The debate over when the Federal Reserve will start cutting interest rates continues to influence market sentiment as investors interpret key macroeconomic data, including the job market report, to determine the current state of the U.S. economy.
At the same time, Wall Street analysts remain focused on picking individual stocks that can grow in the face of short-term pressures and deliver attractive long-term gains.
According to TipRanks, a platform that ranks stocks based on analysts’ past performance, these are the three stocks that top Street pros favor:
Burlington Store
Off-price retailer Burlington Stores (BURL) is our top pick this week. The company impressed investors with strong results for the first quarter of fiscal 2024 (ended May 4) and raised its full-year margin and revenue outlook.
Following the first-quarter results, Jefferies analyst Corey Tarlowe reaffirmed his buy rating on BURL and raised his price target to $275 from $260. The analyst is confident the retailer can deliver solid same-store sales growth.
Tarlow attributed Burlington Stores’ better-than-expected first-quarter profit to expanding gross and operating margins. The analyst also highlighted that the New Jersey-based company has well-managed inventory levels.
“BURL is the smallest and most marginally profitable of the major off-price retailers, but we believe its sales and margin growth will be strong going forward, but this is not yet fully priced into our forecasts,” Tarlow said.
Tarlow expects Baer to benefit from a shift in customers from department stores, which have been hit hard by the pandemic, to off-price retailers. The company operated 1,021 stores as of the end of the first quarter of fiscal 2024 and plans to open about 100 new stores this year. Analysts expect Baer to eventually expand to 2,000 stores.
Tarlow is ranked 291st out of more than 8,800 analysts tracked by TipRanks, and his ratings are successful 67% of the time, delivering an average return of 18.9%. (See Burlington Stores stock chart on TipRanks)
Amazon
E-commerce and cloud computing company Amazon (AMZN) is also a top pick. The company reported strong first-quarter earnings despite a tough macroeconomic environment. The company’s bottom line increased due to strong revenue growth and cost-cutting measures.
Recently, analyst Ivan Feinseth of Tigress Financial reaffirmed his buy rating on AMZN and raised his price target to $245 from $210, citing tailwinds related to generative artificial intelligence, leadership positions across multiple industries, and impressive brand equity.
Amazon Web Services (AWS) is benefiting from the growing adoption of generative AI by companies to improve operational efficiencies and gain a competitive edge, analysts said. He expects AWS’s “superior operational performance, security, and industry-leading capabilities” to continue to drive an increase in the number of large language models (LLMs) built on its platform.
Feinseth highlighted other strengths of Amazon, including the expansion of Prime membership benefits, growing grocery sales, the expansion of its digital advertising business and continued innovation. Additionally, AMZN’s strong balance sheet and cash flow allow it to invest in strategic transactions and growth initiatives.
Fiennes is ranked 242nd out of the 8,800+ analysts tracked by TipRanks. His ratings have produced profits 60% of the time, with an average return of 12.2% each. (See Amazon technical analysis on TipRanks)
Pager Duty
Finally, there’s PagerDuty (PD), a digital operations management platform. The company reported mixed results for its fiscal first quarter (ended April 30). Adjusted earnings per share beat analysts’ expectations, but revenue was slightly below expectations. The company highlighted its seventh consecutive quarter of non-GAAP profitability.
Following the first-quarter release, RBC Capital analyst Matthew Hedberg reiterated his buy recommendation on PagerDuty with a $27 price target, saying he is “modestly optimistic about the stock’s upside potential in the second half of 2025 despite the challenging macro environment.”
The analyst highlighted the company’s annual recurring revenue (ARR) growth of 10% and billings growth of 11%. Notably, he noted that ARR growth has remained steady at 10% for two consecutive quarters. Management expects ARR growth to accelerate in the second half of fiscal 2025 due to traction from multi-year contracts.
Hedberg believes the pipeline is looking good for the second half of fiscal 2025, buoyed by multi-product, multi-quarter deal momentum. He is also encouraged by the opportunities PagerDuty is seeing in the federal government, notably receiving an Authorized To Do Business (ATO) from the Department of Veterans Affairs and closing its first seven-figure deal in the public sector.
Hedberg is ranked 565th out of more than 8,800 analysts tracked by TipRanks. His ratings have generated profits 52% of the time, with an average return of 9.7% each. (See PagerDuty financial statements on TipRanks)
