With 2021 nearing a close, it's difficult not to be hopeful about a market that is returning to normalcy.
There's the better-than-expected third-quarter earnings season, the passage of a $1-trillion infrastructure package, and the gradual return to normalcy of the U.S. labor market, all of which boost confidence.
Despite this, there is a counterbalancing influence. For a few companies, profitability suffered in the third quarter as a result of rising prices and significant worldwide supply chain challenges. That is why few companies' Q3 earnings have been sluggish.
As a result, even the most experienced investors may misjudge a company's performance and lose money on a trade.
TipRanks' Smart Score System is an excellent tool in this circumstance since it allows an investor to study a firm in deeper depth.
This method combines eight key traits, including hedge fund and insider trading actions, both of which are uncommon among investors. Each stock is then rated on a scale of one to 10, with 10 being the best, to assist investors in making more informed decisions.
With this in mind, we looked through TipRanks' Top Smart Score Stocks to uncover two stocks that scored a "Perfect 10" on the Smart Score scale. These stocks also have a Strong Buy average rating and a lot of upside potential.
NvidiaNvidia (NVDA), a semiconductor/AI/graphics giant, has been rated a "Perfect 10" since Monday. The corporation has been putting its hands all over the place in recent years. It has benefited from strong demand in a variety of industries, including gaming and cryptocurrency mining.
Nvidia's second fiscal quarter of 2022 brought in a massive $6.5 billion in sales, a 68% rise over the previous quarter. In addition, quarterly net income was $2.4 billion, up 282% year-over-year.
On November 17, the corporation is expected to release its fiscal third-quarter earnings.
Its Gaming division, which accounts for over half of Nvidia's $6.5 billion quarterly sales, is projected to do strongly. Despite the risk of supply interruptions in the fast-paced graphics processing industry, the graphics processing units (GPUs) behemoth appears to be well-positioned to meet the increased demand in Q3.
Christopher Rolland, a Susquehanna analyst, is effusive in his praise ahead of Q3 earnings. Rolland writes, “We expect another beat-and-raise driven by continued strong GPU demand and (modest) share gains in the quarter.”
He further added, “We note NVIDIA is one of the fastest-growing companies in many key growth areas such as Cloud, Autonomous Vehicle and Metaverse, and we deem it warrants a higher multiple than the rest of the peers.”
Rolland reiterated a Buy rating on the stock and increased his price target to $360 from $250 per share, which implies about 19.9% upside potential to current levels.
In addition to its perfect Smart Score, Nvidia also has a consensus rating of a Strong Buy. The stock is now trading at $300.25, with an average price target of $300.25.
Activision BlizzardActivision Blizzard (ATVI) is a video game maker that has been rated a "Perfect 10" since Monday as well.
The firm creates and distributes interactive video content and services all around the world. It boasts one of the most diverse video game portfolios in the world, with brands like Call of Duty (COD), World of Warcraft, and Candy Crush, among others.
On November 2, Activision Blizzard released its third-quarter 2021 earnings. It made $2.07 billion in revenue, up 5.9% over the previous year. Not only did sales rise, but profits rose as well. The third-quarter profit per share for Activision Blizzard was $0.89, up 1.1% from the year-ago quarter.
Benchmark analyst Mike Hickey was impressed with the company's third-quarter performance. However, the analyst was concerned about the delays in the release of Overwatch 2 and Diablo IV games.
Hickey, therefore, reiterated a Buy rating on the stock but decreased its price target to $115 from $215, which implies about 63.3% upside potential to current levels.
Wall Street analysts have given Activision Blizzard a Strong Buy consensus rating, with 20 recent ratings, including 14 Buys and five Holds. The company is now trading at $70.43, with the average ATVI price target of $96.81, implying 37.5% upside from that level.
Interestingly, we used TipRanks' new Website Traffic tool, which gets its data from Semrush (SEMR), to verify the company's website traffic numbers. We saw that unique user visits to Activision Blizzard's website increased 11.6% from August to September.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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