Investors are grappling with a number of conflicting signals as recent data points to a possible economic slowdown and the S&P 500 hits new highs.
As investors navigate this complicated environment, they are turning to the research of top Wall Street analysts to look for stocks with strong balance sheets and solid growth prospects.
With that in mind, here are three stocks favored by Wall Street's top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Micron technology
Chip manufacturer Micron technology (IN) is this week's top pick. The company recently reported higher-than-expected revenue and profit for its fiscal third quarter, driven by demand fueled by the ongoing wave of artificial intelligence (AI). Management is confident about the future, expecting record revenue in fiscal 2025, helped by opportunities enabled by artificial intelligence.
In response to the results, Goldman Sachs analyst Toshiya Hari reiterated his buy rating on MU stock and raised his price target to $158 from $138. The analyst sees the stock's decline following the results release as a good opportunity for investors to build a position. He expects AI-driven demand and disciplined supply to lead to above-consensus earnings growth in calendar year 2025.
The analyst highlighted several reasons for his optimistic investment thesis, including market share gains in the lucrative high-bandwidth storage space and growth in AI computing power in Micron's data center business and edge computing.
Hari noted that Micron generated $425 million in free cash flow in the third quarter, representing a rebound after several quarters of negative FCF. He added that the company “remains committed to being cash flow positive in fiscal fourth quarter and fiscal 2025, even after factoring in the significant increase in capital expenditures expected in fiscal 2025.”
Hari is ranked 25th among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, generating an average return of 29.2%. (See Micron technical analysis on TipRanks)
Amazon
We are becoming an e-commerce and cloud computing giant Amazon (AmazonRecently, Evercore ISI analyst Mark Mahaney reiterated a buy rating on AMZN stock with a $225 price target following his firm's 12th annual U.S. online retail survey of 1,100 respondents.
Highlighting the survey results, Mahaney said Amazon remains the leader in U.S. online retail, with its dominance reflected in three key shopping metrics his company tracks – price, selection and convenience. But he cautioned that the survey indicates a mixed competitive environment for Amazon Retail, especially with rival Walmart (WMT) shows a significant improvement in the selection and convenience metrics.
Mahaney noted that AMZN is three to four times ahead of its nearest competitor in all three key metrics. In addition, the company continues to improve its satisfaction score, which is up 2% year over year to 84%, a significant jump from the low of 65% in 2020. The analyst believes the improved score is “a reflection of Amazon's continued focus on improving speed and selection (particularly through its regionalization initiatives).”
The analyst also noted that Amazon Prime adoption reached a record high of 81%, with attractive features such as Prime Video, free same-day delivery, Prime Music and groceries making Prime membership more attractive to survey respondents.
Overall, Amazon remains Evercore's No. 1 Large Cap Long, with survey results supporting the company's long-term investment thesis. In particular, survey results supported the analyst's views on three fundamental catalysts in 2024 – a significant acceleration in Amazon Web Services growth, rising operating margins of the North American retail business, and solid free cash flow margins.
Mahaney ranks 20th among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 63% of the time and have produced an average return of 32.2%. (See Amazon Hedge Funds trading activity on TipRanks)
Twilio
Cloud communications platform Twilio (TWLO) is this week's third pick. The company reported better-than-expected results for the first quarter of 2024. Active customer accounts rose to more than 313,000 as of March 31, from 300,000 at the end of the year-ago quarter. Shares fell after the results, however, as second-quarter guidance missed estimates, reflecting the impact of weak customer spending.
Nevertheless, Tigress Financial analyst Ivan Feinseth recently initiated coverage on TWLO stock with a Buy rating and a $75 price target. The analyst views the stock's sell-off as an attractive buying opportunity, backed by his belief that “TWLO is well positioned to benefit from the continued acceleration of AI-driven digital customer engagement.”
The analyst expects Twilio to benefit from demand for automated responses based on artificial intelligence that ensure timely and cost-effective customer interaction. He expects the company's continued investment in research and development and the integration of predictive and generative AI into its new products to increase customer adoption.
Feinseth also highlighted Twilio's cutting-edge “call center as a service” platform and its industry-leading position in the communications market. He expects the company's cost-saving efforts and efficiency measures to lead to higher margins and increased profitability.
Feinseth is ranked 195th among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, generating an average return of 13.1%. (See Twilio stock charts on TipRanks)