Wall Street analysts say buy shares like GoDaddy

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With fears of inflation on the rise, investors are searching for strategies to pinpoint compelling opportunities.

One such strategy is to look for stocks that appear underappreciated by the Street and have plenty of room to run. The following names meet the requirements and have the support of analysts with an impressive track record of success. TipRanks' analyst forecasting service attempts to identify the best-performing analysts on Wall Street. These are the analysts with the highest success rate and average return per rating, taking into account the number of ratings each analyst has published.

Here are the best-performing analysts' top stock picks right now:

Carvana

When Carvana shares dipped lower in after-hours trading following its earnings release, Wells Fargo analyst Zachary Fadem was taken aback, noting "we are scratching our heads." The online used car retailer, which has fallen 24% in the last three months, reported better-than-expected retail unit growth and beat his GPU estimate by 6%. It also posted a 50% narrower EBITDA loss than previously expected.

As such, Fadem reiterated a Buy rating. In addition, he left the $340 price target as is, suggesting 50% upside potential.

Fadem commented, "CVNA continues to fire on all cylinders as average weekly units stepped up by +1,600/week (vs. +600-700 in Q3/Q4) suggesting throughput bottlenecks are alleviating, demand remains elevated and underlying business productivity is also tracking better-than-expected."

Looking ahead, the company is on track to accelerate revenue and unit growth. What's more, in Q2, CVNA believes that revenue growth will exceed retail unit growth.

So, what is behind the recent pullback? Fadem points to a rising rate environment, the shift to value from growth as well as a higher valuation.

That being said, the analyst remains optimistic. Expounding on this, he stated, "Yet in our view, we would be hard-pressed to find a company of this size growing triple digits; and we see an attractive entry point for a long-term leader in a high growth, attractive category with considerable upward revisions on tap."

Scoring a top-30 position on TipRanks' list of best-performing analysts, Fadem boasts a stellar 78% success rate and 31.2% average return per rating.

GoDaddy

With former chief financial officer Ray Winborne "passing the baton" to new CFO Mark McCaffrey, GoDaddy reported a beat-and-raise quarter, thanks to strong product execution across domains, commerce and web-pros initiatives.

On top of this, Deutsche Bank analyst Lloyd Walmsley says the fact that the customer cohort from the first quarter of 2021 looked similar to the size of the Q2 2020 and Q3 2020 cohorts suggests that most of his key concerns were addressed. To this end, the analyst reiterated a Buy rating and $89 price target (11% upside potential).

"One of our primary concerns exiting Q4 2020 results for the web presence space was whether new subscriber cohorts would shrink. This does not sound like it's the case on either subscribers or the dollar size of the cohort. CFO Ray Winborne flagged that while they are seeing difference in demand around the world, there is a robust new business formation backdrop in the US," Walmsley commented.

Additionally, domains revenue growth reached 19% year-over-year, and according to Walmsley, GoDaddy "positioned these results as a function of innovation, particularly within the aftermarket space which now represents a double-digit share of the business vs historically single-digit."

The analyst added, "We believe there is room for further innovation in the segment through out the year as they look to experiment more here. As such, we believe the 'double-digit' full year guidance for the segment may prove conservative as it implies Q4 2021 would go negative assuming that they are able to effectively hold the 2-year stack in Q2 and Q3. We believe after market domains sales are booked as gross revenue and thus lower margin and somewhat less predictable."

It should also be noted that there is a new $770 million repurchase authorization, but Walmsley doesn't think the recent repurchasing activity implies a change to GDDY's flexibly capital allocation strategy.

Based on his 66% success rate and 29.3% average return per rating, Walmsley is ranked #112 out of over 7,000 analysts tracked by TipRanks.

Select Medical Holdings

For RBC Capital analyst Frank Morgan, Select Medical Holdings is a stand-out in the healthcare facilities and services space. With this in mind, the analyst maintained a Buy rating as well as increased the price target from $42 to $45. This puts the upside potential at 26%.

"SEM's diversified post-acute platform appears very well positioned to continue driving solid growth over the next few years," Morgan wrote.

The analyst specifically highlights the company's inpatient businesses as key points of strength. Looking at its CIRHs, occupancy, volume and rate growth have held