The major averages are reaching new highs, but attractive stocks with good growth prospects are still available.
Wall Street analysts continue to focus 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 that are favored by the Street's top analysts, according to TipRanks, a platform that ranks analysts based on past performance.
Nvidia
Chip giant Nvidia (NVDA) is this week's first choice. The company impressed investors with blockbuster quarterly results and better-than-expected sales forecasts, thanks to huge demand for its products due to the artificial intelligence hype.
In response to the excellent fourth quarter fiscal 2024 results, Goldman Sachs analyst Toshiya Hari reiterated his Buy rating on NVDA stock and increased the price target to $875 from $800. “Nvidia has met what appears to be a very high bar, with Data Center once again serving as the key growth driver,” he said.
Hari expects strong investments in generative AI infrastructure and new product launches to drive continued outperformance. The analyst expects Nvidia to benefit from robust demand and new product launches, including the H200 GPU, the Ethernet-based AI networking solution Spectrum-X and the next-generation B100 data center GPU platform.
The analyst expects Nvidia's data center revenue to grow more than 2x year-over-year in fiscal 2025. This is even after the segment recorded a more than three-fold increase in revenue in fiscal 2024. His optimism is supported by continued growth in generative AI infrastructure spending by major cloud service providers and consumer internet companies, as well as increased AI adoption by enterprise customers and sovereign states.
Hari is ranked #61 among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 68% of the time, with an average return of 24.3% each. (See Nvidia stock charts on TipRanks)
Abercrombie & Fitch
Next comes the clothing retailer Abercrombie & Fitch (ANF). Earlier this year, the company raised its guidance for fiscal fourth quarter and full-year net sales and its operating margin guidance. The revised outlook reflected regional net sales growth in the holiday quarter, led by continued strength in the Americas.
Ahead of the company's Q4 earnings release on March 6, Jefferies analyst Corey Tarlowe increased his price target to $149 from $120 and reiterated a Buy rating on ANF stock. The analyst noted that when the company released the improved outlook in January, its women's business was expected to deliver its strongest performance ever in the fourth quarter.
Tarlowe emphasized that Abercrombie & Fitch continues to gain market share both domestically and globally. Citing Euromonitor data, the analyst said the brand moved up four places to 20th place in apparel in the US compared to 2022. Likewise, demand for ANF's denim and outerwear categories helped it rise two places to 55th globally in 2023.
Tarlowe added that while the company's Hollister brand has been under pressure over the past year, it has recently returned to growth. The analyst expects market share gains for the Hollister brand in the coming days.
Tarlowe commented on the outlook for fiscal year 2025 as follows: “We expect ANF to provide strong, yet beatable guidance, which could be a positive catalyst for the stock.” Overall, the analyst sees further upside potential for ANF's market share, Sales and profit.
Tarlowe is ranked #473 among more than 8,700 analysts tracked by TipRanks. Its ratings were successful 68% of the time, with an average return of 15.5% each. (See ANF financial reports on TipRanks)
Walmart
This week's third stock pick is big retail Walmart (WMT), which delivered better-than-expected results in the fourth quarter. The solid performance was driven by positive holiday sales and the strength of the company's e-commerce channel.
Following the release, Goldman Sachs analyst Kate McShane reiterated her Buy rating on WMT shares and increased the price target to $193 from $180.
She noted that Walmart's operating income growth accelerated in the fourth quarter, driven by the company's alternative revenue streams, including advertising, marketplace and fulfillment services. Lower fulfillment costs also improved operating income.
McShane emphasized that Walmart expects its sales growth to be supported by its international business. Specifically, the company expects continued strength in India, Walmex (WMT's subsidiary in Mexico and Central America) and China to account for approximately 75% of its international growth over the next few years.
“We are seeing revenue support from continued market share gains, store investments (remodels and new stores/clubs) and the growth of alternative revenue streams,” McShane said.
Overall, she is bullish on Walmart and believes the company is well-positioned to continue driving strong earnings growth as the company increases its market share thanks to the great deals and convenience the retailer offers. The analyst also expects the company to improve its profitability, driven by the growth of higher-margin businesses and productivity benefits.
McShane is ranked 884th out of more than 8,700 analysts tracked by TipRanks. Their ratings were successful 62% of the time, each yielding an average return of 5.2%. (See Walmart stock buybacks on TipRanks)