The major averages are leaping to fresh highs, but attractive stocks with good growth prospects are still available for the picking.
Wall Street analysts remain focused on the long-term prospects of stocks with solid growth potential. Investors can gain insights from the opinions of top analysts, who make recommendations after thorough research.
Here are three stocks favored by the Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.
Nvidia
Chip giant Nvidia (NVDA) is this week’s first pick. The company impressed investors with blockbuster quarterly results and better-than-expected revenue guidance, thanks to the huge demand for its products due to the artificial intelligence frenzy.
In reaction to the stellar results for the fourth quarter of fiscal 2024, Goldman Sachs analyst Toshiya Hari reiterated a buy rating on NVDA stock and boosted the price target to $875 from $800. “Nvidia delivered against what was seemingly a very high bar with Data Center once again serving as the key growth driver,” he said.
Hari anticipates that strong generative AI infrastructure spending and new product launches will power continued outperformance. The analyst expects Nvidia to benefit from robust demand and new product introductions, including the H200 GPU, ethernet-based AI networking solution Spectrum-X and the next-generation Data Center GPU platform B100.
The analyst is modeling a greater than two-times year-over-year increase in Nvidia’s fiscal 2025 data center revenue. That’s even after the segment generated a greater than three-times surge in its top line in fiscal 2024. His optimism is backed by sustained growth in generative AI infrastructure spending by large cloud service providers and consumer internet companies, as well as increased AI development and adoption by enterprise customers and sovereign states.
Hari ranks No. 61 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 68% of the time, with each generating an average return of 24.3%. (See Nvidia’s Stock Charts on TipRanks)
Abercrombie & Fitch
Next up is clothing retailer Abercrombie & Fitch (ANF). Earlier this year, the company raised its forecast for the fiscal fourth-quarter and full-year net sales, as well as its operating margin guidance. The revised outlook reflected net sales growth across regions in the holiday sales quarter, led by continued strength in the Americas.
Ahead of the company’s Q4 results on March 6, Jefferies analyst Corey Tarlowe increased his price target to $149 from $120 and reaffirmed a buy rating on ANF stock. The analyst noted that while issuing the upgraded outlook in January, the company said that its women’s business is expected to deliver the strongest-ever Q4 performance.
Tarlowe highlighted that Abercrombie & Fitch continues to gain market share both domestically and worldwide. Citing Euromonitor data, the analyst said that in the U.S., the brand moved up four spots to the 20th position for apparel, compared to 2022. Similarly, demand for ANF’s jeans and outerwear categories helped it climb two spots to the 55th position worldwide in 2023.
Tarlowe added that while the company’s Hollister brand was under pressure last year, it recently returned to growth. The analyst expects market share gains for the Hollister brand in the days ahead.
Commenting on the fiscal 2025 outlook, Tarlowe said, “We expect ANF will provide strong yet beatable guidance, which could be a positive catalyst for the stock.” Overall, the analyst sees further upside to ANF’s market share, sales and earnings.
Tarlowe ranks No. 473 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 68% of the time, with each generating an average return of 15.5%. (See ANF’s Financial Statements on TipRanks)
Walmart
This week’s third stock pick is big-box retailer Walmart (WMT), which delivered better-than-expected fourth-quarter results. The solid performance was driven by upbeat holiday season sales and strength in the company’s e-commerce channel.
Following the print, Goldman Sachs analyst Kate McShane reaffirmed a buy rating on WMT stock and raised the price target to $193 from $180.
She noted that Walmart’s operating income growth accelerated in the fourth quarter, fueled by the company’s alternative revenue sources, including advertising, marketplace and fulfillment services. Lower fulfillment costs also enhanced operating income.
McShane highlighted that Walmart expects its top-line growth to be supported by its international business. In particular, the company anticipates that continued strength in India, Walmex (WMT’s unit in Mexico and Central America), and China will drive about 75% of its international growth over the next few years.
“We see top-line support from continued market share gains, store investments (remodels and new stores/clubs), and growth of alternative revenue streams,” said McShane.
Overall, she is bullish on Walmart and thinks that it is well-positioned to continue to drive strong earnings growth, thanks to its increasing market share due to the value deals and convenience offered by the retailer. The analyst also expects the company to improve its profitability, driven by the growth of higher-margin businesses and productivity benefits.
McShane holds the 884th rank among more than 8,700 analysts tracked by TipRanks. Her ratings have been successful 62% of the time, with each generating an average return of 5.2%. (See Walmart Stock Buybacks on TipRanks)
Source: Investing - cnbc.com
