The debate over when the Federal Reserve will start cutting interest rates and the continued craze for artificial intelligence are two major factors affecting the U.S. stock market, while concerns over the direction of the economy continue to affect investor sentiment.
In these uncertain times, Wall Street analysts are focused on identifying stocks with solid fundamentals and strong long-term growth prospects. Investors can gain useful insights by consulting the recommendations of top analysts before making any investment decisions.
In this climate, here are the three stocks that top Street pros favor, according to TipRanks, a platform that ranks stocks based on analysts’ past performance:
Delta Airlines
First Delta Airlines (DAL) is the second largest airline in the U.S. DAL operates 4,000 daily flights, reaching more than 290 destinations across six continents. Following the company’s presentation at TD Cowen’s recent Toronto Corporate Access Day, analyst Helane Becker reaffirmed her buy recommendation and $55 price target on DAL.
Delta Air Lines was named TD Cowen’s Best Idea of 2024, Becker said, adding, “Delta has a differentiated product and continues to invest in it, but what stands out is the company’s strategic plan.”
Becker believes management’s focus on DAL’s strategic plan over the past 15 years has produced favorable results and made the company’s stock price attractive. Delta’s stable management team is a key differentiator from competitors, he said.
Becker highlighted several strengths, including Delta’s extensive network, strategic alliances with other airlines and operational reliability, which is reflected in its improving Net Promoter Score over the past decade.
The analyst also noted Delta’s comments that demand from premium customers (those earning more than $100,000 a year) remains strong. Additionally, the airline is seeing a strong recovery in corporate travel, with year-over-year growth of more than double digits. Delta is also strengthening its financial position as it continues to reduce debt.
Becker is ranked 276th out of more than 8,800 analysts tracked by TipRanks, and her ratings have produced profits 63% of the time, with an average return of 11.2%. (See Delta Air Lines stock chart on TipRanks)
Microsoft
Next up is software giant Microsoft (MSFT), which has invested billions in ChatGPT developer OpenAI and is seen as one of the main beneficiaries of the generative AI wave.
Recently, Tigress Financial analyst Ivan Feinseth reaffirmed his buy rating on MSFT shares and raised his price target to $550 from $475. The analyst believes Microsoft is “increasingly positioned to lead the AI revolution through the continued integration of generative AI capabilities across its software stack and product portfolio.”
Feinseth pointed to Microsoft’s 17% revenue growth in the third quarter ended March 31 as a result of accelerated adoption of the company’s AI-enabled products and AI cloud integration. The company’s cloud business delivered strong performance thanks to demand for its Azure platform.
Feinseth also highlighted the growth potential of Microsoft’s gaming division and its efforts to expand into the metaverse, which is expected to benefit from its $75 billion acquisition of Activision Blizzard and the launch of its new Xbox console.
Finally, Fiennes-Zeiss pointed to Microsoft’s strong financial position, which he said is supporting growing shareholder returns and enabling the company to invest in its AI ambitions.
Fiennes is ranked 242nd out of more than 8,800 analysts tracked by TipRanks. His ratings are successful 60% of the time, delivering an average return of 12.2%. (See Microsoft technical analysis on TipRanks)
Zscaler
Our third pick this week is Zscaler (ZS), one of the leading cloud-based cybersecurity companies. The company’s Zscaler Zero Trust Exchange platform securely connects and protects users, devices and applications from cyberattacks and data loss.
Following the Zenith Live 2024 event, Baird analyst Shrenik Kothari reaffirmed his buy recommendation on Zscaler shares with a $260 price target. Discussing key takeaways from the event, the analyst said Zscaler is looking to capture additional market opportunities by expanding its platform.
Kothari specifically mentioned the introduction of Zscaler Identity Protection capabilities that leverage advanced machine learning to strengthen identity security across cloud environments, Cloud Browser Isolation service to protect user devices, and DLP 2.0 solution with AI-driven capabilities to keep sensitive data safe.
These new capabilities in Zscaler’s platform have increased the company’s total addressable market by more than $24 billion to $96 billion. Kothari also highlighted that the company’s go-to-market strategy has shifted from transaction-centric to account-centric selling. With the new sales approach, Zscaler is focused on growing the number of customers with ARR (annual recurring revenue) above $10 million.
“Impressive customer success stories, especially in the finance, healthcare and manufacturing sectors, support Zscaler’s security at scale,” Kothari said.
Kothari is ranked 381st among the 8,800+ analysts tracked by TipRanks. His ratings generate profits 66% of the time, with an average return of 20.6%. (See Zscaler financial statements on TipRanks)
