The July Consumer Price Index showed inflation was slowing and July retail sales figures eased investor concerns about a slowing economy, also raising hopes that the Federal Reserve will cut interest rates at its September meeting.
As market sentiment improves, investors looking for good stocks can turn to Wall Street’s top analysts to recommend stocks with attractive long-term growth potential. Top analysts make recommendations after detailed analysis of companies’ financials, competitive landscape and future prospects.
With that in mind, here are three stocks that top Street pros favor, according to TipRanks, a platform that ranks stocks based on analysts’ past performance.
Monday
First up this week is project management software provider Monday.com (MNDY), which impressed investors with its second-quarter results and raised its full-year outlook thanks to strong demand from large customers. Notably, the number of paying customers with over $100,000 in annual recurring revenue (ARR) grew 49% to 1,009.
Following the strong results, TD Cowen analyst Derrick Wood raised his price target on MNDY to $300 from $275, reiterated his buy recommendation and called the stock a top pick. The analyst highlighted strong demand for Monday.com’s products from high-value customers and the company’s recent win of its largest contract to date with a multinational healthcare company.
“We see this as evidence that MNDY is successfully penetrating the upper end of the market and is committed to platform sales, and we think this is a sign of bigger deals to come,” Wood said of the deal.
The analyst also noted that Monday.com expects its net dollar retention rate (NDR) to remain stable at around 110% through fiscal 2024, with management anticipating a slight uptick by the end of the year.
“We expect luxury market traction, new product adoption and pricing tailwinds to continue to drive strong growth in the second half of the year,” Wood said.
Wood is ranked 197th out of more than 8,900 analysts tracked by TipRanks. His ratings have been successful 60% of the time, generating an average return of 13.3% each. (See MNDY hedge fund trading activity on TipRanks)
CyberArk Software
Another favorite tech company is CyberArk Software (CYBR). The identity security company reported strong second-quarter results and raised its full-year outlook, citing strong demand for its platform.
Following the Q2 release, Baird analyst Shrenik Kothari reaffirmed his Buy rating on CYBR shares and raised his price target to $315 from $295. The analyst attributes the strong Q2 NNARR (new annual recurring revenue), solid new business wins, and business growth among existing customers to CYBR’s unified identity security platform.
Kothari noted that CYBR’s employee ID and machine ID solutions have emerged as a major growth driver. He believes the company’s stock’s premium valuation compared to peers is justified, given the “transition to recurring revenue and CYBR’s market leadership position.”
Despite macroeconomic challenges, analysts remain optimistic about demand for CyberArk’s identity security solutions as the threat landscape evolves, adding that the company’s strong profitability and free cash flow demonstrate its ability to capitalize on customers’ identity security needs.
The analyst noted that management is upbeat about its plans to acquire Vanafi, and that the acquisition is expected to strengthen CyberArk’s position in the machine identity security market.
Kothari is ranked 196th out of more than 8,900 analysts tracked by TipRanks. His ratings have produced profits 72% of the time, and have returned an average of 22.7% each. (See CYBR stock chart on TipRanks)
T-Mobile US
Finally, our third stock pick for the week is wireless network provider T-Mobile US (TMUS). The company recently reported better-than-expected second-quarter results and raised its full-year outlook for postpaid net customer growth and cash flow.
On August 12, Tigress Financial Partners analyst Ivan Fienneszas reaffirmed his buy recommendation on TMUS shares and raised his price target by 15% from $205 to $235. Fienneszas noted that T-Mobile US continues to outperform the industry in customer acquisition and service revenue growth, backed by “the industry’s best ultra-high-capacity 5G high-speed network.”
T-Mobile’s high-speed network and widespread 5G availability are helping drive subscriber growth, resulting in increased revenue and cash flow, the analyst added. Highlighting TMUS’ vast deployment, Feinseth said the company’s 5G network reaches 98% of Americans, with its ultra-high-capacity 5G network covering more than 330 million people. He expects the company to benefit from fixed wireless access (FWA) opportunities.
Additionally, Fiennes is encouraged by T-Mobile’s shareholder returns: In the second quarter of 2024, T-Mobile returned $3 billion to shareholders through dividends of $759 million and share repurchases of $2.3 billion.
Fiennes-Zess is ranked 239th out of more than 8,900 analysts tracked by TipRanks. His ratings have produced profits 60% of the time and have delivered an average return of 11.9% each. (See TMUS Stock Buyback on TipRanks)
