Uber's logo is seen in a temporary exhibition space on Promenade Street on January 20, 2023, during the 2023 World Economic Forum in the Alpine resort of Davos, Switzerland.
Arnd Wiegmann | Reuters
The Federal Reserve's forecast for three interest rate cuts in 2024 has lifted investor sentiment, but macroeconomic uncertainty may weigh on investment decisions.
Wall Street analysts can drill down to find out which stocks are the most resilient heading into the new year.
According to TipRanks, a platform that ranks analysts based on their past performance, these are three names favored by Wall Street's top pros.
Uber technologies
Shares of the ride-hailing platform Uber technologies (ABOVE) have rebounded this year, with investors appreciating the company's improved profitability and its recent inclusion in the S&P 500.
JPMorgan analyst Doug Anmuth recently named Uber one of his top picks for 2024. He reiterated his Buy rating and increased the price target to $76 from $62. The analyst highlighted that Uber has leadership positions in two long-term growth industries: ride-sharing and food delivery.
The analyst expects the company to weather ongoing macroeconomic challenges and emerge stronger, supported by its dominance in the ride-hailing market and the increasing adoption of food delivery. He's also optimistic about Uber's ability to expand into other areas with huge overall markets, such as groceries, convenience products and alcohol delivery.
Anmuth also sees the possibility of significant earnings before interest, taxes, depreciation and amortization as well as free cash flow generation, driven by increasing margins on gross bookings of 10% for the mobility business and more than 5% for the delivery business.
“From a profitability perspective, supply tailwinds should continue and support further efficiencies, further supported by increased advertising, product improvements, bug fixes and reduced headcount,” Anmuth said.
Anmuth is ranked 100th among more than 8,600 analysts on TipRanks. Its ratings were successful 61% of the time, delivering an average return of 17.5% each. (See Uber Hedge Funds trading activity on TipRanks).
CyberArk
We are now moving to the cybersecurity company CyberArk (CYBR), which specializes in identity security. Last month, the company reported better-than-expected third-quarter results. Annual recurring revenue (ARR) increased 38% to $705 million.
On December 15, Mizuho analyst Gregg Moskowitz picked CyberArk along with Microsoft (MSFT) And Adobe (ADBE) as his top software picks for 2024. The analyst expects these companies to benefit from key trends such as digital transformation, generative artificial intelligence, next-generation security, contact center cloud migrations and more.
The analyst said he was impressed with CyberArk's solid and consistent execution despite a challenging macroeconomic environment. The analyst is optimistic that CYBR's successful transition to a recurring revenue model will result in even stronger financials in the times to come.
“We also view CYBR as the primary beneficiary of a heightened threat landscape that has increased the need for privileged access and identity and secrets management,” Moskowitz said.
In line with his bullish stance on CyberArk's growth prospects, Moskowitz increased his price target on the stock to $250 from $195 and reiterated a Buy rating.
Moskowitz ranks 95th among more than 8,600 analysts tracked by TipRanks. Its ratings were profitable 63% of the time and delivered an average return of 16.9% each time. (See CyberArk financial reports on TipRanks)
Costco wholesale
Bearing chain Costco (COST) recently announced better-than-expected fiscal first quarter results as customers continued to look for great value deals on groceries and essentials. Additionally, the company reported improvements in non-food categories.
Baird analyst Peter Benedict noted that while Costco's earnings per share beat Wall Street's consensus estimate, it fell short of expectations due to lower interest and other income, as well as a higher tax rate.
However, the analyst highlighted that member engagement KPIs (key performance indicators) remain robust and paid membership is growing by 7.6%. Management also said increasing membership fees remains a matter of “when,” not “if,” he added.
Benedict also touted the company's improvement in core e-commerce growth to 6.1%, compared to a decline of 0.6% in the year-ago quarter, thanks to omni-channel initiatives that continue to drive higher digital engagement. The analyst added that even after paying its $15 per share special dividend, Costco's solid balance sheet provides plenty of room to fund the maturity of its nearly $1 billion in debt (scheduled in May) with cash.
“Combined with encouraging commentary on holiday sales trends, COST’s model continues to resonate strongly with consumers and shareholders,” Benedict said, reiterating a Buy rating on COST shares with a higher price target of $675 (up from $600). .
Benedict is ranked 84th among more than 8,600 analysts on TipRanks. Its ratings were successful 68% of the time, delivering an average return of 13.9% each. (See Costco technical analysis on TipRanks)