively, year-over-year to $9.33 and $199.01 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 6.5% in price to close the last trading session at $274.03.
MSFT’s POWR Ratings reflect solid prospects. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. Within the Software – Business industry, it is ranked #8 out of 60 stocks. To see the other ratings of MSFT for Growth, Value, and Momentum, click here.
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Click here to check out our Software Industry Report for 2022
TravelCenters of America Inc. (TA)
TA in Westlake, Ohio, operates or franchises travel centers, standalone truck service facilities, and a standalone restaurant. Its travel centers offer a range of products and services, including diesel fuel, gasoline, truck repair and maintenance services, quick-service restaurants, full-service restaurants, and others. Its travel centers operate under the brand names of TravelCenters of America, TA, TA Express, Petro Shopping Centers, and Petro. It has received 27 mentions in WSBs over the past 24 hours.
On April 4, 2022, TA announced the completion of its acquisitions of two travel center locations located along the Interstate 81 corridor in Virginia–Petro Raphine and TA Lexington–in time for the summer driving season. Both have been successful TA franchise locations since 2011, and by owning these locations, TA expects to realize significantly higher cash flows.
TA’s total revenues increased 58% year-over-year to $2.03 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted net income increased 813.7% year-over-year to $13.18 million. Also, its adjusted EPS came in at $0.89, representing a423.5% increase year-over-year. In addition, its adjusted EBITDA increased 47.8% year-over-year to $52.89 million.
Analysts expect TA’s EPS and revenue for the quarter ending March 31, 2022, to increase 140.5% and 56.5%, respectively, year-over-year to $0.15 and $2.20 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 47.1% in price to close the last trading session at $38.24.
TA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B grade for Sentiment. It is ranked first among 47 stocks in the Specialty Retailers industry. Click here to see the other ratings of Momentum, Stability, and Quality.
Gartner, Inc. (IT)
IT in Stamford, Conn., is a research and advisory company that provides an advisory and objective resource for more than 14,000 organizations. It creates and distributes its research content through published reports, interactive tools, peer networking, briefings, consulting, and advisory services. It has received 16 mentions in the WSBs over the past 24 hours.
IT’s revenues increased 17.3% year-over-year to $1.30 billion for the fourth quarter, ended Dec.31, 2021. The company’s adjusted EBITDA increased 25.3% year-over-year to $307 million. Also, its adjusted EPS came in at $2.99, representing an 88% increase year-over-year.
For its fiscal 2023, It is EPS and revenue are expected to increase 18.1% and 12.8%, respectively, year-over-year to $8.50 and $5.95 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 50% in price to close the last trading session at $293.33.
IT’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall B rating, which translates to a Buy.
It has an A grade for Sentiment and Quality. Within the A-rated Outsourcing – Tech Services industry, it is ranked #4 out of 10 stocks. To see the other IT ratings for Growth, Value, Momentum, and Stability, click here.
International Business Machines Corporation (IBM)
IBM in Armonk, N.Y., operates in cloud and cognitive software; global business services; systems; and global financing segments. It also designs advanced semiconductors in partnership with IBM research. It has received 14 mentions in WSBs over the past 24 hours.
On Feb. 15, 2022, IBM announced that it had acquired Neudesic, a leading U.S. cloud services consultancy that specializes primarily in the Microsoft Azure platform and delivering services in multi-cloud. The acquisition will expand IBM’s hybrid multi-cloud services portfolio and advance its hybrid cloud and AI strategy.
IBM’s revenues increased 8% year-over-year to $14.19 billion for the first quarter ended March 31, 2022. The company’s non-GAAP net income increased 25% year-over-year to $1.30 billion. Also, its non-GAAP EPS came in at $1.40, representing a 25% increase year-over-year.
Analysts expect IBM’s EPS and revenue for its fiscal year 2022 to increase 22.4% and 6.2%, respectively, year-over-year to $9.71 and $60.90 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 13.1% in price to close the last trading session at $138.25.
IBM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Value and Quality. It is ranked #19 out of 81 stocks in the Technology – Services industry. Click here to see the other ratings of IBM for Growth, Momentum, Stability, and Sentiment.
ON shares were trading at $51.57 per share on Monday morning, down $0.21 (-0.41%). Year-to-date, ON has declined -24.07%, versus a -10.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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