With a long history of investment success, billionaire Ken Griffin knows a thing or two about market behavior. Recently, the Founder and CEO of Citadel Investment Group offered some of his thoughts on the state of the stock market and where the economy is headed.
While Griffin believes inflation has already peaked, he thinks the Fed still hasn’t put the “genie back in the bottle”. He also thinks unemployment is on the rise and hopes a recession is likely to emerge “in the middle to back half of 2023.” In addition, says Griffin, the recent FTX fiasco will see people lose billions of dollars, the “total” implication of an event that has shaken confidence in the markets.
Meanwhile, against this backdrop, Griffin has been busy beefing up his fund’s portfolio, and recently added to two stocks. We delved into the TipRanks database to find the lowdown on both. It seems Griffin isn’t the only one expressing confidence in these names. Both are rated a Strong Buy by the analyst consensus. Let’s see why they are drawing praise right now.
The Trading Desk (TTD)
We’ll start with a major player in the ad-tech space. The Trade Desk runs the world’s largest independent demand-side platform (DSP) for online advertising. Advertising agencies, advertisers and trading desks can bid on programmatic ads thanks to RCSs. Compared to sell-side platforms (SSPs), which help publishers sell their own ad inventory, they are at the other end of the advertising supply chain.
While ad titans such as Google will offer packages including DSPs, SSPs, and various advertising products in what are known as ‘walled gardens’, companies that don’t want to be noticed by one giant entity would prefer independent services that use. a platform such as The Trading Desk.
The advertising space is sensitive to the economic backdrop, and ad budgets fluctuate according to the strength of the economy. Hence, this segment has been under pressure for some time now. However, the Trading Desk showed its quality by handling the rough conditions well, as was evident in its latest quarterly report – for Q3.
In the quarter, revenue increased 31% year over year to $395 million, beating the Street forecast by $8 million. Adjusted net income rose 45% to $129 million, translating to $0.26 per share, beating the $0.23 consensus estimate.
Looking ahead, the company expects its Q4 revenue to be “at least” $490 million, compared to analysts’ expectations of $509.13 million.
Ken Griffin, who increased his fund’s stake in TTD by 204% in Q3, added 980,622 shares to the digital ad giant. His holdings are currently worth over $71 million.
Griffin isn’t the only one showing confidence in this name. Scanning the Q3 print, Truist 5-star analyst Youssef Squali is unequivocal in his recommendation.
“TTD reported another strong quarter as its execution remains exceptional amid a challenging macro, reflecting material market share gains,” said Squali. “Broad-based strength was particularly skewed to CTV, which is likely to continue in 2023 given its rapid adoption in the US/Int’l and the huge expected growth in inventory from Netflix , Disney+ and others; increased by increasing shopper mktg budgets moving to the platform. We think the 4Q22 guidance and 2023 commentary are appropriately conservative given the macro.”
“TTD remains one of our favorite stocks due to its execution within a strong and large TAM,” the analyst summarized
These views underpin Squali’s Buy rating and $74 price target for the stock. The figure makes room for one-year gains of 51%. (To view Squali’s recording, Click here)
Looking at the consensus breakdown, 1 analyst remains on the fence, but the other 10 recent reviews are positive, which naturally results in a consensus rating of Strong Buy. At $67.45, the average target implies ~37% upside potential in the year ahead. (See TTD stock forecast on TipRanks)
Bunge Limited (BG)
The next stock Griffin is pushing into is completely different. One of the world’s largest oilseed processors, Bunge runs an integrated company that includes buying, processing, storing and selling grains and oilseeds. The agribusiness assets are spread across Europe, Asia Pacific, South and North America. In addition, Bunge operates a downstream food business, selling packaged vegetable oils, wheat flour, bakery mixes and milled dry corn products. It also has a 50% stake in BP Bunge Bioenergia, a joint venture with British oil behemoth BP, through which it produces sugar and ethanol in Brazil.
The markets may have been in turmoil all year, but Bunge appears to be an outlier; in contrast to most names, the shares are up 11% in 2022. The company’s value proposition and global positioning have proven beneficial in a world plagued by geopolitical turmoil and supply chain snags.
This was evident when the company reported Q3 earnings at the end of October. Revenue hit $16.76 billion, representing an 18.7% year-over-year increase and coming in $1.03 billion above the Street forecast. Likewise, for $3.45, adj. EPS came in $0.90 higher than the $2.55 analysts expected.
Griffin clearly thinks the company will continue to perform better. It significantly increased its fund’s holdings in the quarter, after buying 941,945 shares. At the current share price, Citadel’s entire stake in BG is now worth $99 million.
Echoing Griffin’s action, BMO 5-star analyst Kenneth Zaslow is a big fan of BG and sees a lot to like about it.
“With a global footprint and risk management, BG is built for the current volatility and ongoing changes in trade flows. Second, with its geographic location and operational excellence (high resource utilization rates), BG is among the best positioned to benefit from the higher global margins that create a sustainably strong operating environment based on demand (eg demand for RD) and ongoing global demand. supply tightness (eg, Ukraine war). Third, BG’s strong cash flow and exceptional balance sheet create an incremental option to return cash to shareholders (ie buy back more stock),” Zaslow said.
Accordingly, Zaslow rates BG shares Outperform (ie Buy), supported by a $144 price target. The implication for investors? A gain of 42% from current levels. (To view Zaslow’s track record, Click here)
In the past 3 months, 3 other analysts have weighed in on BG reviews and also say Buy, making the consensus view here a Strong Buy. Going below the average target of $67.45, the shares have room to grow by 39% over the one-year period. (See Bunge stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analyst in question. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.