The Federal Reserve’s forecast for three rate cuts in 2024 has lifted investor sentiment, but macro uncertainty can weigh on investment decisions.
Wall Street’s analysts can dig into the details to find out which stocks are most resilient heading into the new year.
Here are three names favored by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Uber Technologies
Shares of ride-hailing platform Uber Technologies (UBER) have rallied this year, with investors appreciating the improvement in the company’s profitability and its recent inclusion in the S&P 500.
Recently, JPMorgan analyst Doug Anmuth called Uber one of his top picks for 2024. He reaffirmed a buy rating and raised the price target to $76 from $62. The analyst highlighted that Uber has a leading position in two secular growth industries: ridesharing and food delivery.
The analyst expects the company to navigate the ongoing macro challenges and emerge stronger, backed by its dominant position in the ridesharing market and growing food delivery adoption. He is also optimistic about Uber’s ability to expand into other areas with huge total addressable markets like grocery, convenience and alcohol delivery.
Anmuth also sees the possibility of significant earnings before interest, taxes, depreciation and amortization and free cash flow generation, driven by incremental margins on gross bookings of 10% for the mobility business and more than 5% for the delivery business.
“In terms of profitability, supply tailwinds should persist & support continued efficiency gains, further aided by ramping advertising, product improvements, defect leverage, and tighter headcount,” said Anmuth.
Anmuth holds the 100th position among more than 8,600 analysts on TipRanks. His ratings have been successful 61% of the time, with each delivering a return of 17.5%, on average. (See Uber Hedge Funds Trading Activity on TipRanks).
CyberArk
We now move to cybersecurity company CyberArk (CYBR), which specializes in identity security. Last month, the company reported better-than-anticipated third-quarter results, with annual recurring revenue (ARR) increasing 38% to $705 million.
On Dec. 15, Mizuho analyst Gregg Moskowitz picked CyberArk, along with Microsoft (MSFT) and Adobe (ADBE), as his top picks in the software space for 2024. The analyst expects these companies to gain from key trends like digital transformation, generative artificial intelligence, next-gen security, contact center cloud migrations and more.
The analyst said that he is impressed with CyberArk’s solid and consistent execution despite a challenging macro backdrop. The analyst is optimistic that CYBR’s successful shift to a recurring revenue model would drive even stronger financials in the times ahead.
“We also view CYBR as the primary beneficiary of a heightened threat landscape that has amplified the need for privileged access, and identity and secrets management,” said Moskowitz.
In line with his bullish stance about CyberArk’s growth prospects, Moskowitz boosted his price target for the stock to $250 from $195 and reiterated a buy rating.
Moskowitz ranks No. 95 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 63% of the time, with each delivering an average return of 16.9%. (See CyberArk Financial Statements on TipRanks)
Costco Wholesale
Warehouse chain Costco (COST) recently announced better-than-expected fiscal first-quarter earnings, as customers continued to look for value deals on groceries and essentials. Moreover, the company saw improvement in non-food categories.
Baird analyst Peter Benedict noted that while Costco’s earnings per share exceeded Wall Street’s consensus estimate, it lagged his expectations due to lower interest and other income and a higher tax rate.
That said, the analyst highlighted that member engagement KPIs, or key performance indicators, remain robust, with paid membership growing 7.6%. Also, management said that a membership fee hike remains a matter of “when, not if,” he added.
Benedict also drew attention to the improvement in the company’s core e-commerce growth to 6.1% compared to a decline of 0.6% in the sequentially prior quarter, thanks to omni-channel initiatives that continue to fuel higher digital engagement. The analyst added that Costco’s solid balance sheet has plenty of room for funding its nearly $1 billion debt maturity (scheduled in May) with cash even after paying the special dividend of $15 per share.
“When combined with encouraging commentary around holiday sales trends, COST’s model continues to resonate with consumers and shareholders alike,” said Benedict and reiterated a buy rating on COST stock with a higher price target of $675, up from $600.
Benedict holds the 84th position among more than 8,600 analysts on TipRanks. His ratings have been successful 68% of the time, with each delivering a return of 13.9%, on average. (See Costco Technical Analysis on TipRanks)