Wall Street’s Top Picks: Three Stocks to Weather the Market Storm
While the stock market navigates a turbulent landscape, driven by macro pressures, looming elections, and geopolitical tensions, shrewd investors can still thrive. Instead of succumbing to short-term noise, focusing on long-term prospects and leveraging the insights of top analysts can guide investors towards profitable choices. In this spirit, we’ve compiled three stocks favored by the Street’s top pros, according to TipRanks, a platform renowned for its analyst ranking system based on past performance.
Key Takeaways:
- Navigate the Volatility: Despite market turbulence, savvy investors can still capitalize by focusing on long-term returns and seeking guidance from top analysts.
- Costco’s Membership Fee Hike: Costco, a membership-only warehouse chain, recently raised its membership fees, signaling strong confidence in its membership base and future growth. Analysts remain bullish on its prospects, expecting increased sales and earnings.
- MongoDB’s AI-Driven Growth: Despite a recent stumble, MongoDB, a database software company, continues to gain traction with developers, particularly in the rapidly expanding AI sector. Analysts see the current dip as an opportunity for long-term growth.
- Nvidia Rides the AI Wave: Semiconductor giant Nvidia stands to benefit immensely from the burgeoning generative AI landscape. Analysts remain confident in its continued dominance and see strong performance in the coming quarters.
Costco Wholesale (COST): A Membership Fee Boost Signals Strength
Costco Wholesale (COST) tops the list of top analyst picks this week. The company recently reported its June sales and announced a significant increase in its membership fee. This move, the first since 2017, signals Costco’s unwavering confidence in its membership base and its continued growth strategy.
Jefferies analyst Corey Tarlowe, reiterating a buy rating on COST stock and boosting the price target to $1,050 from $860, sees the membership hike as a positive catalyst for the company’s earnings. He notes that, historically, Costco has raised its fees every 5.5 years on average, though it had waited seven years this time. Tarlowe believes this timing is strategically sound, given the company’s robust membership base and strong June sales figures.
"Historically, COST has not experienced a significant impact on membership trends when fees are increased, so we think the impact will be muted," said Tarlowe. He projects the higher fee will drive enhanced sales and Earnings Before Interest and Taxes (EBIT) as membership fees represent a substantial portion of Costco’s consistently increasing operating profit. Tarlowe estimates a potential benefit of nearly 3% to the company’s earnings per share over the next two years.
MongoDB (MDB): Riding the AI Wave
Next on the list is MongoDB (MDB), a database software company. The stock took a hit in May following weaker-than-expected Q2 guidance and a downward revision of its full-year outlook. The company attributed this to a slower-than-anticipated start to the year in new workload wins and consumption growth of its cloud-based database software offering, Atlas.
However, Tigress Financial analyst Ivan Feinseth sees this downturn as a prime buying opportunity. Despite lowering his price target on MDB stock to $400 from $500, he remains bullish on the company’s long-term prospects, reaffirming his buy rating.
Feinseth highlights MongoDB’s ongoing traction among developers and the growing momentum of its Atlas DBaaS (database as a service) product. He anticipates significant benefits from the integration of artificial intelligence (AI) into MongoDB’s offerings. "MDB’s incorporation of new AI-powered capabilities improves developer productivity, accelerates application development, and accelerates its rapid enterprise adoption trends," said Feinseth.
Feinseth also emphasizes MongoDB’s expansion into crucial verticals like healthcare, insurance, manufacturing, and automotive production. He remains optimistic about the prospects of MDB’s robust DBaaS platform, given its superior functionality and cost advantages compared to traditional database solutions.
Nvidia (NVDA): Dominating the Generative AI Landscape
Semiconductor giant Nvidia (NVDA) rounds out the list of top picks. The generative AI wave has fueled an unprecedented demand for Nvidia’s advanced graphics processing units (GPUs). Despite the stock’s impressive year-to-date rally, Goldman Sachs analyst Toshiya Hari believes there’s still significant upside potential.
Following a meeting with Nvidia’s CFO, Colette Kress, Hari reiterated his buy rating on the stock, setting a price target of $135. The meeting solidified his belief in the sustainability of the current Gen AI spending cycle and reassured him about Nvidia’s ability to maintain dominance through robust innovation across compute, networking, and software.
Hari reports that Blackwell, Nvidia’s next-generation AI graphics processor, is well-positioned for a successful ramp-up, with key suppliers prepared for this significant transition. While he expects limited contribution to revenue in Q3 FY25, Hari anticipates a notable impact from Blackwell in Q4 FY25 and Q1 FY26.
Hari remains confident that, despite mounting competition, Nvidia will retain its leadership position thanks to several factors. These include a vast installed base, better access to supply, and a rapid pace of adoption for generative AI models by large enterprises and cloud providers. This advantage puts Nvidia ahead of competitors still developing advanced AI GPUs.
