For Immediate Release
Chicago, IL – June 1, 2023 – Today, Zacks Investment Ideas feature highlights Dassault Systemes DASTY, Transdigm Group TDG and Shake Shack SHAK.
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To the surprise of most, 2023 has been a very strong year for the stock market. Fears of recession, higher inflation, higher interest rates and geopolitical tension haven’t been enough to stop this market from continuing higher. As is often the case, the market climbs a wall of worry.
One way to keep up with a strong market is to invest in stocks with relative strength and improving earnings estimates. Dassault Systemes, Transdigm Group and Shake Shack are all outperforming the market YTD, and are on the Zacks Rank #1 (Strong Buy) list. Additionally, each of these companies have unique competitive advantages making them compelling investment opportunities.
Dassault Systemes is a renowned global leader in 3D design, engineering, and collaborative software solutions. The company, founded in 1981 and headquartered in France, offers a comprehensive portfolio of innovative products and services that cater to various industries, including aerospace, automotive, manufacturing, and life sciences.
Dassault Systemes' flagship software, CATIA, is widely recognized as a leading design and modeling tool, while its other offerings, such as SOLIDWORKS and SIMULIA, provide advanced simulation and virtual testing capabilities. With a strong focus on digital transformation and sustainable innovation, Dassault Systemes empowers businesses to enhance their product development processes, improve efficiency, and drive meaningful customer experiences.
Through its cutting-edge technologies and industry expertise, DASTY continues to shape the future of design and engineering, enabling companies to stay at the forefront of their respective sectors.
DASTY stock has had an impressive performance over the last twenty years, compounding at an annual rate of 14.3%, and returning a total of 1,385%.
Analysts have almost unanimously upgraded DASTY earning estimates across timeframes. Next quarter earnings have been revised higher by 15.4% and FY23 earnings estimates have been boosted by 9.2% over the last two months.
Current quarter earnings estimates have been revised 11% higher, and are expected to grow 7% YoY, while current quarter sales are expected to climb 8.8% YoY.
Dassault Systemes applications are the leader in PLM (Product Lifecycle Management) and Engineering software. It is estimated that it owns the largest share in the market at 17% and increased that share by 8.3% over the last year. DASTY has over 300,000 customers in more than 140 countries.
Transdigm Group is a prominent aerospace and defense company that specializes in manufacturing highly engineered aircraft components and systems. With a diverse portfolio of proprietary products, TDG has established itself as a leader in the industry, providing critical solutions for commercial and military aircraft.
The company's products encompass a wide range of applications, including cockpit controls, power systems, sensors, and safety equipment. Transdigm relentless focus on innovation and quality has earned it a reputation for delivering reliable and technologically advanced solutions to its customers.
Additionally, the company has a unique business model that emphasizes acquiring and integrating complementary businesses, allowing it to expand its product offerings and customer base.
Transdigm stock has put up an epic performance over the last 15 years. Over that period, it has compounded at an annual rate of 30.3%, which is a 5,400% total return. TDG has dramatically outperformed the market, its industry, and all major competitors.
Earnings have seen significant revisions higher over the last two months. Current quarter earnings have been revised higher by 7.7% and are expected to climb 30% YoY. FY23 earnings were upgraded by 7.5% and are expected to increase by a whopping 40% YoY.
Sales growth is expected to be extremely strong as well. Current quarter sales are projected to grow 19.7% YoY, while FY23 sales are expected to increase 19.5%.
Shake Shack is a prominent player in the fast-casual dining sector, known for its iconic brand and high-quality menu offerings. Since its inception as a New York City hot dog cart in 2004, Shake Shack has experienced impressive growth, expanding its footprint both domestically and internationally. With a focus on sourcing premium ingredients and providing an elevated dining experience, the company has cultivated a loyal customer base and established a strong brand presence.
SHAK’s commitment to culinary excellence and hospitality has translated into robust financial performance, with consistent revenue growth and strong profitability. Furthermore, the company's strategic initiatives, such as new store openings and menu innovations, demonstrate a proactive approach to capturing market share and driving future growth.
As Shake Shack continues to expand its footprint and enhance its brand equity, it remains an intriguing investment opportunity in the dynamic fast-casual dining industry.
Shake Shack’s stock performance has been admittedly underwhelming over the past five years. However, with improving business economics, upgraded earnings and a compelling technical chart pattern SHAK may be in the early stages of a major bull run.
After developing a large base over the last year SHAK has consolidated and broken out from a convincing bull flag. This is exactly the kind of price action you see when large institutions are building positions.
Now, the stock is forming a descending bull flag and this continuation pattern could send the stock higher yet again. If SHAK can trade above $66, it should move forcefully higher in a short time. Alternatively, if it trades below $64.50 the pattern is invalid, and investors may want to wait for another trade setup.
The road to success for fast casual restaurants is extremely challenging, as it is a highly competitive market with numerous entrenched contenders. However, from a completely subjective position, I have to say SHAK is my favorite food-chain restaurant out there. Its smashed burgers are cooked to perfection, and basically melt in your mouth, while the shakes and custards are insanely delicious with some unique flavor combinations.
Additionally, the restaurants are always tidy and well managed. Many people I know have similar views of the brand as well. I think for consumer brands, personal experiences can be a useful way to gauge a company’s prospects, although certainly not a complete methodology.
It is hard to deny that the stock market has resumed its long-term bull trend, and many leading stocks are moving aggressively higher. By utilizing the Zacks Rank, investors can easily identify stocks with strong near-term expectations, and find companies to further dive into.
By focusing on firms with industry leading technologies, and deeply satisfied customers, investors can stay on the right side of the market. Of course, picking stocks is just one aspect of the process, focusing on risk and portfolio management will always be critical for successful trading.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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