3 New Stocks to Consider
Morningstar recently added a few companies to its coverage list. Here's what our analysts think of the newcomers.
Morningstar analysts recently brought a few new stocks under coverage.
Snowflake (SNOW) is a data lake, -warehousing, and -sharing company that came public in 2020. To date, the company has over 3,000 customers, including nearly 30% of the Fortune 500. As enterprises continue to migrate workloads to the public cloud, significant obstacles have arisen, compromising performance of data queries, creating hefty data transformation costs, and yielding erroneous data. Snowflake seeks to address these issues with its platform, which gives all of its users access to their data lake, warehouse, and marketplace on various public clouds. We think Snowflake has a massive runway for future growth and should emerge as a data powerhouse. We project exceptional revenue growth in the years ahead and assign Snowflake a fair value estimate of $204 per share. We also assign Snowflake a no-moat rating, given the infancy of the business. But we think its moat trend is positive, as its multicloud platform exhibits switching costs and a network effect.
Malibu Boats (MBUU) designs, manufactures, and sells performance sports boats. The boats are used for water sports, such as water skiing, wakeboarding, and wake surfing. We assign Malibu Boats a narrow moat rating and a fair value estimate of $87 per share. The company's robust market share and consistently robust returns on invested capital drive its economic moat rating. Malibu drives demand through cutting-edge water sports technology (for which it holds several patents) and perpetual innovation, releasing a plethora of new products every year. Additionally, Malibu has historically been acquisitive in its efforts to broaden its total addressable market, and we forecast acquisitions to continue at regular intervals. Malibu has a best-in-class balance sheet, giving the firm enviable financial flexibility.
Lastly, Neogen (NEOG) develops, manufactures, and markets various products for food and animal safety. We assign shares a $47 fair value estimate, and narrow-moat and stable moat trend ratings. While Neogen operates in a highly competitive market environment, the firm has been able to carve out a narrow economic moat from differentiated intangible assets in food testing and animal genomics. Neogen's margins compare well to larger, diversified peers in the testing space. We think Neogen is focusing on the right things, with recent investments, tuck-in acquisitions, and strategic partnerships adding to the firm's moatworthy offerings in animal genomics. We think the development of a proprietary database of cattle genetic traits and recent expansion into companion animal genetic health will help reinforce Neogen's economic moat and allow for greater share gains going forward.
Analyst Julie Bhusal Sharma, senior analyst Jaime Katz, and analyst Aaron Degagne provided the research for this segment.
Morningstar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.