In this photo illustration, the CrowdStrike Holdings, Inc. logo is displayed on a smartphone screen.
Rafael Henrique | SOPA images | Light rocket | Getty Images
Investor worries about the prospect of longer-term higher interest rates have made a comeback, pushing major averages lower over the past week.
Even though the markets appear turbulent at the moment, it is crucial for investors to focus on the long term and find stocks that can continue to offer attractive returns in the years to come.
With that in mind, here are three stocks that are favored by the Street's top pros, according to TipRanks, a platform that ranks analysts based on past performance.
CrowdStrike
This week's first stock pick is the cybersecurity provider CrowdStrike (CRUD). The company recently impressed investors with strong quarterly results and optimistic guidance. The company also announced the acquisition of Flow Security, a provider of runtime security solutions for cloud data.
Gregg Moskowitz, analyst at Mizuho, highlighted that CrowdStrike is seeing solid traction with its next-generation Falcon Cloud security, identity and LogScale Security Information and Event Management (SIEM) offerings. Management said these products combined contributed more than $850 million in annual recurring revenue.
The analyst also noted that the company closed several large transactions in the fourth quarter, including more than 250 deals valued at more than $1 million. In addition, business volume across all customer cohorts increased by 30% compared to the previous year.
Moskowitz justified his bullish stance by saying, “CRWD’s cloud platform remains very differentiated, their GTM.” [go-to-market] is unrivaled,” and the company continues to see success beyond the traditional endpoint security markets.
The analyst sees CrowdStrike as a beneficiary of generative artificial intelligence. Moskowitz reiterated his Buy rating on CRWD stock and increased the price target to $390 from $360.
Moskowitz ranks 132nd among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 62% of the time and delivered an average return of 16.5% each time. (See CrowdStrike ownership structure on TipRanks)
Nike
We switch to a sports shoe and clothing manufacturer Nike (FROM). Earlier this month, Guggenheim analyst Robert Drbul reiterated his Buy rating on Nike stock with a $130 price target, calling it the “best idea.” The analyst believes the decline in the stock – which has fallen more than 8% in 2024 – provides an attractive entry point with a favorable risk-reward profile.
“We believe Nike is laying the foundation for impactful new product launches (led by basketball, but also running) to drive revenue growth acceleration in the second half of 2024 and into 2025,” Drbul said.
The analyst noted that the company is increasing its focus on the highly competitive running category after losing ground in recent years. He expects category growth to be supported by a number of new product launches, including the Pegasus 41.
Drbul also expects the Nike brand to be highly visible at the upcoming 2024 Summer Olympics. Additionally, he believes the Jordan brand remains strong and represents a major opportunity for the company in the international, women's and children's segments. He emphasized that the Jordan brand is on its way to becoming the second largest brand in North America.
Additionally, the analyst sees the possibility of gross margin expansion, with higher prices, cheaper ocean freight rates and supply chain improvements more than offsetting the impact of increased product costs.
Drbul is ranked 565th among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 59% of the time and delivered an average return of 7.9% each time. (See Nike stock buybacks on TipRanks)
BJ's Wholesale Club
Bearing chain BJ's Wholesale Club (BJ) recently reported mixed fourth-quarter results. The company's earnings beat analyst consensus estimates, but revenue, which rose 8.7% year-over-year, fell short of expectations.
Still, Baird analyst Peter Benedict was impressed with the company's performance. He reiterated his Buy rating on BJ stock and increased the price target from $80 to $90. The analyst noted that the company delivered encouraging top performance indicators, including traffic and units, even as disinflation continued to weigh on average basket size.
The analyst believes that BJ's is making good progress in transforming its general merchandise business through several measures, including improving its assortment and product presentation and intensifying its marketing efforts. Interestingly, general merchandise sales are expected to surpass grocery sales in FY24.
Benedict also highlighted BJ's solid real estate pipeline and its plan to open 12 clubs this year. He also noted the retailer's strong membership trends: Membership revenue increased 6.5% in the quarter and the renewal rate remained high at 90%.
“With a healthy balance sheet and still reasonable valuation, we continue to highlight BJ as an attractive long-term mid-cap underlying GARP.” [growth at a reasonable price] idea,” said the analyst.
Benedict is ranked #74 among more than 8,700 analysts tracked by TipRanks. Its ratings were profitable 69% of the time and delivered an average return of 15.2% each time. (See BJ's wholesale technical analysis on TipRanks)